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HomeMy WebLinkAbout01/22/2008, BUS. 5 - RESOLUTION APPROVING IMPLEMENTATION OF BENCHMARK COMPENSATION STUDY 2007 RECOMMENDATIONS FOR UNREP council k as o r agenda aEpont CITY OF SAN LUIS OBISPO FROM: Ken Hampian,City Administrative Officer Monica Irons,Director of Human Resourceg-0y PREPARED BY: Rachael Hendricks,Human Resources Analyst SUBJECT: RESOLUTION APPROVING IMPLEMENTATION OF BENCHMARK COMPENSATION STUDY 2007 RECOMMENDATIONS FOR UNREPRESENTED MANAGEMENT AND SAN LUIS OBISPO CITY EMPLOYEES' ASSOCIATION CLASSIFICATIONS CAO RECOMMENDATION 1. Adopt a resolution implementing salary range adjustments and phased compensation increases for a limited number of San Luis Obispo City Employees' Association(SLOCEA) and unrepresented management classifications resulting from the Benchmark Compensation Report 2007; 2. Approve modifications to the management Pay-for-Performance Program, including elimination of the suspended program that allowed one-time lump-sum payments for employees at the top of a salary range; 3. Direct staff to return to Council with recommendations to improve the competitiveness of the City contribution to dependent health insurance for management, confidential, and SLOCEA employees no later than August 2008 and authorize staff to re-open the SLOCEA memorandum of understanding to discuss potential changes. REPORT IN BRIEF Council received the Benchmark Compensation Study 2007 on November 6, 2007 and directed staff to return in January with recommendations based on the study. This report provides recommendations to adjust a limited number of SLOCEA and management salary ranges, to adjust compensation for employees in specific classifications, to modify the management pay- for-performance program, and to return to Council in August 2008 with recommendations on improving the City's contribution to health insurance. DISCUSSION Background—the City's Development of the 2007 Benchmark Compensation Report Decisions about compensation for public employees are difficult and sensitive. This is understandable—public resources should be used wisely and with accountability. And that is why such decisions should be made with a solid foundation of data and soundly reasoned analysis. Council Agenda Report—Compensation Recommendations Page 2 January 22,2008 The Benchmark Compensation Report 2007 (the Study) received by the Council on November 6, 2007 provides a major part of this necessary analytic foundation. The methodology and the Study were endorsed by the Personnel Board and accepted by the Chamber of Commerce as an appropriate foundation for future compensation decisions by Council. However, sound data and information are not ends unto themselves. There must be an overarching public purpose behind any review of public employee compensation, and that purpose should be tied to one fundamental thing: service to the public. The Compensation Philosophy adopted by Council in March 2007 established "competitive compensation" as a necessary part of an overall strategy to attract and retain employees who can deliver high quality public service our community needs and expects – the kind of service that will help San Luis Obispo remain a great place to live, work, and visit. In October 2007, the Council held a study session on: Succession Planning: Preparing the Next Generation. This marked the start of more formal succession planning efforts at the City; strengthening the overall strategy necessary to attract and retain employees, especially as the baby boomer generation leaves the workforce. Recent Recruitment Challenges San Luis Obispo City government has become more and more vulnerable to the recruitment challenges posed not only by jurisdictions in larger metropolitan areas, but more recently, by jurisdictions within the County. For example, over the last two years the City has lost several employees to municipalities like Morro Bay, Paso Robles, and Santa Maria. The Supervising Civil Engineer responsible for engineering development review resigned in August 2005 to accept a job in the local private sector for an increase in salary. The City recruited and made an offer to the one strong candidate identified, but the offer was declined due to compensation. In July 2006, the City re-hired the employee who left for the private sector. However, he resigned again only a few months later to accept a higher paying job at the City of Morro Bay. Another offer was made and declined due to compensation and the position remains unfilled today. City employees cited increased pay and benefits as reasons for accepting employment with the City of Paso Robles. Consequently, the City has lost experienced and knowledgeable employees in key positions. The Water Reclamation Plant Chief Operator recently left after twelve years of service with the-City to accept a comparable position with the City of Paso Robles. The Water Projects Manager, a key position with responsibility for multi-million dollar projects like the Water Reuse project, accepted employment with Paso Robles after four years with the City. The City's Industrial Waste Coordinator also went to the City of Paso Robles after six years. The Deputy Director of Community Development left for a position with the City of Paso Robles after fifteen years with the City. Most recently, the City's Information Technology(IT) Manager and a highly skilled IT Technician accepted positions with the City of Santa Maria. U1,agcnda report:.._(JOS\CompStud\'Rccnmmcndarionsl-I0-08.doc 7r f V /� C. � Council Agenda Report—Compensation Recommendations Page 3 January 22,2008 Development of Compensation Recommendations for Implementation Upon receipt of the Study, on November 6, 2007, the Council directed staff to return in January 2008 with recommendations for implementation upon further analysis and appropriate consultation with employee groups. 1. Nature of Recommendations The good news is the Compensation Study indicated salary is competitive (close to the median of comparable agencies) for almost 60% of City classifications. Time-off and retirement benefits are also competitive. However, salary lags significantly in utilities, engineering, and senior management classifications, and the City contribution to dependent health insurance coverage also significantly lags the comparable market. In making recommendations to implement the Study, the City's recruitment and retention experience, as well as internal classification relationships, employee-supervisory relationships, fiscal responsibility, and local acceptability were considered. , Therefore, recommendations are "surgical" and not. across-the-board, addressing specific areas where the City is not competitive and has experienced difficulty attracting and retaining high-quality employees. 2. How the Analysis Was Undertaken Analysis began by examining the percent from market median for each benchmark classification. Staff considered the salary competitive if the benchmark was within 5% of market median. Ten of the twenty-three benchmarks were more than 5% below the median of comparable public sector agencies. A strong correlation was found between the benchmarks that fell significantly below median and the City's recruitment difficulties and turnover (specifically utilities, engineering, and senior management classifications). Staff also examined the current salary range structure. SLOCEA salary ranges are approximately 2.63% apart from top step to top step. The difference between the maximum of management salary ranges varied. However, 5% between management ranges is standard in municipal government settings, so staff recommendations aim for consistency with that standard. The recommendations are not simply "formula-driven." As adjustments to salary ranges were modeled, internal relationships such as employee-supervisor, classifications in the same salary range, and internal "value" were considered. Because of these other considerations, recommended adjustments are lower than the market data may have suggested in many cases. Recommended Salary Range (Different than Pay) Adjustments Within the City's classification plan all positions with substantially similar duties, responsibilities, authority, and character of work are included in the same class and are compensated at the same level (e.g. in the same salary range). The market value of responsibilities, certifications, or education required to carry out duties may cause classifications to move to higher salary ranges. Adjusting salary ranges to ensure market competitiveness helps the City address recruitment and retention concerns. Adjusting a salary range may or may not Wauenda reports%200S1CompStudyRccommrndations l-lO-OS.doc 7r V I� Council Agenda Report—Compensation Recommendations Page 4 January 22,2008 result in an increase for a current employee within that range or classification. The impact these recommendations have on pay is discussed under the"Implementation" section of this report. Recommendations are broken into two categories: 1) SLOCEA salary range adjustments (Attachment 1, Exhibit A) and, 2) Management salary range adjustments(Attachment 1, Exhibit B). Recommended adjustments to SLOCEA salary ranges adjust each of five steps within the range thus maintaining the current range structure. Recommended adjustments to management salary ranges adjust the range minimums and maximums. 1. SLOCEA Salary Range Adjustments Staff recommends salary range adjustments for 16 of the 79 SLOCEA classifications. Adjustments of 8% are recommended for engineering and the biologist classifications and adjustments of 14% are recommended for utilities classifications. No other adjustments are recommended for SLOCEA classifications. Z Management Salary Range Adjustments Of the 65 management classifications, 9 are not recommended for adjustments and 18 are recommended for very slight salary range adjustments of 0.7% or 1.8% to establish the recommended 5% between maximums of management ranges. Thirty-eight classifications are recommended for market range adjustments that range from 4%to 17.4%. Implementation of Salary Range and Pay Adjustments: A Phased Approach Staff considered the following in proposing a phased-in implementation of the above salary recommendations: 1. The difference in salary structures between SLOCEA and management classifications. 2. Impact on recruitment and retention. 3. How the recommendations and implementation strategy might be received by employees as well as the community. 4. Fiscal impact. The phased-in implementation strategy is consistent with the City's implementation of market adjustments in other bargaining units such as Fire, Police Staff Officers, and Battalion Chiefs. The proposed phased-in implementation approach varies slightly between SLOCEA and management, due in part, to the difference in salary range structures and pay-for-performance system. 1. Phase-in of SLOCEA Recommendations Most SLOCEA salary ranges consist of five steps, with five percent between each step. The first step is typically the hiring rate. Employees progress through the steps based on performance and longevity. The only exceptions are utilities' classifications, which use a skills-based-pay model. With this approach, employees are hired or move to steps based on specific demonstrated skills, certifications, and experience. Therefore, if a salary range is adjusted, the employee retains the Q\agcndu rcport>\?U08\CompStudyRccommcndations I-I 0-08.doc Council Agenda Report—Compensation Recommendations Page 5 January 22,2008 same"earned" step, thus their pay is increased by the same amount. Because of the step system for SLOCEA employees, staff recommends phasing in both the salary range and pay adjustments in two stdges: 50% of the recommended adjustments are proposed for January 24, 2008 and the other 50% for the first full pay period after January 1, 2009. 2. Phase-in of Management Recommendations Management classifications are in salary ranges that are 20% "wide", but do not have steps. Progression through a management salary range is determined by individual performance. Pay- for-performance increases vary between 0% and 5% annually. Staff recommends management salary ranges be adjusted by the entire proposed amount January 24, 2008. This will enhance recruitment abilities by allowing the City to advertise the competitive salary range. However, staff recommends market pay adjustments of no more than 5% on January 24, 2008, with the exception of the Police Chief discussed below. Further movement through the management range would be per the City's Pay-for-Performance system. This means "earning" the greater range capacity (market median) over the course of subsequent evaluation cycles. The Police Chief classification was benchmarked in the Compensation Study and results indicated the City's classification was 16% below comparable agencies. A salary range adjustment of 15% is recommended due to how significantly this classification lagged the market, including the local market where it ranked below the City of Paso Robles .and Santa Maria (4% and 22% respectively). A pay adjustment of 8% effective January 24, 2008 is recommended to address internal equity concerns. Without this adjustment, the Police Captains who report to the Chief will earn approximately 9% less than the Chief in January. Typically, differences between a Chief and Captain's salary are between 15% and 20%. Adjusting the Chief's salary by 8%, instead of the 5% recommended for other management employees, will result in a 17%difference, which is competitive with other comparable agencies. Regarding the recommended changes to the Pay-for-Performance System, staff.examined management compensation systems in the comparison agencies and found the vast majority of cities use a step increase system for their management employees; meaning they progress at the rate of 5% per year plus cost of living increases. In order to remain competitive while retaining a pay-for-performance system, staff recommends increasing the potential pay-for-performance increase from 5% to 6% for outstanding performers. With competitive salary ranges and the ability to achieve a 6% pay-for-performance increase, staff also recommends formally abandoning a feature that has been suspended for the last four years that allowed employees at the top of range to receive performance increases in the form of lump-sum payments. Health Insurance—Further Discussion and Analysis Prior to Formal Recommendation While most benefits at the City are competitive, the City contribution to family health coverage lags the market significantly. The City currently contributes.59% of family health coverage for Gi agenda rcpirtt 3008'•CumpStudgRcuor:vm rd'ations I-10-0N.doc Council Agenda Report—Compensation Recommendations Page 6 January 22,2008 SLOCEA, confidential, and management employees. The median contribution to family health coverage for SLOCEA and confidential employees is 79%, while the median contribution for management employees is 89%. Preliminary analysis indicates the City's "flat rate" structure, which provides the same contribution to health insurance regardless of the number of dependents covered, may contribute to the issue by "over-funding" those employees who opt-out of City provided health insurance or elect employee-only coverage. Conceptually, staff recommends shifting City funding of health insurance from those employees who either opt-out of the City's medical plans or elect employee-only coverage, to those who elect dependent coverage. This philosophical change warrants further discussion and analysis but is premised on the concept that the City is currently "over-funding" (contributing more than 100% of the cost of employee-only health insurance) those employees who elect employee-only medical coverage or choose to opt-out of the medical coverage offered by the City. On the other hand, from a market perspective, the City is "under-funding" family health coverage. This "under-funding" of family health insurance has contributed to recruitment and retention issues. A shift in the City's contribution would either reduce or freeze health insurance contribution amounts for the "opt-out" and "employee-only" individuals in order to mitigate the cost of improving the currently weaker benefit for those with dependent coverage. Any changes to the method of funding health contributions should occur prior to open enrollment in September 2008, when employees have the ability to change their health insurance elections. Therefore, staff recommends returning to Council by August 2008 with more formal recommendations. SLOCEA has requested the. City re-open the SLOCEA Memorandum of Agreement for the purpose of discussing changes to future health insurance contributions. Staff recommends the Council authorize re-opening of the contract for this focused purpose. The. current SLOCEA MOA calls for increases to the current "flat-rate" structure in December 2008. Potential changes to the structure or the amount must be negotiated with SLOCEA and re- opening the contract allows more formal discussions to commence. CONCURRENCES These recommendations have been presented to management employees and the City has met and conferred with SLOCEA. No action has been formally taken by either group to support or oppose the recommendations. FISCAL IMPACT As reflected in the summary chart below, implementing these changes will have a very modest fiscal impact in the two-year 2007-09 Financial Plan in the context of the City's overall financial operations. This is due to two key factors: 1; Focused Changes. As noted above, the study found that most City positions are already compensated at a competitive level. For this reason, there are a limited number of positions G:�jgenda rcp,nis%?068\CumpStudyRccommrndatinnsl-10-OS.doc /� Council Agenda Report—Compensation Recommendations Page 7 January 22,2008 in the City that are affected in implementing the study results. This surgical (versus across- the-board) approach mitigates the fiscal impact of these recommended salary range changes. 2. Phased Implementation. The recommendation for phased.i mplementation also mitigates the fiscal impact of the adjustments over the next two years. For example, the increased cost to the General Fund in 2007-08 represents 0.25% (one-quarter of one percent) of expenditures in 2007-08 ($56.1 million); and 0.5% (one-half of one percent) of General Fund expenditures over the two years of the 2007-09 Financial Plan. As also shown in the chart below, while there are some additional costs that will be incurred beyond the next two years, these are also modest in the context of the City's overall financial operations. For example, the added cost in the General Fund of $110,000 in 2009-10 ($424,600 to $534,600) represents less than 0.2% of planned General Fund expenditures in 2008-09 of$58.3 million. And there are no significant cost additions beyond 2009-10. In short, while phased, there are no hidden "tail" costs under the proposed implementation approach. Im lementation Cost Summa 2007-08 2008-09 2009-10 General Fund $141,700 $424,600 $534,600 Water Fund 62,200 190,000 247,200 Sewer Fund 59,900 181,600 236,800 Other Enterprise Funds 800 1,500 1,500 Because of the modest fiscal impact of these changes, they can be accommodated within existing resources: no added appropriations are required in the two-year 2007-09 Financial Plan. ALTERNATIVES 1. Do Not Adopt a resolution implementing salary range adjustments and phased compensation increases for a limited number of San Luis Obispo City Employees' Association (SLOCEA) and unrepresented management classifications resulting from the Benchmark Compensation Report 2007. This alternative is not recommended as failure to implement these adjustments will adversely affect our ability oto recruit and retain the qualified employees needed to effectively deliver services to the community. 2. Implement the Proposed Salary Range and Pay Adjustments effective January 24, 2008 instead of the proposed phased-in approach. Although this alternative brings employees to market median immediately, this alternative is not recommended due to its immediate fiscal impact. 3. Modify the.Proposed Salary Range Adjustments The Council may elect to modify the proposed salary range adjustments. If Council chooses this alternative, staff requests that Council provide direction as appropriate. G:�agrnda report;\'20pS\GompSwdpRccommcnd;ttion;I-10-08.doc Council Agenda Report—Compensation Recommendations Page 8 January 22,2008 ATTACHMENT Resolution G:�agcnda rcPrnts�20081CompSuidyficcommrndat ip ns I-I 0-08.dnc Q ��Q Attachment RESOLUTION NO. (2008 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO APPROVING IMPLEMENTATION OF BENCHMARK COMPENSATION STUDY 2007 RECOMMENDATIONS FOR UNREPRESENTED MANAGEMENT AND SAN LUIS OBISPO CITY EMPLOYEES' ASSOCIATION CLASSIFICATIONS WHEREAS,the City of San Luis Obispo strives to provide excellent service to the community at all times, and supports this.standard by promoting organizational values including customer service, productivity, accountability, innovation, initiative, stewardship, and ethics; and WHEREAS,to achieve our service standards, the City must attract and retain highly qualified employees who exemplify our organizational values; and WHEREAS, fostering an environment attractive to such employees depends upon many factors, including a competitive compensation program; WHEREAS, in 1996 the City Council established the Management Pay for Performance System, which has included periodic reviews and updates; and .WHEREAS, the City Council is committed to a comprehensive policy that strengthens the recruitment and retention of well-qualified and effective appointed officials,management personnel and San Luis Obispo City Employees' Association(SLOCEA); and WHEREAS, the Benchmark Compensation Study 2007 has been completed by staff and has been'presented and received by Council, the Personnel Board, a representative from the Chamber of Commerce and staff. NOW,THEREFORE BE IT RESOLVED the City Council of the City of San Luis Obispo hereby approves implementation of the recommendations resulting from the Benchmark Compensation Study 2007, as follows: SECTION 1. The salary ranges for specified SLOCEA classifications are adjusted according to the schedule shown in Exhibit"A", attached and incorporated herein; SECTION 2. The salary ranges for specified Management classifications are adjusted according to the schedule shown in Exhibit`B", attached and incorporated herein; SECTION 3. The Management Pay-for-Performance System is modified and revised by eliminating the Pay-for-Performance feature providing lump-sum payments for those employees at the top of their salary range and increasing the potential for pay-for-performance increases from 5%to 6%for outstanding performers as shown in Exhibit"C", attached and incorporated herein; R oS=9 Resolution No. (2008 Series) Page 2 BE IT FURTHER RESOLVED the Council directs staff to return to Council with recommendations for improving the competitiveness of the City's contribution to dependent health insurance for management, confidential, and SLOCEA employees no later than August 2008. Staff is hereby authorized to re-open the SLOCEA memorandum of agreement to discuss potential changes. BE IT FURTHER RESOLVED the Director of Finance and Information Technology shall adjust the appropriate accounts to reflect the compensation changes Upon motion of , seconded by and on the following vote: AYES: NOES: ABSENT: the foregoing resolution was adopted on January 22, 2008. Mayor David F. Romero ATTEST: Audrey Hooper, City Clerk APPROVED AS TO FORM: Jon an well, City Attorney Exhibit A SLOCEA Classifications - Proposed Range Adjustments Effective January 24, 2008 Current Current Proposed Proposed Range Bi-Weekly Bi-Weekly Bi-Weekly Bi-Weekly Classification Adjustment Low High Low High Biologist 4% $ 2,381 $ 2,923 $ 2,476 $ 3,040 Engineer 1 4% $ 1,985 $ 2,437 $ 2,064 $ 2,534 Engineer II 4% $ 2,203 $ 2,704 $ 2,290 $ 2,812 Engineer III 4% $ 2,381 $ 2,923 $ 2,476 $ 3,040 Laboratory Analyst 7% $ 1,493 $ 2,251 $ 1,597 $ 2,407 Wastewater Collections Systems Operator 7% $ 1,310 $ 1,974 $ 1,401 $ 2,111 Water Customer Service Personnel 7% $ 1,310 $ 1,974 $ 1,401 $ 2,111 Water Distribution Systems Operator 7% $ 1,310 $ 1,974 $ 1,401 $ 2,111 Water Reclamation Maintenance Technician 7% $ 1,493 $ 2,251 $ 1,597 $ 2,407 Water Reclamation Operator 7% $ 1,493 $ 2,251 $ 1,597 $ 2,407 Water Supply Operator 7% $ 1,310 $ 1,974 $ 1,401 $ 2,111 Water Treatment Plant Chief Operator 7% $ 1,985 $ 2,437 $ 2,119 $ 2,601 Water Treatment Plant Maintenance Technician 7% $ 1,493 $ 2,251 $ 1,597 $ 2,407 Water Treatment Plant Operator 7% $ 1,493 $ 2,251 $ 1,597 $ 2,407 WRF Chief Maintenance Technician 7% $ 1,885 $ 2,314 $ 2,011 $ 2,470 WRF Chief Operator 7% $ 1,985 $ 2,437 $ 2,119 $ 2,601 SLOCEA Classifications - Proposed Range Adjustments Effective January 8, 2009 Current Current Proposed Proposed Range Bi-Weekly Bi-Weekly Bi-Weekly Bi-Weekly Classification Adjustment Low* High* Low High Biologist 4% $ 2,599 $ 3,191 $ 2,702 $ 3,318 Engineer 1 4% $ 2,167 $ 2,661 $ 2,253 $ 2,766 Engineer II 4% $ 2,405 $ 2,952 $ 2,500 $ 3,069 Engineer III 4% $ 2,599 $ 3,191 $ 2,702 $ 3,318 Laboratory Analyst 7% $ 1,677 $ 2,527 $ 1,793 $ 2,703 Wastewater Collections Systems Operator 7% $ 1,471 $ 2,217 $ 1,573 $ 2,371 Water Customer Service Personnel 7% $ 1,471 $ 2,217 $ 1,573 $ 2,371 Water Distribution Systems Operator 7% $ 1,471 $ 2,217 $ 1,573 $ 2,371 Water Reclamation Maintenance Technician 7% $ 1,677 $ 2,527 $ 1,793 $ 2,703 Water Reclamation Operator 7% $ 1,677 $ 2,527 $ 1,793 $ 2,703 Water Supply Operator 7% $ 1,471 $ 2,217 $ 1,573 $ 2,371 Water Treatment Plant Chief Operator 7% $ 2,224 $ 2,731 $ 2,373 $ 2,914 Water Treatment Plant Maintenance Technician 7% $ 1,677 $ 2,527 $ 1,793 $ 2,703 Water Treatment Plant Operator 7% $ 1,677 $ 2,527 $ 1,793 $ 2,703 WRF Chief Maintenance Technician 7% $ 2,112 $ 2,593 $ 2,253 $ 2,766 WRF Chief Operator 7% $ 2,224 $ 2,731 $ 2,373 $ 2,914 Reflects scheduled MOA Adjustment in July 2008 G:\RESOLUTIONS AND ORDINANCES\2008\SLOCEAExhibit J"-// Exhibit B Management Classifications - Proposed Range Adjustments Effective January 24, 2008 Current Current Proposed Proposed Range Bi-Weekly Bi-Weekly Bi-Weekly Bi-Weekly Classification Adjustment Low High Low High Accounting Supervisor 1.8% $2,417 $3,022 $2,462 $3,076 Assistant City Administrative Officer 12.0% $4,039 $5,051 $4,524 $5,657 Assistant City Attorney 12.0% $3,194 $3,993 $3,578 $4,471 Chief Building Official 9.8% $2,860 $3,575 $3,142 $3,926 City Administrative Officer 12.0% $5,110 $6,388 $5,722 $7,155 City Attorney 15.0% $4,466 $5,579 $5,135 $6,416 City Clerk 12.0% $3,194 $3,993 $3,577 $4,473 City Traffic Engineer 9.8% $2,860 $3,575 $3,142 $3,926 Construction Engineering Manager- New 14.6% $2,741 $3,425 $3,142 $3,926 Construction Engineering Manager-Old 11.0% $2,564 $3,207 $2,850 $3,561 Deputy Director-Community Development 12.0% $3,194 $3,993 $3,578 $4,471 Deputy Director-Public Works 12.0% $3,194 $3,993 $3,578 $4,471 Deputy Director-Public Works/City Engineer 12.0% $3,355 $4,193 $3,757 $4,695 Deputy Director-Utilities/Wastewater 12.0% $3,194 $3,993 $3,578 $4,471 Deputy Director-Utilities/Water 12.0% $3,194 $3,993 $3,578 $4,471 Director of Community Development 17.4% $3,854 $4,817 $4,524 $5,657 Director of Finance& Information Technology 12.0% $4,039 $5,051 $4,524 $5,657 Director of Human Resources 12.0% $3,648 $4,560 $4,085 $5,108 Director of Parks and Recreation 12.0% $3,648 $4,560 $4,085 $5,108 Director of Public Works 12.0% $4,039 $5,051 $4,524 $5,657 Director of Utilities 17.4% $3,854 $4,817 $4,524 $5,657 Economic Development Manager 9.8% $2,860 $3,575 $3,142 $3,926 Finance Manager 12.0% $3,194 $3,993 $3,578 $4,471 Fire Chief 12.0% $4,039 $5,051 $4,524 $5,657 Fire Marshal 9.8% $2,860 $3,575 $3,142 $3,926 GIS Supervisor 1.8% $2,417 $3,022 $2,462 $3,076 Housing Programs Manager 1.8% $2,417 $3,022 $2,462 $3,076 Human Resources Analyst II 1.8% $2,417 $3,022 $2,462 $3,076 Industrial Waste Coordinator 1.8% $2,417 $3,022 $2,462 $3,076 Information Technology Manager 12.0% $3,194 $3,993 $3,578 $4,471 Laboratory Manager 0.7% $2,564 $3,207 $2,585 $3,230 Natural Resources Manager 9.8% $2,860 $3,575 $3,142 $3,926 Neighborhood Services Manager 0.7% $2,564 $3,207 $2,585 $3,230 Parking Manager 0.7% $2,564 $3,207 $2,585 $3,230 Police Chief 15.0% $4,084 $5,106 $4,697 $5,872 Principal Administrative Analyst 0.7% $2,564 $3,207 $2,585 $3,230 Principal Transportation Planner 0.7% $2,564 $3,207 $2,585 $3,230 Public Works Administrative Services Manager 0.7% $2,564 $3,207 $2,585 $3,230 Recreation Manager 0.7% $2,564 $3,207 $2,585 $3,230 Revenue Supervisor 1.8% $2,417 $3,022 $2,462 $3,076 Risk Manager 0.7% $2,564 $3,207 $2,585 $3,230 Senior Administrative Analyst 1.8% $2,417 $3,022 $2,462 $3,076 Senior Civil Engineer 11.0% $2,564 $3,207 $2,850 $3,561 G:\RESOLUTIONS AND ORDINANCES\2008\MgtExhibit �,�/� Exhibit B Current Current Proposed Proposed Range Bi-Weekly Bi-Weekly Bi-Weekly Bi-Weekly Classification Adjustment Low High Low High Senior Planner 1.8% $2,417 $3,022 $2,462 $3,076 Supervising Civil Engineer 14.6% $2,741 $3,425 $3,142 $3,926 Telecommunications Supervisor 4.0% $2,741 $3,425 $2,850 $3,561 Transit Manager 0.7% $2,564 $3,207 $2,585 $3,230 Utilities Conservation Coordinator 1.8% $2,417 $3,022 $2,462 $3,076 Utilities Engineer 11.0% $2,564 $3,207 $2,850 $3,561 Utilities Projects Manager 11.0% $2,564 $3,207 $2,850 $3,561 Wastewater Collections Supervisor 6.9% $2,417 $3,022 $2,585 $3,230 Water Distribution Supervisor 6.9% $2,417 $3,022 $2,585 $3,230 Water Supply Supervisor 6.9% $2,417 $3,022 $2,585 $3,230 Water Treatment Plant Supervisor 11.0% $2,564 $3,207 $2,850 $3,561 WRF Plant Supervisor 11.0% $2,564 $3,207 $2,850 $3,561 G:IRESOLUTIONS AND ORDINANCES120081MgtExhibit 3'-13 Exhibit C MANAGEMENT PAY FOR PERFORMANCE SYSTEM CITY OF SAN LUIS OBISPO Adopted by the City Council July 2, 1996 Revised March 1, 2004 Revised January 22, 2008 Exhibit C CITY OF SAN LUIS OBISPO MANAGEMENT PAY FOR PERFORMANCE SYSTEM Table of Contents I Introduction 1 II The System Annual Performance Evaluations 2 Annual Salary Increases for Performance 4 Salary Range Adjustments 5 Annual Pay for Performance Milestones 5 III The Forms Annual Performance Plan 6 Annual Performance Evaluation 8 IV Classifications Covered List of Management Classifications 10 Exhibit C INTRODUCTION This booklet is intended to provide instructions on the use of the City of San Luis Obispo Management Pay for Performance System. Adopted by the City Council in July of 1996 and refined periodically, most recently in January 2008, the system is designed to recognize and reward excellent performance by managers and to provide an incentive for continuous improvement and sustained high performance. The foundation for any successful pay for performance system is meaningful performance evaluations. While this booklet does not provide information on how performance evaluations should be conducted, it is the responsibility of all who participate in this program to be knowledgeable of and comfortable in the role of evaluator. The success of this program depends upon the highest quality evaluations that are realistic, reasonable and accurate. Straightforward communication between the evaluator and the employee being evaluated is essential so that each employee can understand how he or she can work toward achieving the objectives and desired work behaviors that lead to excellent performance. Excellence in performance translates to outstanding public service which our community has every right to expect. As you use this booklet either as an evaluator or as a manager being evaluated, please feel free to consult the Human Resources Department(X250) if you have any questions. GAManagement CompensationTay For Performance 2008.doc I _/� Exhibit C CITY OF SAN LUIS OBISPO MANAGEMENT PAY FOR PERFORMANCE SYSTEM PURPOSE Maintain management pay that is internally equitable and rewards management employees based on their performance. OBJECTIVES • Compensate management employees solely according to their accomplishment of objectives and their job-related behavior • Attract and retain well-qualified management employees • Encourage consistent and objective evaluation and compensation of management employees • Keep procedures simple and understandable • Allow management employees to progress through their salary ranges • Maintain management pay ranges according to differences in duties, responsibilities, and job requirements APPLICABILITY This system shall apply to all management employees, which shall include appointed officials, department heads, and other managers. A listing of classifications covered can be found on page 10. ANNUAL PERFORMANCE EVALUATIONS Schedule A management employee must receive an annual performance evaluation in order to receive pay for performance. Annual performance evaluations for management employees shall take place in the following months: Appointed Officials: March Department Heads: April Other Managers: May Content Annual performance evaluations shall include review of the current year's performance plan, completion of the current year's performance evaluation form, and preparation of the next year's performance plan. GAManagement CompensationTay For Performance 2008.doc 2 —/� Exhibit C. Rating Procedure Half of an employee's overall performance rating shall be based on five to eight job-related behaviors. All of the following five behaviors must be rated: • Initiative: identifying problems and finding opportunities for innovative solutions. • Customer Service: responding to the needs of external and internal customers; continually increasing the value of services delivered. • Job Knowledge: demonstrating expertise; keeping skills current through professional development. • Teamwork: communicating and collaborating well with others to solve problems and accomplish tasks. • Stewardship: promoting the public trust by using City resources wisely, communicating honestly, and being accountable. And, at least one and up to three of the following behaviors must be rated: • Organization Development: improving organization responsiveness and productivity • Human Resources Management: encouraging excellent performance from employees • Leadership: defining and communicating overall issues and priorities for the organization The remaining half of an employee's overall performance rating shall be based on accomplishment of five to eight management objectives. These objectives shall be directly related to Council goals, program objectives, and personal objectives. Changing circumstances may require periodically adding, deleting, or altering the management objectives listed in an employee's performance plan. Rating Definitions On the performance evaluation each job-related behavior or management objective shall receive an individual performance rating based on the following scale: Unacceptable: Performance consistently fails to meet minimum requirements and expectations. Needs Improvement: Performance is inconsistent, only sometimes or partially meeting expectations. Sustained improvement is needed to frilly meet expectations. Meets Expectations: Performance fully meets expectations,with only a normal amount of supervision or direction necessary. Performance reflects competent skills and a good attitude. GAManagcment CompensationTay For Performance 2008.doc 3 i J Exhibit C Exceeds Expectations: Performance consistently exceeds expectations, with higher quality, more innovation, and less supervision or direction than typically required. Specific examples document this above-average achievement. Outstanding: Performance is clearly superior. While specific examples document this superiority, achievement is usually self-evident to others because this level of performance is extraordinary. ANNUAL SALARY INCREASES FOR PERFORMANCE Increases Available Each year an employee may receive a salary increase from one to five percent based on the recommendation of the employee's evaluator. A salary recommendation cannot increase the employee's salary beyond the top of the assigned salary range. The recommended increase shall acknowledge the employee's overall annual performance evaluation as follows: Overall Rating: Salary Increase Available: Unacceptable None—employee subject to termination* Needs Improvement None—employee subject to probation* Meets Expectations Two percent to three percent Exceeds Expectations Three and a half percent to five percent Outstanding Five and a half percent to six percent *in accordance with the Personnel Rules and Regulations Schedule Salary increases for the three classes of management employees shall take effect with the first pay period in the months listed below: Appointed Officials: April Department Heads: April Other Managers: July Salary increases for management employees who are not appointed officials or department heads shall be reviewed and approved by the department head and the Human Resources Director. A summary of increases and ratings may be provided to the City Administrative Officer. Prorated increases For new employees, or employees newly promoted into a management position, there will be no increase if the employee has been in the position less than six months. If the employee has been in the position for six months or longer, or the employee has taken a leave of absence of six months or longer during the evaluation period the amount of increase should be prorated by the amount of months in the position. GAManagement CompensationTay For Performance 2008.doc 4 /9 Exhibit C Example: Since a manager's salary increase takes effect in July(for performance through May),. to qualify for a prorated increase the employee must have occupied that position by the first pay period in December(December—May). For example if the manager(who has been in the position for six months) is recommended for a 3% salary increase on their performance evaluation, the prorated rate of increase would be 1.5% for the six months time spent in the position (6 months- 12 months =.5 times 3%= 1.5%). Thus the formula is as follows: Number of months in the position- 12 months=Y x the recommended percentage increase=prorated increase. SALARY RANGE ADJUSTMENTS Periodically, the Human Resources Director shall review management salary ranges and shall recommend adjustments as necessary to keep them competitive and maintain distinctions in compensation levels between management employees and represented employees. Factors to be considered in adjusting salary ranges will include local labor market data, compensation in comparable cities, recent wage settlements for represented City employees, and statewide cost- of-living indices. A salary range adjustment shall become effective the first full pay period after Council approval, unless otherwise indicated in the resolution. ANNUAL PAY FOR PERFORMANCE SYSTEM MILESTONES March The City Council evaluates appointed officials and recommends pay adjustments. April Pay adjustments for appointed officials take effect with the first full pay period. The City Administrative Officer evaluates department heads and recommends pay adjustments. Pay adjustments for department heads take effect with the first full pay period. May Department heads and other supervisors evaluate other managers and recommend pay adjustments. June The Human Resources Director reviews pay adjustments and performance plans for other managers to ensure consistency from employee to employee and department to department. July Pay adjustments for other managers take effect with the first full pay period. WManagcment CompensationTay For Performance 2008.doc 5 Exhibit C city or SOMMosan Luis mspo MANAGEMENT EMPLOYEE ANNUAL PERFORMANCE PLAN (to be completed at the beginning of the evaluation year) EMPLOYEE: DEPARTMENT: EVALUATOR: EVALUATION YEAR ENDING: JOB RELATED BEHAVIORS Enter an evaluation weight from 1 to 20 for each of the first four mandatory job-related behaviors listed and for at least one and up to four of the last four job-related behaviors. The higher the evaluation weight, the more important the behavior. If a behavior is not applicable, enter "N/A". The total of evaluation weights assigned to job-related behaviors must equal 50. Use the extra space to elaborate on expectations about selected behaviors. Job-Related Evaluation Behavior Weight Initiative: identifying problems and finding opportunities for innovative solutions(mandatory) Job Knowledge: demonstrating expertise;keeping skills torrent through professional development(mandatory) Teamwork: communicating and collaborating well with others to solve problems and accomplish tasks(mandatory) Stewardship/Ethics: promoting public trust by using city resources wisely,communicating honestly and being accountable(mandatory) Customer Service: responding to the needs of internal and external customers;increasing the value of services delivered(mandatory) Organization Development: improving organization responsiveness and productivity Human Resources Management: encouraging excellent performance from employees Leadership: defining and communicating overall issues,priorities,and directions for the organization Total Evaluation Weight(must equal 50) G:\Management CompensationtPay For Performance 2008.doc 6 _4.2/ Exhibit C Annual Performance Plan MANAGEMENT OBJECTIVES Enter descriptions and evaluation weights (again from 1 to 20) for at least five and no more than eight management objectives. Attach more detailed descriptions of objectives on a separate sheet if desired. If there are fewer than eight objectives enter"N/A" in the spaces not used. The total of evaluation weights assigned to management objectives must equal 50. Management Evaluation Objectives Weight 2. 3. 4. 5. 6. 7. 8. Total Evaluation Weight(must equal 50) Acknowledgments and Approvals: Employee Date Evaluator Date Department Head Da[e Human Resources Date G:Vvlanagement CompensationTay For Perfomtance 2008.doc 7 �� Exhibit C F,i city of Qgagasan IS OBISPO MANAGEMENT EMPLOYEE ANNUAL PERFORMANCE EVALUATION (to be completed at the end of the evaluation year) EMPLOYEE: DEPARTMENT: EVALUATOR: EVALUATION YEAR ENDING: PERFORMANCE RATING Refer to the performance plan and enter the evaluation weight for each applicable performance factor. If a factor is not applicable,enter "N/A". Now enter a performance rating for each performance factor based on the following scale: O—Unacceptable■ 1—Needs Improvement 0 2—Meets Expectations■3—Exceeds Expectations■4—Outstanding Next multiply the evaluation weights times the performance ratings and enter the scores in the fourth column. Enter a brief comment,if desired,in the fifth column. And finally,add the scores and enter the total in the "Overall Score"box. Performance Evaluation Performance Factor Weight Rating Score Comments Initiative Job Knowledge Teamwork Stewardship/Ethics Customer Service Organization Development Human Resources Management Leadership Objective No. I Objective No.2 Objective No.3 Objective No.4 Objective No.5 Objective No.6 Objective No.7 Objective No.8 Overall Score GAManagement Compensation\Pay For Performance 2008:doc 8 '7�-" Exhibit C Annual Performance EVALUATION SALARY INCREASE .i.f :5. ftits "•F .9. .y'rl�•.h vl }.G. �.. From the following table, determine the overall performance score and the salary increase available for that score; then enter the overall performance score and corresponding salary increase percentage. 0 to 80 Unacceptable None 81 to 160 Needs Improvement None 161 to 185 2.0% 186 to 235 7Meets Expectations 2:5% 236 to 260 3.0% 261 to 280 3.5% 281 to 300 4.0% Exceeds Expectations 301 to 320 4.5% 321 to 340 5.0% 341 to 370 5.50 Outstanding 371 to 400 6.00 Overall Score: Recommended Salary Increase: Evaluator Comments(attach additional sheets and documentation if desired): Employee Comments(attach additional sheets and documentation if desired): Acknowledgments and Approvals: Employee Date Evaluator Date Department Head Date Human Resources Date City Administrative Officer Date G:\Management CompensationTay For Performance 2008.doc 9 �—� Exhibit C MANAGEMENT CLASSIFICATIONS APPOINTED OFFICIALS AND DEPARTMENT HEADS Assistant City Administrative Officer City Administrative Officer City Attorney City Clerk Director of Community Development Director of Finance and Information Technology Director of Human Resources Director of Parks and Recreation Director of Public Works Director of Utilities Fire Chief Police Chief OTHER MANAGEMENT POSITIONS Accounting Supervisor Neighborhood Services Manager Administrative Analyst Parking Manager Assistant City Attorney Parks and Urban Forest Supervisor Chief Building Official Principal Administrative Analyst City Traffic Engineer Principal Transportation Planner Construction Engineering Manager-New Program and Project Coordinator Construction Engineering Manager-Old Public Works Administrative Services Manager Deputy Director of Community Development Recreation Manager Deputy Director of Public Works Recreation Supervisor Deputy Director of Public Works/City Engineer Revenue Supervisor Deputy Director of Utilities/Wastewater Risk Manager Deputy Director of Utilities/Water Senior Administrative Analyst Economic Development Manager Senior Civil Engineer Facilities Maintenance Supervisor Senior Planner Finance Manager Streets Maintenance Supervisor Fire Marshall Supervising Civil Engineer Fleet Maintenance Supervisor Telecommunications Supervisor GIS Supervisor Transit Manager Golf Course Supervisor Utilities Conservation Coordinator Housing Programs Manager Utilities Engineer Human Resources Analyst I Utilities Projects Manager Human Resources Analyst II Wastewater Collection Supervisor Industrial Waste Coordinator Water Distribution Supervisor Information Technology Manager Water Reclamation Facility Plant Supervisor Laboratory Manager Water Supply Supervisor Natural Resources Manager Water Treatment Plant Supervisor GAManagement CompensationTay For Performance 2008.doc 10