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Item 5HCity of Southlake, Texas MEMORANDUM January 10, 2006 TO: Shana Yelverton, City Manager FROM: Kevin Hugman, Director of Human Resources SUBJECT: Authorize the City Manager to enter into a professional services agreement with Waters Consulting Group to conduct a Compensation and Classification Study. Action Requested: City Council consider authorizing City Manager to enter into a professional services agreement with the Waters Consulting Group to conduct a compensation and classification study (employee pay plan study). Background Information: The current Pay and Classification Plan was developed in 1997 by Ralph Andersen and Associates. Staff has periodically updated the plan and pay ranges since then, however, it is necessary to again conduct a thorough review of the City's compensation and classification system. The major components of the study include: Classification Component • Review of current job descriptions and update as necessary to match duties and comply with current ADA, EEO and FLSA guidelines. • Allocate employees to job classifications and rank for internal equity. 2. Compensation Component • Recommend benchmark cities and /or private sector comparisons. • Conduct salary survey for proposed classifications to account for external equity. • Recommend system for equitable and fair compensation (i.e., merit based, skills /competency based, tenure based, etc.) 3. Benefits Component • Survey benchmark organizations for comparison to current City benefits and conduct analysis of competitiveness. 4. Performance Appraisal System. (Optional component at this time) • Develop performance appraisal system that incorporates adopted City values and provides tool for measuring individual performance and competencies with an established standard. A Request for Proposals was developed encompassing the above components and other project requirements. The RFP was sent to eleven (11) firms. Three proposals were received (Bid Tabulation attached). Of the three proposals, only the proposal from Waters Consulting Group (WCG) was considered financially feasible, although still above the budgeted amount. Shang Yelverton, City Manager January 10, 2006 Page 2 Assistant City Manager Jim Blagg and I met with Senior Consultant Ruth Ann Eledge on Wednesday, December 28 to discuss the project scope and budget. After discussion and negotiation, WCG has agreed to conduct the Compensation and Classification study for $46,500, including expenses. Development of the Performance Appraisal system would be conducted either later this fiscal year, or next fiscal year, depending on the availability of funds. This component was originally anticipated to be conducted in a second phase and was therefore not included in the original budget amount. WCG specializes in human resources services, including compensation design and performance management development. Their main office is located in Dallas. They have completed compensation studies for other area cities, including a recent compensation and classification study for the city of North Richland Hills. NRH was pleased with the end product and has utilized the system now for two years. The project timeline provides for completion by May 1, 2006, allowing for incorporation into FY 2006 -2007 budget development. Financial Considerations: Funds of $3 8,000 were budgeted for the compensation and classification study. Additional funds are available in the professional services budget originally set aside for executive recruiting. Recent executive position recruiting was done by staff and it is expected that if the need arises, staff will again conduct the recruiting with in -house resources. Therefore, funds are available in the amount of $46,500 to conduct this study. Citizen Input/ Board Review: Not Applicable. Legal Review: The City Attorney has reviewed the professional services agreement. Alternatives: Decline to enter into a professional services agreement with Waters Consulting Group and: (a) seek alternative proposals; (b) reduce the scope of the project; or (c) decline to conduct the study. Supporting Documents: 1. Bid Tabulation Sheet 2. Professional Services Agreement with Waters Consulting Group Staff Recommendation: Approve the professional services agreement with Waters Consulting Group. Staff Contact: Kevin Hugman, Director of Human Resources a O N V Q �_ c $ V 7 O C a m C7 ES J y�j O E J (A O ~ LU o U `� CB _z a r Ow c7 mma m mopp a aUU a m O 2 o U z o o ° o m U 0 o 0 v 0 v S 0 o o 0 0 m m 0 tV u� O ~ C U w > �► f' ` 4 N .Qp cn ea vs tai 6v fn s«> ug � a o C. 0 0 o R ° m L Q o x C.1 v 0 a o g LY lO F O m U .� zz o °° a g O Lu LU a cn Q O ti Z T © O p u L D hl 9 m L O 1 1 a5 vs 55 sn to ul o o 0000 o 0 0 0 ,� y 00 01 LO vi vi o v v, IT tt p > W �. p O U ' ^) vJ M 2 + W d O f O p 2 � Q b d OC U v3 0 yr cn Vs stn 6 u9 a z $ i d .� 5 C° Wo V L o d G C � � w� w `� Q -a 4 L m At 0 c C4 w m a K N C y y c a a 4 LU A cU W m L LL a W E c c W W 0 LU d d h Q Z a Q L � .: N M F -E d E JANUARY 17 • 2006 THE WATERS CONS ULTING G INC. AND THE CITY OF SOUTHLAKE, TX AGREEMENT FOR SERVICES Agreement made this 17th day of January 2006 between the City of Southlake, Texas, hereafter referred to as "the Client ", and The Waters Consulting Group, Inc., hereafter referred to as "WCG". 17 0) 0:11111J.-1 The Client has its principal place of business at 1400 Main Street, Southlake, Texas 76092. WCG has its principal place of business at 2695 Villa Creek Drive, Suite 104, Dallas, Texas 75234. WCG provides services to clients across the nation in the field of wage and salary system development, performance management, executive search and other related human resource areas; therefore, the Client hereby engages in the services of WCG, and in consideration of the promises herein contained, both parties agree to the following as per the proposal submitted and as modified herein. Any other changes to the scope of the project will be by written consent of both parties: "A 9 1 1. This Agreement shall be for the period necessary for successful completion of the project, commencing on January 17, 2006 but may be terminated by the Client if WCG's services are no longer desired. If the Client terminates, WCG is entitled to any portion of its fee so earned. If any of these provisions apply, the terminating party must provide 30 days written notice to the other party. SCOPE OF PROFESSIONAL SERVICES 2. WCG will provide professional services in the area of consulting services and the completion of a classification and compensation study. PROFESSIONAL FEES AND EXPENSES 3. Professional fees and expenses for basic services as outlined in WCG's proposal are $46,500.00 with additional hourly and set rates for other optional and variable project elements as defined in the tables below. The Client has agreed to provide printing on -site. Optional elements must be approved in advance in writing on behalf of client by the City PAGE • 1 JANUARY 17 •2006 THE WATERS CONSULTING GROUP, INC. AND THE CIT OF SOUTHLAKE, TX Manager or by Kevin Hugman, Director of Human Resources. Should the Client require additional services not included in this Agreement and referenced proposal, an amendment to this Agreement stating the exact scope of services and cost of all additional services shall be submitted for the Client's approval. WCG reserves the right to use the entire total of this project amount as necessary in order to complete the entire scope of the project as outlined in its proposal regardless of line item assignments. The Client will make payments for the project upon receipt of an invoice submitted by WCG. Invoices will be submitted as works progresses. Payment to WCG is expected within 30 calendar days. All invoices will be forwarded to Kevin Hugman, Human Resources Director, for processing unless otherwise directed. For reporting purposes, WCG's tax identification number is 75- 2272138. ,E__ 'tEyEFP {�1'�i.£AA E.. S E p Pe♦tmS§ P.... e O ti y.. i C F E 3 i V T,g S3E C b .td_. }{ y {% ..,,.s' ; #? E /i NF' gx" d )" Ns 9 F AS s�`P S�4 {fjt �VAI.�.I 1..[ 1Fk R£1 EFC Y `3 4 'e I t No d_ �V, 11`�lj 4ET...EIN i3<e_4 .. ...z'A.�x >{P34. 3s. x7 Eu _ L L _ k 3 1. Project Planning and Administration/Initial Kick -off Meeting 4,500.00 (This includes one day onsite.) 2. Employee Orientation Sessions (with JDQ Distribution Process) 3, 000.00 (This includes one day on site.) (This includes up to 10 employee interviews.) 3. Job Evaluation Process and Review of Classification Structure, 13,600.00 including creation of an Appeals Process (This includes preparation of 10 Job Descriptions in an Access database format.) (This includes one day on site.) 4. Salary and Benefits Survey Process using data obtained from the 6,500.00 Texas Association of Counties and Texas Municipal League Web sites, including job matching/ benchmarking and collection of data not found in published surveys (This includes zero days on site.) 5. Design of the New Compensation Structure, including training HR 14,400.00 staff in future maintenance of program, (This includes one day on site.) 6. Development of Final Report and Recommendations and Onsite 4,500.00 Presentation to the Mayor, City Manager, and City Council (This includes one day on site.) SUBTOTAL $46,500.00 PAGE • 2 JANUARY 17 •2006 THE WATERS CONSULTING GROUP, INC. AND THE CITY OF SOUTHLAKE, TX 3 Y 4 b fi� ¢�➢¢ ttf �JAV�al ,LY i . ST �..,.:G, Communication with Council Members other than the final report $175 per hour as presentation approved in advance Development of the Performance Appraisal Plan, including full day of $18,000.00 supervisory training session Incumbent Interviews as necessary for job duty clarification purposes $150 each as approved with the exception of the 10 included in the base fee of $46,500.00 in advance Update of ADA and EEO Compliant Classification Specifications for $150 per job title as all City of Southlake Jobs with the exception of the 10 included in the approved in advance base fee of $46,500.00 Additional requested and approved work outside of scope of project $175 per hour as approved in advance Additional on site meetings as ordered to meet with elected officials, $1,500 per day as department directors and/or project staff, etc. provided these meetings approved in advance are not because of project errors or omissions solely by WCG DEVOTION OF TIME 4. WCG shall devote such time to the performance of its duties under this Agreement as is necessary for the completion of all project phases. ENTIRE AGREEMENT 5. This Agreement supersedes any and all other agreements, either oral or in writing, between the parties hereto with respect to the subject matter hereof, and no other agreement, statement, or promise relating to the subject matter of this Agreement that is not contained herein shall be valid or binding. AMENDMENT 6. This Agreement may be amended by the mutual agreement of the parties hereto in writing and must be attached to and incorporated into this Agreement. PAGE • 3 JANUARY 17 •2006 THE WATERS CONSULTING GROUP, INC. AND THE CITY OF SOUTHLAKE, TX LEGAL CONSTRUCTION 7. In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provisions thereof and this Agreement shall be constructed as if such invalid, illegal, or unenforceable provision had never been contained herein. Executed on the day and the year first written in this Agreement. CITY OF SOUTHLAKE, TEXAS THE WATERS CONSULTING GROUP, INC. By: x_ Name: Title: By: x Name: ROLLIE O. WATERS, CMC Title: PRESIDENT PAGE • 4