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Item 9D Establishing a Strategic Employee Compensation System August 6, 2013 Item 9D Approval of Employee Compensation System Compensation Systems City (Institutional) Strategy Compensation Strategy Job Structure Job Analysis Pay Methods Salary Structure Integrated Compensation System Outcomes Vision Valuation Market Model Performance Transparency Governance Classification Reporting Job Levels Job/Work Design Titles Job Duties Evaluation Factors Internal/External Evaluation Salary Ranges Control Market Movement Pay Administration Pay Progression Pay for Performance Variable/Incentive Pay Strategic comp system to support City strategy Foundation for HR initiatives Employee engagement Open/transparent system City of Southlake Strategy Map Critical Business Outcomes CBO1 - Continue to implement Southlake 2030 Plan by focusing on short-term initiatives. CBO2 - Become an employer of choice by developing a plan to recruit, develop and retain employees committed to excellence. CBO3 - Develop long-term strategies to address future financial uncertainties and challenges. CBO4 - Improve mobility by proactively completing traffic analysis of key areas. CBO5 -Optimize resources through collaboration and partnerships to reduce costs and add service value. The City of Southlake provides municipal services that support the highest quality of life for our residents, businesses, and visitors. We do this by being an exemplary model of balancing efficiency, fiscal responsibility, transparency, and sustainability. Deliver on Our Focus Areas Performance Management & Service Delivery C1 Achieve the highest standards of safety & security C2 Provide travel convenience within City & region C3 Provide attractive & unique spaces for enjoyment of personal interests C4 Attract & keep top-tier businesses to drive a dynamic & sustainable economic environment C5 Promote opportunities for partnerships & volunteer involvement Serve our Customers Manage the Business B1 Achieve best-in-class status in all City disciplines B2 Collaborate with select partners to implement service solutions B3 Enhance resident quality of life & business vitality through tourism B4 Provide high quality services through sustainable business practices B5 Enhance service delivery through continual process improvement B6 Optimize use of technology Provide Financial Stewardship Promote Learning and Growth F1 Adhere to financial management principles & budget F2 Invest to provide & maintain high quality public assets F3 Achieve fiscal wellness standards F4 Establish & maintain effective internal controls L1 Ensure our people understand the strategy & how they contribute to it L2 Enhance leadership capabilities to deliver results L3 Attract, develop & retain a skilled workforce L4 Recognize & reward high performers L5 Empower informed decision-making at all levels in the organization C6 Enhance the sense of community by providing excellent customer service and citizen engagement opportunities L6 Foster positive employee engagement ICMA Code of Ethics Handle all matters of personnel on the basis of merit so that fairness and impartiality govern decisions, pertaining to appointments, pay adjustments, promotions and discipline. Evolving Our System Best Practices Current Framework Employer of Choice Compensation Study Compensation Study Current Environment: Employee Characteristics Minimum Requirements 51% Higher Education 14% require 5+ years experience High Hazard Jobs Average Tenure: 8.25 Yrs Promotion Rate: 32% Diversity Rate: 22% Average Age: 38 Current Environment Average Market Turnover: 7.25% Cost of Turnover: 6 Firefighters: approx. $210,000 Current Environment Exit Interview Comments… 6 out of 10 employees said compensation was primary reason for seeking alternative employment. “The initial base salary is good but there is nothing setup for the future as far as a compensation plan.” “There needs to be a pay plan in place so individuals know what to expect and to look forward to in the future.” “In years past, step and pay increases were good …. My only increase since then was due to promotion and a small COLA type increase…increases are necessary.” Current Environment Current Compensation Philosophy & Framework Current Environment Labor Market 7% Compensation Study Market Study Steps Establish Labor Market Determine Market Philosophy Survey the Market Establish Labor Market Geographic Location Market Comparison: 7 to 18 cities 33 different cities Recommended Labor Market * Newly Proposed Market Study Steps Establish Labor Market Determine Market Philosophy Survey the Market Percentile - Recommended Market Philosophy Options Weighted Market Average - Current Pay Ranges Conservative Stable Actual Salaries Aggressive Unpredictable Market Position Options Lag the Market Match the Market Lead the Market Recommended Market Position Lead the Market 60th Percentile Similar to current philosophy Market Study Steps Establish Labor Market Determine Market Philosophy Survey the Market Market Survey Findings Market Study Summary 60th Percentile Compensation Study Pay Plan Structures Evaluated Recommended Structure Range Movement Options Options considered Tenure Base Adjustment COLA Merit Hybrid: Base Adjustment and Merit Market Comparison Recommended Range Movement Compensation Study Implementation Options $145,560 50 Employees $216,253 67 Employees $466,253 215 Employees Recommendation Compensation Study Recommended Compensation Philosophy Summary Recommendation City Council approve a Strategic Employee Compensation System as presented. Questions? Cost Comparison Note: this slide is for illustrative purposes only; future increases will be included for City Council consideration in future proposed budgets. Current Philosophy Recommended Philosophy Percentile Benefits Structures Found in Market Civilian Employees Public Safety Employees Impacted