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8. Discussion on Classification and Compensation study Staff Report Date of Meeting: December 5, 2018 To: City Council From: Neil Soltis, Administrator Re: Classification and Compensation study Background: In the discussion regarding the 2017 pay equity report to the Minnesota Department of Management and Budget it was noted that the point values assigned to position have not been updated since the 2009 report and the pay ranges in the step scale have not been updated since approved by the Council in 2013. The duties of staff have changed since 2009 and the wage increases to non-bargaining unit staff have been solely based on the step scale while the bargaining unit staff have received increases based on both experience and inflation. Springsted has proposed the attached work plan to study the existing positions and provide recommendations for updating the job classification, job descriptions, and compensation for the step scale. Issue: Should Springsted be engaged to complete a classification and compensation study? Proposal Details: See the attached proposal Fiscal Impact: Springsted has proposed a not-to-exceed fee of $4,900. This work has not been included in the proposed 2019 budget. Any work co mpleted in 2018 can be accommodated in the 2018 budget without the need for an amendment. Options: 1. Approve the study proposed by Springsted and provide additional funding in the 2019 budget 2. Suggest modifications to the scope of work for future review 3. Take no action Recommendation: Option 1 City of Scandia, Minnesota - Draft Work Plan 1 City of Scandia, Minnesota Work Plan - Classification and Compensation Study October 22, 2018 Introduction Springsted is one of the most established independent public sector advisory firms in the United States. For nearly 60 years, we have continually grown in the range of our local government relationships, the comprehensiveness of our services and our prominence within the industry. Our managed growth is focused on providing local governments with a balance of national perspective and local expertise. Springsted is a women-owned business and is certified as a Women’s Business Enterprise (“WBE”) by the City of Saint Paul, Minnesota. Three employee-owners lead Springsted and our 70 staff members. Our headquarters are in Saint Paul, Minnesota, with additional offices located close to our clients throughout the Midwest and Mid-Atlantic states. Specifically, our regional offices include Milwaukee, Wisconsin; Des Moines, Iowa; Kansas City, Missouri; Richmond, Virginia; Denver, Colorado, Dallas, Texas and Los Angeles, California. Contact Information and Brief Bios Springsted Incorporated Ms. Julie Urell, Assistant Vice President and Consultant 380 Jackson Street, Suite 300 Saint Paul, Minnesota 55101 651-223-3041 Office 612-248-7350 Cell jurell@springsted.com Ms. Julie Urell is a human resources leader with over 20 years in the field, most recently in senior manager, director and consulting human resources roles for regional non-profit, as well as global organizations. In these capacities, she has applied both tactical and strategic insight across a variety of human resources functions. Areas of interest and specialization include employment practices and benefit/retirement plan compliance, human resource systems optimization and deployment, classification and compensation and business process efficiencies. Ms. Urell holds a Master of Business Administration degree from the University of St. Thomas and a bachelor’s degree in human resources management from the University of Iowa. Ms. Urell is certified as a Senior Professional, Human Resources with the Society for Human Resource Management and a Senior Certified Professional with the Human Resources Certification Institute. Since joining Springsted in 2012, she has provided project and consulting services for clients in Minnesota, Kansas, Wisconsin, Illinois, North Dakota, North Carolina, New Jersey, Iowa, Virginia, Texas and Missouri. Outcomes The outcome of the study includes the following items: ➢ A classification and compensation study. The study is anticipated to include: ▪ Data collection utilizing Position Analysis Questionnaires for all positions included in the study; ▪ Preliminary classification and high-level position description review and change recommendations as necessary; ▪ League of Minnesota Cities salary survey analysis using a field of benchmark agencies and organizations; ▪ Job evaluation for compliance with state law; City of Scandia, Minnesota - Draft Work Plan 2 ▪ Pay plan development and implementation options; ▪ An Executive Summary report of all findings including final presentation. Approach In conducting a classification and compensation study the typical approach Springsted uses to prepare and update an organization’s plan is described below. 1. Project Initiation Springsted meets with the City Administrator to discuss study methodology and timetable. The existing classification and compensation plan is discussed and reviewed, noting major issues the organization would like the study to address. The purpose of the meeting is also to obtain information regarding organizational structure and classification and compensation issues that may be affecting operations, including recruitment and retention issues. 2. Data Collection Springsted conducts an employee informational meeting to introduce the study, explain study procedures and answer any questions employees may have about the process. Springsted will explain the distribution of Position Analysis Questionnaires (PAQs) to employees at these meetings. The questionnaire will collect information from each employee about job-related factors that affect their position. Employees will also identify specific physical requirements and working conditions of their position to assist in the consultant’s review for compliance with the Americans with Disabilities Act. After reviewing the completed PAQs, Springsted may, at our discretion, conduct individual telephone job audit(s) with employees in positions requiring clarification of information outlined in the PAQ. 3. Preliminary Classifications Springsted will use the information collected from the PAQs to conduct a preliminary assignment of employees to appropriate job classes based on a review of job duties and responsibilities, knowledge, skills and abilities, and minimum education and experience requirements as reflected on current job descriptions. We will also review physical requirements and working conditions in compliance with the Americans with Disabilities Act, as well as each position’s designation (exempt v. non- exempt) under the Federal Fair Labor Standards Act. 4. Market Survey Springsted will utilize League of Minnesota Cities wage data to compare your organization's positions with analogous positions in other comparable agencies in the area labor market. Potential survey field participants should be comparable to the organization, relate to those organizations with which your organization competes for employees, and represent the appropriate labor market. External market comparisons for positions is based on similar organizational structure, population, geographic location, job responsibilities, scope of authority, financial, socio-economic, growth, and other relevant factors. The study team will identify appropriate sources for the survey data in consultation with the City Administrator. The survey will include all positions in the organization. 5. Job Evaluation While salary survey data will assist in determining an organizations’ position in the competitive market, job evaluation is the mechanism that ensures that internal pay relationships are equitable, and in Minnesota, ensures compliance with the Local Government Pay Equity Act. Springsted has developed and copyrighted a job evaluation system known as Systematic Analysis and Factor Evaluation (SAFE®) System. The SAFE system is a unique job evaluation method designed to measure job factors which apply specifically to local government. The system rates and ranks jobs based on various skill levels which include various levels of trades positions, administrative support, human support, technical, administrative, protective services, professional and executive levels and nine work factors, which include: City of Scandia, Minnesota - Draft Work Plan 3 • Training and Ability • Independence of Actions • Human Relations Skills • Level of Work • Supervision Exercised • Working Conditions/Hazards • Physical Demands • Experience Required • Impact on End Results The result is an equitable and consistent method of evaluating jobs and relating positions to the compensation plan. The system facilitates proper and equitable comparisons between and among classes, and minimizes the appearance of favoritism in evaluating, rating and ranking jobs. 6. Development of a Pay Plan and Implementation Strategy Developing a compensation plan typically draws substantially from market data in conjunction with the job evaluation results for each position. Springsted will assign each position to an appropriate salary grade based on the classification system and prevailing rates paid by survey participants. The compensation plan is developed to reflect information obtained from the organization regarding its pay philosophy as well as goals and objectives established for its compensation program. Springsted will propose a compensation plan and implementation options which will ensure that the organization remains competitive with the labor market and meets the financial and budgetary requirements of the organization. Cost estimates of the implementation option(s) will be provided. 7. Executive Summary The Executive Summary includes: • A study methodology overview • A succinct discussion of the consulting team’s findings, conclusions, and recommendations regarding proposed changes in job descriptions (if any), salary structure, compensation philosophy, pay and compensation mechanisms, estimated cost and implementation plan • Study information and attachments including: ➢ A list of positions and the assignment of each class to a salary grade ➢ Identification of positions that are exempt from FLSA overtime requirements ➢ Salary survey results ➢ Job evaluation factor analysis for each position ➢ Status under the State of Minnesota Local Government Pay Equity Act Springsted staff will meet with designated officials to present and explain the findings outlined in the Executive Summary. Copies of study documents will be provided in electronic form. 8. Post Contract Maintenance Springsted can provide on-going assistance to clients after completion of a classification and compensation study. Post- contract maintenance services include assisting the organization with the development of new position descriptions, assignment of positions to the classification plan, determining the FLSA status of a new or revised position, and conducting job evaluations for reclassification requests and new positions created by the organization. Fee Schedule and Timeline Springsted takes pride in meeting its time commitments. The schedule to commence this project coincides with Springsted’s completion of other studies. This will ensure that the proposed staff members will be available to concentrate on this study for the City of Scandia. Springsted is prepared to initiate the study within three weeks of notification to proceed and will complete the study within six months, or according to the schedule outlined by the City. There are factors which impact the timeline which are beyond the consulting team’s control. The proposed time frame is contingent upon a timely decision, the receipt of the data from the participants when requested and the timely receipt of feedback and comments on the submitted preliminary data. City of Scandia, Minnesota - Draft Work Plan 4 Springsted Incorporated will perform all the tasks delineated as described in this proposal for a professional fee not to exceed $4,900. This fee includes approximately 6 different job classifications. Project costs are itemized in the following schedule: As indicated above, it is anticipated that the project will take approximately 24.5 hours to complete, allocated between consultants, project managers, analysts and administrative professionals. Springsted would charge the City of Scandia, at cost, for actual out-of-pocket expenses. Out-of-pocket expenses include, but are not limited to, travel and sustenance, overnight or messenger deliveries, conference calling beyond our internal capabilities, WebEx meeting fees, purchase of commercially available wage data, photocopying and mailing costs. Direct out-of-pocket expenses are not expected to exceed $175 for the project. Should the City request and authorize additional work, we would invoice the agency at an agreed upon fee or our standard hourly fees. Additional customized implementation options will be billed at a $160/hour. In addition, we would charge, at cost, for any related out-of-pocket expenses. Out-of-Pocket dditional Process Step Hours Fee Cumulative Percentage Invoiced Project Initiation Assumes: • One (1) on-site visit • One (1) employee orientation meeting and one (1) individual meeting with the City Administrator 3 $600 12% Classification Analysis and Job Evaluation Assumes: • Microsoft Word electronic PAQ completion per job class • Internal equity analysis using the SAFE System • Existing job descriptions will be utilized with high level recommendations for change 7 $1,400 41% External Market Comparison Assumes: • League of Minnesota Cities wage data including six (6) job classes 7 $1,400 70% Compensation System Development Assumes: • Up to three (3) standard implementation options • Recommended grade assignments for each job class • One (1) electronic draft Executive Summary 4.5 $900 88% Presentation of Study Findings and Final Report Assumes: • One (1) on-site visit and presentation • One (1) final Executive Summary 3 $600 100% Total Not-To-Exceed Professional Fee Estimate 24.5 $4,900 City of Scandia, Minnesota - Draft Work Plan 5 Additional work would include work outside the scope of services as agreed to including, but not limited to: • Additional position descriptions or job classes • Additional on-site meetings • Additional reports • Work related to a special request We are happy to answer any questions you have about our proposal and would be delighted to work with the City of Scandia and its employees on this important project. Respectfully submitted, Julie Urell AVP, Consultant Title Hourly Rate Principal & Senior Officer $260 Senior Professional Staff $215 Professional Staff $160 HR Analyst/Project Coordinator $100 Associates $75