HomeMy WebLinkAbout138-06 RESOLUTION•
RESOLUTION NO. 138-06
A RESOLUTION TO ADOPT THE CITY'S COMPENSATION
PHILOSOPHY FOR CITY EMPLOYEES
WHEREAS, the City Council has studied and debated what type of
compensation philosophy should be adopted in setting the City of Fayetteville employee
compensation; and
WHEREAS, the City Council has retained the Management Advisory Group,
Inc. to assist in drafting this compensation philosophy.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
THE CITY OF FAYETTEVILLE, ARKANSAS:
Section 1: That the City Council of the City of Fayetteville, Arkansas hereby
adopts the City of Fayetteville Employee Compensation Philosophy attached as Exhibit
A.
PASSED and APPROVED this 29th day of August, 2006.
APPROVED,
By:
DAN COODY, Ma or
ATTEST:
By:
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SONDRA SMITH, City Jerk
CITY OF FAYETTEVILLE'S
COMPENSATION PHILOSOPHY
Background
The City Council is committed to ensuring that Fayetteville remains a highly
desirable City in which to live and work. In order to accomplish the goals set forth in the
City Council s Strategic Plan, the workforce must possess key attributes associated with
excellence. The following key characteristics for all employees are desired:
Key Characteristics of City Employees
■ highly skilled;
■ customer service oriented;
• possess personal integrity and exhibit ethical behavior;
• highly productive and focused on quality results;
• team players;
Is seek opportunities to improve services;
• understand technology;
• value diversity; and,
• committed to the City s welfare.
The City recognizes the need to put new systems in place to enable the
organization to be effective, efficient, and responsive in a rapidly changing environment.
One such system is an effective compensation plan. This plan should be based on a
clear compensation policy that is aligned with the City s strategic goals. The economic
resources of the City must be considered in the implementation of a compensation
philosophy, as the City Council is responsible for maintaining a sound financial program
for the City. The objectives of a sound compensation policy include the following:
Objectives of a Sound Compensation Policy
• identify the appropriate labor market for comparing city jobs;
• determine an appropriate relationship to the labor market;
• establish a stated market position so that both current and
prospective employees know what to expect;
;Managementylivisory group, Inc.
t
The City of Fayetteville's Compensation Philosophy
■ identify a solid set of benchmark positions and conduct a market
review every year and a comprehensive market survey every four
years to ensure the City retains a competitive posture;
• adopt a policy that allows the City to offer more competitive salaries
to highly qualified candidates based on their qualifications and
experience; and
• adopt a policy and process that rewards employees based on
performance and achievements while remaining sensitive to
economic factors.
In a competitive labor market, the City s pay and classification plan should be structured
to provide the flexibility necessary to meet changing economic and employment
conditions. The City Council has already committed to, adopting a competitive pay
system that will address the current needs of the City and meet the challenges of the
future.
City Council's Direction for Compensation Plan
A. Results of City Council Survey
To establish the framework of the City s pay philosophy, MAG surveyed City
Council members to determine their views. Questions focused on critical issues
underlying the compensation philosophy.
An analysis of the results of the survey revealed that there is support for
competitive salaries to recruit and retain highly qualified City employees.
The City Council survey results indicated that they recognized the City s need to
recruit professional positions on a regional basis, while other positions can be recruited
on a more local basis.
In the information gathered from City Council, there was support that performance
criteria should play a role in the determination of salary increases. The use of
performance criteria should particularly apply to management positions. Finally, in
jr, .ianagcnwntAdvisory group, Inc. 2
The City of Fayetteville's Compensation Philosophy
addition to the aforementioned factors, there was agreement that the City has and
should retain a competitive position in its benefits package.
Budgetary constraints were viewed as a limiting factor in the implementation of
any compensation philosophy.
B. Incorporating City Council's Goals into the Compensation Plan
The City Council s current (2003-2008) strategic plan includes the conduct of a
classification and compensation study. This was point number 60 in the list of 71 goals
and objectives.
In order to meet the overall goal of placing the City of Fayetteville in a competitive
position relative to its markets, it is proposed that the overall pay line be set at the market
average. This is accomplished by aligning the mid -point pay for all job classes to the
average mid -point pay for the labor market. The adoption of this structure will address
several key issues identified by the City's leadership. These issues include:
■ structuring its compensation plan to enable the City to be competitive in its
labor market;
• attracting highly qualified new employees; and
• establishing a proactive compensation plan that will enable the City to
maintain a competitive position in future years.
6,4
Management Advisory group, Inc. 3
The City of Fayetteville's Compensation Philosophy
Benefits of Adopting. the Proposed Compensation Philosophy
The City Council, citizens, and employees of the City of Fayetteville can benefit
from the adoption of the proposed compensation philosophy in the following ways:
• Citizens of the City of Fayetteville can have confidence that the pay
philosophy of the City fosters the excellence in the City workforce
embodied in the City Council s vision, strategic goals, core values
and desired characteristics of City employees.
• The City will become an employer of choice, by positioning itself
competitively relative to other employers.
• Current employees will know and understand what the City's pay
philosophy will be. This will provide employees with a better sense of
economic security and stability.
• Prospective employees will know and understand the City's
compensation philosophy, which will enable them to make an
informed decision with respect to accepting a position with the City
of Fayetteville.
• The decisions with respect to employee compensation will be made
using clearly identified standards for all employees.
• By setting the pay line at the market average, the City will ensure
that the City s compensation structure does not degrade relative to
the marketplace. This will confirm that the City Council s strategic
goal of an excellent workforce is translated into a meaningful and
competitive position relative to the labor market.
This philosophy will serve as the guiding force for the upcoming development
of the City s new compensation plan and related administrative policies.
•
•
Management Advisory Group, Inc. 4
The City of Fayetteville's Compensation Philosophy
Proposed Compensation Philosophy
The City s proposed Compensation Philosophy is as follows: The City of
Fayetteville is committed to recruiting, retaining and motivating an excellent
workforce by providing a high quality of work life to City employees through a
competitive compensation structure, competitive benefits program, and a
challenging and enriched work environment.
In order to deliver high quality municipal services, the City s workforce must possess key
attributes associated with excellence. Therefore, the following key characteristics for all
employees are desired:
• highly skilled;
• customer service oriented;
• possess personal integrity and exhibit ethical behavior;
• highly productive and focused on quality results;
• team players,
• seek opportunities to improve services;
• understand technology;
• value diversity; and,
• committed to the City s welfare.
The City will achieve this pay philosophy by implementing the following initiatives:
Hiring
• provide a base compensation structure that is competitive with and strives
to be above the average market salaries as incorporated into the City s
compensation and classification plan.
• provide for flexibility in both hiring rates and providing compensation for
existing employees that is both flexible and intemally equitable.
• provide an appropriate set of benchmark positions which establish the
foundation for the City s pay line and provide a consistent means for the
City to review the market every year and conduct a comprehensive
market survey every four years.
.=
SKanagementilSisory Group, Inc.
5
The City of Fayetteville's Compensation Philosophy
Retaining
• provide for a meaningful way for employees to move through the
compensation plan based on both experience and achievement so that
employees can anticipate rewards based on contributions, experience
and performance.
• provide that the annual review of the market and adjustments to the City s
overall compensation plan of not less than the cost of living increase
become a part of the budgeting process through periodic surveys and the
incorporation of the results into the City s proposed budget for personnel
costs.
• adopt a policy of regularly reviewing the City s benefits and rewards
programs to maintain competitiveness with the City s market.
Motivating
• provide for a performance and experience recognition program that
incorporates the following:
o the ability to review and rate performance for all employees and to
provide adjustments to employees based on their consistent level
of achievement and successful experience on the job;
o a bonus program to provide one-time, on -the -spot rewards for
meritorious service, and,
o a compensation program that recognizes incentives based on job
related professional or academic achievements.
The proposed compensation philosophy would result in consistently positioning
the City s pay line at the market average. Additionally, the City would adopt a policy of
regularly evaluating its benefits and performance rewards program to ensure that the
City s position relative to the market did not erode.
Wanagement,�7dvisory Group, Inc.
6
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Michele Bechhold
Submitted By
City of Fayetteville
Staff Review Form
City Council Agenda Items
or
Contracts
Special Meeting 8/29/2006
City Council Meeting Date
Human Resources
Division
Action Required:
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► 35
fin/� vt4 Y' Syr t o
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Operations
Department
Staff recommends adoption of a Compensation Philosophy for the City of Fayetteville.
Cost of this request
Account Number
Project Number
Budgeted Item
Category / Project Budget
Funds Used to Date
Remaining Balance
Budget Adjustment Attached
Program Category / Project Name
Program / Project Category Name
Fund Name
City Attorney
Previous Ordinance or Resolution #
f '3-0 b
--Date Original Contract Date:
Date
-oi
Finance and Internal Service Director Date
lag (Id e#212c
Date
Mayor
Original Contract Number:
Received "it CII k's Office
Comments:
Wyeattelyi le
S
CITY COUNCIL AGENDA MEMO
Special City Council Meeting August 29, 2006
TO: Mayor Dan Coody and the City Council
THRU: Gary Dumas, Operations Directo
FROM: Michele Bechhold, Human Resources
DATE: August 23, 2006
SUBJECT: Compensation Philosophy — Discussion and Approval
Recommendation
Staff recommends the adoption of a compensation philosophy for the City of Fayetteville.
Discussion
After questions arose in 2005 about implementing the results of a salary survey performed by
Condrey & Associates, the City made a decision to formalize its pay strategy and define a
compensation philosophy. The City, like many other public sector organizations, spends about
80% of its operating budget on components of employee compensation. Based on the amount
of fiscal resources dedicated to employee compensation and benefit programs, it is a natural
progression to desire to align compensation strategies with a defined goal that supports the
overall mission of the organization.
Compensation philosophies generally focus on recruitment, internal and external equity, and
retention. The statement should support the operational needs and strategic plans of the City.
It should function as a communication tool to inform employees and applicants how the
organization intends to pay.
A sound compensation philosophy allows the Council to provide understandable, consistent
direction to senior management staff on compensation issues
On August 15, 2006, the Council Compensation Committee invited all City Council members to
attend a meeting with Alan Johnson, Vice President of Management Advisory Group, Inc. The
goals of this meeting were to provide information about compensation philosophies and to solicit
input from the Council to determine the direction of the compensation philosophy for the City.
All Council members were provided worksheets which they could return to MAG anonymously.
The draft compensation philosophy is scheduled to be delivered to the City on August 24, 2006.
Staff will distribute this to all Council members and employees for review. Carolyn Long, CEO
of Management Advisory Group, Inc., will be on-site to facilitate discussion of the compensation
philosophy for this Special City Council meeting.
Staff is available to answer any questions you may have.
RESOLUTION NO.
A RESOLUTION TO ADOPT THE CITY'S COMPENSATION
PHILOSOPHY FOR CITY EMPLOYEES
WHEREAS, the City Council has studied and debated what type of
compensation philosophy should be adopted in setting the City of Fayetteville employee
compensation; and
WHEREAS, the City Council has retained the Management Advisory Group,
Inc. to assist in drafting this compensation philosophy.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
THE CITY OF FAYETTEVILLE, ARKANSAS:
Section 1: That the City Council of the City of Fayetteville, Arkansas hereby
adopts the City of Fayetteville Employee Compensation Philosophy attached as Exhibit
A
PASSED and APPROVED this 2981 day of August, 2006.
ATTEST:
By:
SONDRA SMITH, City Clerk
APPROVED: •
By:
DAN COODY, Mayor
1 -Clarice Pearman - Res. 138-06
Page fI
From: Clarice Pearman
To: Bechhold, Michele
Date: 9.1.06 4:04PM
Subject: Res. 138-06
Michele,
Attached is a copy of the above resolution passed by the City Council, August 29, 2006 special meeting. If
anything else is needed please let me know.
Thanks.
Clarice
CC: Audit