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1/11/2008 - Meeting Minutes Minutes of Meeting Citizens Compensation Advisory Committee January 11,2008 Members Present: Diane Wood RECEIVED Bob Baty John Campbell FEB � 9 2008 Lourdes Cooke Cori-Dawn Petersen Larene Wyss,Vice-Chair CITY RECORDER Members Excused: Allen Miller, Chair Staff Present: Vic Blanton, Compensation Program Manager Sylvia Richards, City Council Constituent Liaison/Public Policy Sam Guevara,HR Director Annette Pugmire, HR Office Administrator Ralph Chamness, Sr. City Attorney Margaret Plane, Asst. City Attorney David Everitt, Mayor Chief of Staff Guests: Bryan Meenen,PEC Pat Peterson,PEC Kathy Rollman,PEC David Fry, Fire Dept. Tom Gallegos, Police Association Kitty Durfey,AFSCME Sam Guevara,the new Human Resource Director was present, so introductions were made by each of the committee members. Minutes of the December 14,2007 Meeting Approved. The Committee approved, as written,the December 14,2007 meeting minutes. Review and Discuss Citizens Compensation Advisory Committee Fiscal Year 2008-2009 Annual Report due February 1,2008 Vic Blanton presented the CCAC Fiscal Year 2008-2009 Annual Report Draft to the committee. In discussing the Executive Summary of the document, John Campbell said the total salary budget increase of 4.1% and a pay-step and range-midpoint increase of 3.0% seemed high based on trend predictions. Vic said he put those numbers in because of the recent rise in the cost of living. John cited the trend data,which puts the forecasted structure increase percent at 2.7%and said he doesn't feel the Committee should suggest more than that.. Lourdes Cooke stated that unemployment has increased and the economy has shifted in the last month. Analysts are suggesting the labor market is starting to soften,however the SLC area economy should be going pretty strong for the next year. Vic said that the general increase last year for AFSCME was 3%and professional employee midpoints were increased by 3%. The 3%general structure increase drove a 4.07%total increase. He estimated that a 2.7%structure increase would probably drive a total salary budget of around 3.8 percent, which would put us a bit under the trend forecast of 3.9%. This number reflects structure increase plus merit-step increases,he said. He added that the 100 Series employees are mostly topped out, so there wouldn't be much merit-step increase cost. He went on to say that the 200 Series employees are mostly still traveling through the steps, so at a 2.7%structure increase,the cost will probably come in around 4%. Cori-Dawn Petersen voiced concern about the graph on page 14, noting that the Firefighter EMT figures seemed out of line. Vic said that the data is still evolving and at this point we don't know what the other agencies are going to do on July 1st. In today's economy, it is fairly certain we are going to see some increases. The County's increase on January 1st was 3%. West Jordan, Murray, Sandy and West Valley City tend to be high payers, so any apparent SLCC excesses we are looking at now are likely going to be slimmed down somewhat come July 1 Acknowledging that the labor market is currently very tight,the report emphasized that paying higher wages will not solve all retention problems. Vic said that the Airport is feeling especially frustrated by employee turnover,which is currently about 9.7 percent—but that its experience is generally no worse than that of other employers. He said the Airport leadership believes that salaries for certain of the airport positions should be based on the major hub airport market rather than the general market. Various points of discussion touched on the following: • Some managers think there are too many controls on the compensation system, but controls are needed. The City's wage tab for salaried employees alone exceeds$133 million. If the seasonal and hourly employee expenses are added, it is over$140 million. The lack of essential controls could have serious fiscal impacts. The City's salary program is a large,relatively complicated salary system in the public sector. Discrimination complaints tend to be more prevalent in the public sector, so consistently administered controls are critical for that reason,too. • At the same time, flexibility is needed. Some individuals want to return the professional employee pay program to a stepped system. In step plans there is much less flexibility. The stepped plans appeal to unions and paramilitary personnel because employees want to know where they will be at any point in time based on seniority. Open range plans are much more flexible,but for that reason even more controls are necessary • Pay for performance is the perpetual debate. When everyone knows everyone's salary and when everyone thinks their performance is stellar,pay for performance 2 doesn't work well. Generally,public sector organizations don't have the budget to reward outstanding performance at an appropriate level, so it almost has the reverse effect of what is intended. The lack of objectivity in rating performance is a universal problem. • HR hears it from the administration and others that"we are Salt Lake City so therefore we ought to pay the highest rate." It's an impossible goal. Murray City has always paid higher than SLCC. West Valley City, Sandy City and Salt Lake County will boost their salaries to stay up with or move ahead of SLCC. SL County and Murray City's rates are usually higher than SLCC's at any given point in time. SLCC might increase its salary rates over the market momentarily, but Murray City will hang back until July 1st and then make sure that they are paying a bit more. When dealing with a fairly confined area like the Salt Lake locality, it creates an inflationary effect to try to outpace each other. So,it is best to follow the market,not lead it. It is interesting that despite the higher salaries of Murray City and Salt Lake County,the latest reports on employee turnover indicated that their voluntary separation rates were actually higher than SLCC's. A City Council resolution calls for elected officials' salaries to be adjusted every fourth year on the basis of a survey of capital cities having a mayor-council form of government and populations in the 100,000 to 400,000 range. Data from the survey this year puts the Mayor's salary at$114,145 starting July 1,2008. Years ago,the Council adopted the Committee's recommendation that Council members' salaries would be set at 20%of the Mayor's salary. Also by City Council resolution,the elected officials' salary increase during intervening years is to be the same percentage as the average percentage increase received by the City's professional employees. The report draft posed the question Should the City Employee Who Works at the Airport be Paid More than the City Employee Who Doesn't? The Committee felt that the answer to this question is generally,no,but there may be a few cases in which salary would appropriately be set based on the major hub airport market. Such cases should be presented to the Mayor and Council for approval. Overall,it appears that the airport's ability to attract and retain qualified personnel has been good. Many people who left the airport in recent times did so for reasons other than money. One control feature the City uses with its open range plans is midpoint control. Some employees have objected to this. John pointed out that as the membership is currently comprised,the Committee had not addressed the above-midpoint deceleration aspect of the approach. Specifically, he expressed concern that employees' salaries are slowed once they meet midpoint. He would like to address this issue in future meetings. Vic suggested that a survey be done to see what the general practice is. Sylvia Richards stated that midpoint control is an item one of the Council Members wants addressed in the upcoming audit. Also,increases for promotions have been limited to 10%. Vic would like to address this as well in the upcoming months. The committee wants the 3 report to state that the issue has been raised and the committee feels the concept should be reviewed. The group briefly reviewed the data comparing the City's salaries and total compensation values(TCV)with the market averages. Overall,the data indicates that the City's practice is in line with or above market. Vic explained that the reason the distribution of professional employee salaries has become disproportionately concentrated below midpoint is because the pay grades of a significant number of positions have been increased(based on market data),but that these increases have not been accompanied by salary increases. Related cases need to be reviewed and in-range adjustments considered where appropriate. This committee has previously stated that when looking at market value,a difference of plus or minus 5%is considered by most compensation practitioners to be on track. Larene Wyss was previously appointed to the position of vice chair,but she is not comfortable eventually moving to the position of Chair, so at the next meeting members will elect another Vice-Chair. The next meeting will be held on March 14,2008 at 9:00 a.m. in room 118 of the City&County Building. The other meeting dates tentatively set for 2008 are June 13, September 12 and December 12. The Committee thanked Vic for all of the effort he has put into this report. The meeting adjourned at 11:00 a.m. 4 • • • • • • • • • OM" RECEIVED • SALT LAKE CITY • FEB 19 2008 •• CITY RECORDER • • • • • • • • • • Where SLCC's Professional Employees Are in the Salary Range • December 2007 • • • tio'200 • —Frequency • ou • Z 100 • • • 75% 80% 85% 90% 95% 100% 105% 110% 115% 120% • Percentage of Midpoint • • CITIZENS COMPENSATION ADVISORY COMMITTEE • FISCAL YEAR 2008-2009 ANNUAL REPORT IIII • • • • o • • CCAC 2008-2009 ANNUAL REPORT • • EXECUTIVE SUMMARY • Equity May Call for Acceleration indicate that many who left airport • of Below-Midpoint Salaries employment during the past few • years did so for reasons other than • The graph on this year's cover money. depicts a disproportionate population • of professional employees positioned Should Airport Employee Pay • below range midpoint. If the Differ from Regular City? • midpoint is supported by market data,and provided the employee's Should the identified market for • skill sets meet market standards, airport employee salaries be different • equity may call for an in-range than the identified market for regular • adjustment. City employee salaries? In other • words,should airport employees be Our'General Pay Increase' paid more than regular city • Recommendation for 2008-2009 employees are paid? Except in the • rarest of bona fide business-related • We suggest a 2008-2009 total salary cases,we don't advise it. • budget increase of 3.9%;and a pay step and range-midpoint increase of Attraction/Retention Incentives • 2.7%. Adjust elected official salaries Shunned? • in accordance with City Council • Resolution No. 70 of 1993. Some SLCC managers are resisting use of the one-time attraction-and/or- • Current Economic Climate retention incentive. Reported • Sustains Worker Bidding War reasoning: "Employees like base • pay increases more than one-time The coming fiscal year may bring awards." The premise is • some relief,but the struggle to indisputable,but if the incentive is • attract and retain certain benchmark not offered,how does the employer • skills will likely remain high through know whether or not it will work? most of the period. Firing back at Unless existing base pay falls short ID the competition with unwarranted of equity standards,management • base salary hikes is strategy surely should rely on good employment • to prove errant in the long run. practices and the one-time incentive as primary strategy in meeting • Airport and Regular City Turnover attraction/retention challenges. 410 • Like most other operational areas in In it for the Money • the City,the Airport's attraction and retention challenges have increased Some jobs simply do not match— • in recent times. But has this been and the differences tend to reflect • out of the ordinary? Employee the career aims of those who choose • turnover data suggests not.Also,exit them. One should not pursue public • interviews and personnel records sector employment when an above- •• • • CCAC 2008-2009 ANNUAL REPORT—EXECUTIVE SUMMARY • • market income is the career aim. It's S a fact that mysteriously seems to • escape some folks. • Managing$133 million in Annual Education May be Lacking • Wages Requires both Flexibility • and Control Years ago,the City's supervisory • training program included a module SLCC's annual wage tab tops$133 on compensation. We recommend • million for salaried employees;$140 reinstatement of such a program. • million when seasonal and hourly Ignorance at the supervisory level . employee salaries are annualized. aggravates employee unrest and Flexibility and control are necessary causes dissention. • to harness fiscal impacts,and to • maintain practicality and legality.The Combined WMG and WCG • more flexible open-range plan Surveys Indicate SLCC on Pace • requires more controls than the with Market Practice stepped plan, because the potential • for runaway expense and Because it remains a work-in- • troublesome inconsistencies is progress,we view the Western • greater. Midpoint control in open- Management Group's(WMG)annual range plans,along with limits on survey for the Salt Lake Area with • promotional increases,are among some reservation. Suffice to say, • the essential. however,that when combined with • the Wasatch Compensation Group's Pay for Performance—The (WCG)data,we believe the result is • Perpetual Debate a sufficiently reliable indicator that • SLCC's salary and salary-plus- • In past reports we have explained in benefits programs are competitive. • detail why pay-for-performance (PFP)systems don't work well in `Lead'or'Lag'Strategy • public sector employment. Among • the reasons,budgets are restrictive, We've said it before: Trying to be . and everyone knows the other the highest payer among local person's salary. Whether public agencies is ill advised. Certain other • sector or private, most employees agencies have amply demonstrated • believe their own performances to be their resolve to match or exceed • above average. For most SLCC's compensation practices. To • employers,the means to prove avoid undue inflationary effects,it's otherwise are elusive. best to follow the market, not lead it. • • This ends the Executive Summary. Detailed discussion is provided on the • following pages. • • •• • • CCAC 2008-2009 ANNUAL REPORT • Introduction • • This annual report for 2008-2009 takes us into our 169h year as the Citizens • Compensation Advisory Committee,established by Salt Lake City Ordinance No. 65 of 1992. Our general purpose: Advise the City on prudent compensation and • benefits practice. As a volunteer committee,it's a role in which we have been • pleased to serve,and we look forward to continuing a productive working s relationship with the Mayor and City Council. g In our annual reports,we recommend general wage-increase and employee benefits decisions for the coming fiscal year. This advice is intended to keep the • City on pace with cost-of-living changes, pay-increase trends,and market • practices. As reflected in the foregoing Executive Summary,we also provide direction on any strategic issues that may come to our attention. • • Our General-Increase Recommendations for 2008-2009 • Annual base wage adjustments,or"general increases"as they are commonly • known,are essential to keep pace with economic trend and for maintaining • employee morale. Our recommendation for the coming-year general increase is • based in part on the information provided in the following table. The table shows national market trend for salary structure and salary budget increases predicted • for 2008—and cost of living changes,as measured by the Consumer Price Index • for All Urban Consumers(CPI-U). • 2008 Structure&Salary Budget Increase Predictions CPI-U West- •Ion Class WC.- . Percent • Category�, _ Base Period Index Increase • Structure("COLA2.7% 2.7% 2.8% December-06 125.00 Salary Budget 3.9% 3.9% 3.9% December-07 130.48 4.38% . Prev.12 Mo.Avg. 125.0 Last 12 Mo.Avg 128.8 3.07% • ', Source: WorldatWork -Population 50,000 to 1,500,000 • "Salary structure"refers to a system of pay grades. When the pay structure consists of grades with steps,a salary structure increase is sometimes referred to as a Cost of Living • Adjustment(COLA). The"salary budget"increase adds the cost of any expected merit • increases to the planned cost of the structure increase. CPI-U stands for Consumer Price index,all urban consumers. • • Although the latest CPI-U average index increase over the past 12 months comes in at barely more than three percent,we have seen an upward trend. Note that the index increased nearly 4.4 percent from December of 2006 to • December of 2007. However,we are reluctant to recommend increases that • exceed the pay-increase trend predictions,which have always proven to be very • reliable. To stay on pace,we believe the City should plan a 2.7 percent salary structure increase and a salary budget increase of 3.9 percent. • • We also consider pay practice comparisons when making our general increase • recommendation. Charts showing salary and total compensation value(TCV) • 3 • • C -) • CCAC 2008-2009 ANNUAL REPORT • information start on page 14. The information is from the 2007 Western • Management Group's(WMG)annual survey for the Salt Lake Area and also from S the Wasatch Compensation Group's(WCG)on-line survey called Technology • Net. • Recommendation for Elected Official Salary • • By resolution,every fourth year the Mayor's salary is to be based on a survey of • capital cities having a mayor-council form of government and populations in the • 100,000 to 400,000 range. Cities that fit this criteria are few,and their numbers are getting fewer—as they either change to the city manager model and/or their • populations grow beyond the established benchmark. • State Capital Population Mayor's Salary • Albany,NY 94,226 $130,195 • Atlanta,GA 462,546 $147,500 • Baton Rouge,LA 435,413 $113,435 Boise,ID 194,000 $91,229 • Lansing,MI 144,276 $106,995 • Madison,WI 210,000 $115,138 • Montgomery,AL 201,568 $95,000 Providence,RI 174,000 $125,000 • St Paul,MN 287,151 $101,792 • Springfield,IL 116,482 $108,020 Average Mayor Salary $114,145 • 20%of Average $22,829 • SLCC Current Mayor Salary $113,217 20%of Current Salary $22,643 • • The salary of City Council members is set at 20 percent of the Mayor's salary. • Our recommendation is to set the annual salary of the mayor at$114,145, . starting July 1,2008,and to set the annual salary of the City Council members at $22,829,effective the same date. • • During intervening years,the Mayor's salary increase is determined by the • average percentage increase given to the City's professional(600/300 Series) employees. This is also by resolution. • • Local Economy Remains Strong;Available Labor Remains Scarce • According to Mark Knold,Chief Economist for the Utah Department of Workforce Services,2007 has been another stellar year for the Utah economy—and 2008 • promises to be a repeat performance.Although showing signs of slowing, Utah • Jobs growth continues at a robust pace,and the Utah unemployment rate for • November was only 2.8 percent. Such a low rate—almost less than one-half the national figure—translates into a very tight labor pool. This aspect,combined • with an over-abundance of jobs, pits employers against one another to attract • and retain qualified personnel. • •• • • d f" • • CCAC 2008-2009 ANNUAL REPORT • We cautioned the City against over-reacting with base salary increases. No • doubt HR has faced considerable pressure to ignore that advice. The current • environment tempts otherwise well-intentioned managers to think higher wages • is the cure-all to attraction/retention ills. The error of such thinking is well proven. A strategy of base-wage bidding will not change the simple fact that there are • virtually more jobs than qualified workers to fill them. • • For workers sincere in the aim to improve their employment circumstances, the • climate has rarely afforded better opportunity. Unfortunately, the atmosphere also fosters another contingent of not-so-sincere folks. These individuals seek • and acquire job offers, then, with no real intent to exit the status quo, present • their current employers with invitations to counter. • Whatever the case, reacting with base salary increases is likely to be a misstep • on several counts. First, while pay must be sufficient to meet basic needs, • studies have shown that money is not the primary motivator for most employees. • Secondly, said reaction does not go unnoticed by other employees. They may begin seeking pay-raise leverage of their own. Third, when the sincere employee • decides to make the change, the offer of more money will likely not have the • desired affect. On the contrary, if money was indeed ever the issue for this • employee, he or she will likely be offended that it took the threat of leaving for the • employer to finally recognize his/her worth. • At the same time, however, we repeat the advice of our last report: A less-than- • competitive compensation strategy will, in a tight labor market, exacerbate • recruiting and retention difficulties. Management just needs to exercise restraint in giving base salary increases resulting in pay levels that may not be justified • when the economic climate ultimately cools. It bears repeating that unless base • salary is too low as indicated by market data or internal equity analysis, good • employment practices and the use of one-time, lump sum incentives should be viewed as the primary attraction/retention strategy. • SLCC Turnover— Airport and Regular City • The city's airport leadership has expressed much frustration of late over • recruiting and retention difficulties. And not without reason. Like other city • departments and other employers both national and local, the airport's employee- turnover rate has increased substantially during the past year, and replacements • have been difficult to recruit. While employee separations have occurred at all levels (from blue collar to key manager), those in airport property management • and certain craft areas have proven to be particularly problematic. • • Reason for the turnover and recruiting difficulty? It comes as no surprise that • airport management points to salaries as the main cause. Past surveys have shown that major-hub airport market salaries are higher than SLCC airport rates • for nearly every key position. Hence, if the city is to be guided by the major hub • airport market, a property manager working at the airport should be paid higher • • 5 • • CCAC 2008-2009 ANNUAL REPORT • than his/her regular-city counterpart. Likewise,the finance manager at the S airport should be paid higher than the city's regular finance manager. • • If all positions at the airport are"Key,"how much has salary been a contributing • factor to airport turnover? Exit interviews with former airport employees,who • separated during a 32-month period starting on January 1,2005 and ending on September 1,2007,indicate that a significant number retired;some left for • different careers or to advance their careers;some left to accompany spouses • who acquired out-of-area employment;and still others were dismissed. In all, • there were 113 separations counted, resulting in a total average annual turnover rate for the period of 7.84 percent(against an average annual population base of • 541 employees). Fifty-seven individuals,or more than one-half of the 113 • employees exiting, reportedly left for reasons other than money. To assume that • the entire remainder left for more money is,at best,a shaky assumption. • The following chart reflects a fiscal-year 2007 jump in turnover at the airport. But • the resulting rate of 9.7 percent is only slightly ahead of the 9.3 percent rate • calculated for regular City employees. As the chart shows,the airport's rate is • also comparable to rates reported by Salt Lake County and Murray City—and is substantially below the national rate for all business sectors and the non- • business sector rate,which includes municipalities and non-profit employers. • • Employee Separation Rates-Local and National FY 2007 • Voluntary Quits,Retirements,and Dismissals • 16.0% • 14.4% • 14.0%o '- -lI • 13.2% • 12.0% III • 10.1% .tip • 10.0% .7 •3 -- • 8.0% • • 6.% • 4.0 0% • 2.0% • • 0.0%' • SLCC Airport SLCC Without Salt Lake County Murray City BNA-All Sectors BNA-Non- Buess Sectors • Non- Business National employee turnover information is provided by the Bureau of National Affairs(BNA),Inc. • In reporting employee turnover,SLCC follows the standard set by BNA,which includes voluntary • separations,retirements,and dismissals in the turnover count. • • 6 • • • • • CCAC 2008-2009 ANNUAL REPORT • The numbers for Salt Lake County and Murray City are notable, because both of • these employers have lured Salt Lake City employees away from time to time— • and both have made it an ongoing practice to pay higher-than-SLCC rates for • certain positions. Although certainly not conclusive,this observation lends support to the contention that money is generally not the primary motivator of • worker's employment choices. • • The Experience of Other Airports • But what about turnover at other airports? HR asked 16 other major hub airports • the question. Of the dozen that responded,the lowest turnover rate reported • was 4.44 percent,and the highest was 15.07 percent,with a median of 8.28 • percent. The representative of one major Midwest airport said that his airport's latest reported rate of 7.06 percent represented a substantial increase over prior • reporting periods,and that the number was"rapidly climbing." The • representative of a major airport in the East lamented,"We're having a hell of a • time keeping people,and we lose them as fast as we hire them." This airport reported a turnover rate of 10.48 percent. • • Thus,based on the data,some airports are enjoying lower turnover rates than • SLCC;and some are experiencing higher rates. The Salt Lake City Airport's attraction/retention plight does not appear to be significantly more severe than • that of other employers experiencing similar woes. • • Should the City Employee Who Works at the Airport be Paid More than the • City Employee Who Doesn't? • With the above turnover information in mind,we address the question of whether • airport employees should be paid more than their counterparts employed in non- • airport City positions. In other words,should the identified market for airport employee salaries be different than the identified market for regular City • employee salaries? • • It's reasonable to address this question from time to time, but our answer is the • same as given repeatedly in the past. In our view,an affirmative response can only apply to the narrowest of possibilities—namely,the executive director • position,one or two others in the second or third level of leadership,and any rare • case where the necessary skills and discipline to do the job can be acquired only • through highly specialized academics and experience gained with another airport. • The recurring question is symptomatic of managers who persist in the • assumption that turnover stems from compensation problems. We join many employment experts in questioning that assumption.Given the impact of the• organizational and leadership issues the airport has faced in recent times,we • find it difficult to conclude without hard data that employees want to leave their • SLC Airport positions because of low pay. In this regard,a salary survey with the • intent of"supporting salary increases"isn't the kind of data we are referring to. • 7 • • CCAC 2008-2009 ANNUAL REPORT • To learn why they really leave, we suggest a third-party follow-up with former • employees. To determine how to stem the outward flow of good people, we S believe this approach would be much more valuable than a salary survey. • • As long as the Airport is owned and operated by the City, we find the idea of creating separate pay structures for the City and the Airport to be philosophically • questionable at best, and potentially downright destructive. That said, any • analysis of the issue should consider several factors: • • First, can employees move between assignments at the airport and other • city departments? If so, this supports having one pay structure for all • employees. • • • Second, does the airport recruit for positions that are similar to those of the city from similar or identical candidate pools? If the pool of prospective candidates is similar, then there should be similar pay structures. • Otherwise, the higher-paying entity will cannibalize the recruiting effort of • the lower paying entity. • • Third, is the airport considered part of the city family or is it viewed as a • separate entity? If the airport is generally viewed as part of the city by • other city employees, the impact of separate salary structures for the two I entities could adversely impact morale in the lower-paid entity. This, in • turn, would lead to dissention (and increased turnover) by those who resent being paid less for performing duties that require essentially the • same skills. At the same time, turnover in the higher-paying entity may • continue unabated. Why? Because the high turnover there wasn't really • caused by compensation problems in the first place. • We can see no justification in a pay program designed to compensate a finance • executive working at the airport more than his or her counterpart working for the • city's general fund; or an airport electrician being paid more than a city • electrician. • Again, however, if a case can be made such that there exists an airport position • so unique to the aviation business that attraction/retention needs simply can't be • met except by relying on the major hub airport market to guide salary decisions, such case should be presented to the Administration and the City Council for review. The case should include a profile of who has occupied the position for • • the Airport, how they acquired the position, and who has left and why. • Resistance to Using One-Time Incentives Sidesteps Proper Approach • • It goes without saying that employees will generally prefer base salary increases • over one-time awards, but that doesn't mean supervisors must promote • concession. The following letter from a well-intentioned manager illustrates the kind of thinking for which we strongly advise caution, and reminds us of the need • •• • • CCAC 2008-2009 ANNUAL REPORT • to again encourage the use of one-time,lump sum incentives to facilitate • attraction/retention aims. • "...I am requesting concurrence in my recommendation to increase the base salary of four of • my senior staff... I would much prefer to increase their base salary than provide a bonus • because the purpose of the adjustment is to keep up with the incredibly high demand for • engineers and technicians over the long haul,not a one-time thank you." • There is no assurance that demand for engineers and technicians,or any other • position benchmark for that matter,will remain"incredibly high over the long • haul." Indeed,history has shown that the market demand for certain job skills will inevitably have its ups and downs over time. • • Base pay additions become permanent,compounding repeatedly with each • general base pay adjustment regardless of whether the project that was once mission-critical is now history;or whether a market down-turn in jobs-availability • has created an excess supply of the subject employee's skills • • That said,by all means adjust base pay when called for by equity reasons—but • spurn the notion that meeting attraction/retention challenges should rely exclusively on base pay increases. • • Public Sector Employees Not In It for the Money • Some jobs simply do not match—and the differences tend to reflect the career • aims of those who choose them. Consider the typical construction engineering • consultant,for example,versus an engineer working for the City. • The income and job stability of an individual who works for a private engineering • consulting firm will,in the final analysis,depend on the availability of construction • projects and the market share captured by the firm. When things are good,high • salaries may be accompanied by generous bonuses,and employment is likely • secure. This will vary over time. • Retirement benefits will take the form of a defined contribution plan(401k,profit- • share or other),with the employer's contribution depending on the firm's fortunes. • Regarding leave benefits and life/work balance?On average,these are probably not comparable to what the City offers—which may matter little to the individual • whose top career priority is to earn the highest possible income. • • The point is that if the individual is in it for the money,he/she should not choose a government job.People who choose a career with the City are likely to find • satisfaction in serving the public,along with relative peace of mind in stable • employment and above-average health,retirement and leave benefits. We • believe that the salary that goes with this public sector employee package is appropriately one that is generally in step with the market average;not one that • exceeds market average. • •• • • CCAC 2008-2009 ANNUAL REPORT • Is the City System too Controlling? • • Some SLCC managers complain that the City pay system unduly restricts their • freedom to make salary decisions. They charge that linking city employee • salaries to market average encourages mediocrity. They want more latitude in deciding what to offer new-hires, and in determining what adjustments to award • employees who step up in pay grade. They want discretion to provide • performance-based raises, and they want to eliminate midpoint control, thereby . allowing employees in open-range systems to ultimately be paid at the range top. • Flexibility and Control—Both Are Critical • In previous reports we explained the differences between stepped plans and a open range plans. SLCC has both. Stepped plans generally work better for • union-covered employees and para-military employees. Their simplicity better accommodates union contracts and/or the preference for lock-step progression • linked to longevity. Stepped plans afford very little flexibility. Indeed, a demoted • employee may actually receive a pay increase in moving from one stepped pay • grade to a lower stepped pay grade. Also, in the government sector where long tenure is the rule, the top step in a stepped plan is likely to be attained by all but • those who have separated either voluntarily or involuntarily. That's why in • stepped plans, grade maximums rather than midpoints are usually linked to • market average. • Open range plans, on the other hand, afford maximum discretion to the • compensation decision makers—so much so, in fact, that they present a definite • risk of compensation excesses unless controls are faithfully administered. Using • the range midpoint as a control is standard practice among employers using open range plans. Open-range maximums are set well above market average to • allow flexibility in salary administration; not to pay everyone at the range top. We understand that this has been a difficult concept for some employees to accept. As we stated in our last report, being paid at the range top is appropriate only if • the range top is the market average. • • Certainly some level of flexibility is desirable—especially in open range plans. But in a public sector pay system, where wages are public knowledge, budgets • are limited, and discrimination claims are easily launched, we believe these • wants reflect naiveté and if conceded to the extent desired, would provide a • formula for fiscal and administrative chaos. • Midpoint Control: Let Market Average Guide the Practice • • We are aware that one of the most criticized features of the city salary system for • professional employees is midpoint control. The city follows the example of i many employers in setting most of its range minimums and maximums approximately 20 percent below and above the midpoint, respectively. • The city ordinance that established the CCAC states that one of our duties is to: • • 10 • • • CCAC 2008-2009 ANNUAL REPORT • • "Determine the appropriate competitive position of city pay levels relative to S the central tendency (emphasis added) of surveyed employer pay levels." • "Central tendency" means the 50th percentile of salary rates, or in other words, • the market average. Where position matches exist in the identified market, range • midpoints are based on data indicating the market average rates. (Where no • such matches exist, range midpoints result from pay level assignments based on internal equity analysis.) • • We believe that the appropriate pay level for a city employee with journey skills is • general alignment with the market average rate, as indicated by survey data • collected and analyzed in accordance with accepted professional practice. This does not mean that the salary rate must precisely equal the value determined as • the market average. As we have explained in previous reports, by tying the • midpoint control to the indicated market average, and by accelerating salary S progression below the midpoint and slowing it on the upside, the ultimate effect is to cluster salaries within a zone around the midpoint. • Again, this concept apparently eludes the understanding of many employees. • They object to being denied the range maximum—determined in their resolve that long service should justify above-market average pay. In their press to S discredit the approach, some employees (both management and non- • management) dispute the fact that other employers use the midpoint to control • salary concentrations. • How prevalent is use of the midpoint as a control on salary? Almost any survey done by large compensation consulting houses will ask respondents to state the • control point of the range. If the range maximum is to be attainable, there would • be no sense to the control point terminology. • Unless the range top is not far above market average—say no more than five percent in non-PFP systems—most employers do not allow base salaries to • aggregate at open-range tops. It is our view that public sector employers should be in this camp. Public Sector employees tend to remain in service for a long S time. Indeed, employment stability is one the things that attracts workers to the • public service. If the employer allowed the top of the range to be the control • point, the vast majority of salaries would ultimately reside there. Obviously, no . public sector employer could defend this scenario to taxpayers and fee payers. Likewise, most private sector employers would not endeavor to convince stock • holders that such an approach is appropriate. S • Again, employees need to understand that being denied the range maximum is a competitive disadvantage only if the range maximum represents the market i average. This has been such a point of contention, however, that we S recommend a survey of other employers' practices, both public and private, to • assess the conventional wisdom regarding use of the control point and the • acceleration/deceleration concept. • 11 S a � ' CCAC 2008-2009 ANNUAL REPORT t� Does this strategy of tying salaries to market average relegate the City to • mediocrity? We think not. Witness the excellent ratings that SLCC employees • have received year after year in the Dan Jones Citizen Survey. It should also be • recognized that many exceptionally capable individuals enter public service • knowing full well that it's not a career choice apt to garner the highest wages. . The aim is to keep city salaries generally competitive overall and over the long • run. Competitive does not mean paying above market average. To pay above • market average is to adopt a pay policy that goes beyond that which is necessary to be competitive. Likewise, paying less than market average reflects a less • - than-competitive pay policy. We believe that departure either way is unfair. • Unless it can be shown that performance suffers, pay that exceeds more than a • competitive level is unfair to taxpayers and fee payers. By the same token, pay that is less than competitive is unfair to employees, and probably will affect • performance in the long run. • Other Often-Resented Controls • Compensation is by far the largest operating expense of most employers. The • City wage tab for full-time employees alone now exceeds $133 million per year, • and these dollars drive high benefits costs as well. Operating a compensation . system the size of SLCC's without carefully designed and consistently administered controls would ultimately result in fiscal chaos, and possibly discrimination lawsuits as well. • Besides the range midpoint for open-range plans, listed below are several of the most often protested controls currently in use by the SLCC system. The controls • are spelled out in the City's Compensation Guidelines and Procedures, which are . posted on the city's internet and intranet sites. • 1 . Hiring offers are permitted within a range of values, but have limits to • prevent uncontrolled compression of new-hire salaries with current • employee salaries—as well as to encourage managers to act responsibly • in making salary decisions. • 2. The hiring authority may decide to offer a salary higher than the suggested guideline, but may not later use the new employee's high salary as 41 argument that the salaries of longer service employees must be increased • to be fair. Without such stipulation, the inflationary impact—given enough time and the propensity of many supervisors to succumb to the complaints 410 of longer service employees—could be crippling. • 3. Everyone makes their own deal at hire, but once inside a structured pay system, all employees must be subject to the same rules. Inconsistencies • spawn morale issues and discrimination complaints, as well as • undesirable fiscal impacts. That's why there's a general 10 percent limit on • promotional increases. That a longer service employee may wind up • 12 • • • CCAC 2008-2009 ANNUAL REPORT • being paid less than a shorter-service employee is,by far,the lesser of the • evils. • • 4. Bringing pay up to the level of responsibility is unfailing logic. But so is bringing responsibility up to the level of pay. When the employee's pay is • already within the new pay range,the general rule is to give no immediate • increase. This rule,intended in part to temper fiscal impacts when large numbers of employees are reclassified,is sensitive to the fact that in many • cases,current salary will approach or even exceed the midpoint of the new grade. Movement to the higher grade will result in a higher pay raise whenever a general increase is given. • In all of these cases,flexibility is afforded by special approval of policy exception • requests,within limits. An in-range pay adjustment should be considered when it • serves objectives of pay equity and business purpose—and does not create • imbalances with the pay of other incumbents already occupying the new grade. • Some controls that limit the compensation decisions of supervisors are • established by union contracts. These apply to stepped plans. The stepped • plan,meaning a salary structure with steps instead of an open range,is a • different matter. Generally,in stepped plans the top step will approximate market • average.This is the intent with SLCC's stepped plans,which include AFSCME- covered groups,and sworn fire and police. • • Incidentally, HR reports that some managers have expressed preference for • returning professional employees to a stepped structure. It should be emphasized that stepped plans offer little flexibility. This is precisely why their • use is preferred for sworn positions in police and fire,and for union-covered • positions. The stepped plan tells the employee the where-and-when the • employee will be at any given point in length of service—provided he/she commits no grievous wrongs along the way. • • Freedom to Pay for Performance(PFP)? • Many managers—even public sector ones—tout pay-for-performance(PFP)as the means to validate any pay system while enhancing employee performance. We have never seen empirical evidence to back up this position. Even if it works • for some private sector employers,PFP clearly cannot be viable in the public • sector where all employees'salaries are public knowledge. Serious morale difficulties and conflicts will arise when employees who think they are deserving • (which is most everyone)see co-workers benefiting from the system while they • are denied. Ironically,employees often have a better grasp of who the stellar • performers are than do the supervisors. Studies have shown that 80 percent of employees believe their own performances to be above average,yet true PFP• systems only materially benefit about 20 percent of the employee population. • • In previous reports,we identified other problems with trying to pay city • employees based on their individual performances. These problems include lack • 13 • ) ) • CCAC 2008-2009 ANNUAL REPORT • of budget to provide meaningful differences in performance-based awards, and • questionable objectivity in performance appraisal approaches. • • Education May be Lacking • Years ago, the City's supervisory training program included a module on • compensation. We recommend reinstatement of such a program. Ignorance at • the supervisory level regarding prudent pay principles aggravates employee • unrest and dissention. Believing that in a compensation system such as that • I administered by the City that employees should be allowed to progress in-mass to as much as 120 percent of market is potentially harmful ignorance. S Total Compensation Value (TCV), Local Market, Non-Executive Positions - • ISalary Plus Benefits Comparison To cover the next sections, we adopt the format used in previous reports. This is • I intended to allow easier comparison with year-earlier information. Data looked to • for salary and benefits comparison is a meld of survey results provided by the • Western Management Group (WMG) and by the Wasatch Compensation I Group's (WCG) on-line survey named Technology Net. Regarding the WMG • data, survey participation has continued in flux since WMG took the administrator • reins from AON Consulting. This means that unwelcome variances may still be a • concern. Thus, we have not given substantial weight to the data in making our recommendations for the year ahead. Suffice it to say that the data continues to • indicate that SLCC's practice is at least on pace with the competition. 2006-2007 2007-2008 • Actual Actual • Actual Average Actual Average • Average Salary Plus Average Salary Plus . Salary Only Benefits Salary Only Benefits EMPLOYEE GROUP SLCC/MKT SLCC/MKT SLCC/MKT SLCC/MKT • Operations/Maintenance 103.6% 104.2% 106.4% 107.9% Clerical/Technical 115.2% 113.3% 114.3% 113.2% • Non-Exempt Professional 106.4% 107.5% 105.6% 107.2% • Exempt Professional 99.0% 103.4% 100.2% 103.4% • Police Officer 112.9% 109.4% 107.2% 104.1 Sergeant 106.6% 103.4% 108.1% 104.1 Lieutenant 105.0% 102.0% 105.8% 102.3% • Police Captain 102.7% 100.8% 105.7% 102.8% • Firefighter EMT 106.7% 99.0% 101.1% 93.8% Firefighter Paramedic 116.4% 133.5% 114.2% 103.6% • Firefighter Engineer 95.7% 90.3% 110.5% 100.7% • Fire Captain 110.1% 102.0% 111.7% 101.6% Battalion Chief 120.8% 100.0% 116.9% 97.8% • Average 107.8% 105.3% 108.3% 103.3% • Although the overall SLCC-to-market salary-only comparison went up this year, S the change in compensation based on actual average salary was only slight at • of one percent. The SLCC excess in overall salary-plus-benefits comparison • 14 • .) • • CCAC 2008-2009 ANNUAL REPORT • went down by two percent. Such small differences can be caused by variances • in the mix of survey participants and their employee separations,new hires,etc. • As is the usual case,the clerical-technical group continues to be high in both • categories,with the data suggesting a 9/10ths of one percent reduction in the salary-only category,and a 1/101h of one percent reduction in the salary/benefits • combination. More will be said about this group starting on page 16. • • Because turnover is exceedingly low in the public safety groups, pay grade maximums may be seen by many police and fire employees as the true level at • which compensation competitiveness is measured. Data presented in the next • chart suggests close SLCC-to-market alignment at the grade maximum. Most • employers regard comparison variances within five percent as alignment with • market. • MINIMUM > • AVERAGE MAXIMUM MAXIMUM AVERAGE • SLCC/MKT AVERAGE AVERAGE SLCC/MKT EMPLOYEE GROUP TVC MKT TCV SLCC TCV TVC • Police Officer 101.5% $ 80,980: $ 82,300 101.6% • Sergeant 120.1% $ 95,446 $ 98,472 103.2% Lieutenant 113.9% $ 110,317 $ 114,027 103.4% • Captain 111.9% $ 122,442 $ 122,068 99.7% • Assistant Chief 82.7% $ 155,430' $ 159,025 102.3% • Combined Avg Police 106.0% 112,923•• $ 115,179 MEM= • Firefighter 95.9% $ 74,258; $ 75,809 102.1% • Firefighter Engineer 81.2% $ 82,099 $ 80,369 97.9% Firefighter Paramedic •.8% $ 84,159` $ 84,401 100.3% • Fire Captain 09.6% $ 95,9771 $ 93,800 97.7% • Battalion Chief 05.7% $ 113,102E $ 108,036 95.5% Assistant Chief _ .72.8% $ 142,947 $ 130,427 91.2% Combined Avg Fire 92.3% $ 98,757 $ 95,474 • • Operations and Maintenance Employees, 100 Series • The following chart plots TCV for 10 benchmark positions in the City's AFSCME- • covered 100 Series. Most of these positions are benchmarks employed in the • construction industry,so significant market swings can be expected. • Nonetheless,even though the local construction industry has surged in recent • times,the 2007 data vs.the 2006 data suggests that this SLCC employee group's salary-only lead over the market went up by 2.8 percent overall(from • 103.6 percent of market average to 106.4 percent of market average)-and its • TCV lead went up by 3.7 percent(from 104.2 percent of market to 107.9 percent • of market). In 2004,data indicated that SLCC's TCV alignment to market was on the upside by only two-tenths of one percent. That excess increased to 7.6 • percent in 2005,dropped back to 4.2 percent in 2006,and recovered to 7.9 • percent in 2007. Again,year-to-year changes in survey group make-up can • contribute significantly to data variances. • • 15 iiiimiiiimiiiiimmiummimmiimmimimi • CCAC 2008-2009 ANNUAL REPORT • • SLCC VS LOCAL MKT AVG TCV -OPERATIONS & MAINT(100 SERIES) • From 2007 Western Mgt Group and Wasatch Compensation Group Surveys • • •U a .. . O$30.00 . n , y . co —N c n ° Nen �o •ri $25.00 — CO 10 NNMpN N Nto, • MM- N 5 w $20.00 r • r- di. • c $15.00 j U • $10.00 i El Market II SLCC • >, • 1 $5.00 _ • • L a e P;6;PAa" G� 'y 1A/GC'atiP o 06. 0, Ap0c .. Aa .° ^ i 9qP^ 4iPAia'a �4 .P re' i c fO •'> e, e h p ha'; AA of •O,, • Clerical/Technical Employees, 200 Series • The next chart is for the 200 Series employees, which consists mostly of office • • SLCC VS LOCAL MKT AVG TCV-CLERICAL &TECHNICAL (200 SERIES) • From 2007 Western Mgt Group and Wasatch Compensation Group Surveys • • > • M N H $30.00 co N N M • 7 iiii- _ r '- i a $20.00 ' N • N Ire 2 a. • c $15.00I I U •• ,° $10.00 ' ■Market II SLCC • H 7- •$5.00 1I o • 0 _ a^ s c 'PP Sc, locs 9;/ Qs 6 . ' • ,� ' P fo o 0, o ,9cug % 9,o af •�o � f, S4 y f the9i PP'iC ,> e o~'t 0, 'ce /P. Pcfo Pch e^ �Pa , // '.?, • 0 • 16 • • • • CCAC 2008-2009 ANNUAL REPORT • support positions predominantly occupied by female employees. Believing the • market to be inherently discriminatory against such female worker element, the • City made a deliberate decision during the mid-90s to ignore market data and to • establish wage rates on the basis of internal-equity analysis only. • The chart reflects a continuation of this established policy. However, the data • indicates that the decline in the excess of City salary rates over market for 200 • Series jobs, as we noted in our last report, is being maintained. In previous • years, it has been as high as nearly 30 percent. • • Professional Employees, Non-Exempt (300 Series) and Exempt (600 Series) • • • SLCC TCV VS LOCAL MARKET TCV From 2007 Western Mgt Group&Wasatch Compensation Group Surveys • • . • $120,000 > y=102.55x+14313 • o SLCC TCV - • 2 $100,000 • c O ., $80,000 • y=1 14.24x+4645.2 MKT TCV —SLCC TCV a —MKT TCV • o $60,000 — U // • / i O ~ $40,000 • a` $20,000 • • 300 400 500 600 700 800 900 1000 1100 Evaluation • • Here, regression analysis is used to graphically show the aggregate City-to- • market TCV comparison for 50 professional employee positions. There are too • many positions in the data set to show how each individual one compares. • "Evaluation points" reflect position rank. Solving for the equations at various • evaluation points indicates that City TCV exceeds market by an average 1.8 percent. That's down 3.4 percent from last year. The narrowing occurred mostly • in upper level (600 Series) positions, where the plotted difference between SLCC • and the market was less than two percent. • • • • 17 ' 0 • • CCAC 2008-2009 ANNUAL REPORT . • Since the range midpoint is used to control in-grade progression of salaries in the professional employee pay plan, it is useful to compare how the midpoints • compare with actual market average salaries. The following regression analysis • chart shows such relationship, based on the 2007 salary-only data. • • SLCC PROFESSIONAL EES MP AVG VS LOCAL MKT AVERAGE SALARY • _ ._ From 2007 Western Mgt Group&Wasatch Compensation Group Surveys $120,000. • • $100,000 . y=100.74x-6403.7 MKT AVG SALARY • $80,000 • WT AVG Salary WMG+WCG • —SLCC Midpoint AVG • , $60,000 z y=89.361x+1842 • SLCC AVG MIDPOINT ' $40,000 • • • • • • • Solving for the equations at various points along the evaluation scale indicates • that SLCC salary range midpoints align very closely with market actual average salaries, being only 7/10ths of one percent high on average. Again, narrowing • between SLCC rates and those of the market occurs at the upper level positions. Police, 500 and 800 Series; and Fire, 400 Series and 900 Series As pictured in the next chart, TCV data using actual average salary suggests a relatively close (generally within five percent) relationship between City and local market values for police positions. Again, however, because it is based on actual average salary rather than top-step salary, police officers may view the chart as deficient because it doesn't show differences based on the top-step salary rate. As mentioned earlier, due to longevity in public safety positions, there is some credibility to the argument. Nevertheless, data based on actual average salary generally conveys a more accurate representation of how employers' actual pay practices compare at a given point in time. It is a reflection of a number of pay- related factors, including the rate at which employees are allowed to progress through the pay grades, and promotional steps, pay premiums, etc. That said, it should be noted that the differences between the SLCC-vs.-market values shown • in the following charts are, overall, somewhat larger than when based on top-step salary. • 18 • . • C • CCAC 2008-2009 ANNUAL REPORT • • • SLCC VS. LOCAL MKT AVG TCV--POLICE From 2007 Wasatch Compensation Group Survey • $140,000 $120,000 _, ..... 4, • co 1 11 IF • o) $100,000 To ' • o 0,cc)$80,000 !xi • I• $60000 N4• $40,000 o • 1-- $20,000 I III • $ Ill ' • Police Officer Sergeant Lieutenant Captain . • The same point generally applies to firefighters. • • SLCC VS. LOCAL MKT AVERAGE TCV--FIREFIGHTERS • From 2007 Wasatch Compensation Group Survey • • o • $100,000 • m $80,000 �,. 2 4 - n {0 To r o • O $60,000 rn 'am.' N w ■Market TCV • inw - ■SLCC TCV d • E C $40,000 • 0 • F-- $20,000 Z • k • Firefighter Engineer Paramedic Captain Battalion Chief • • • 19 • f 3 • CCAC 2008-2009 ANNUAL REPORT • • Executive Salaries • National salary data in the next two charts is provided by the International • City/County Management Association(ICMA)and the WCG. We were surprised . by the data for 2006,given that it showed SLCC executive salaries to be • generally higher than their national counterparts. Equally surprising,the data indicated that executive salaries for Wasatch Front agencies also tended to be • higher than the national average. Suspecting flawed data,we expected the 2007 • numbers to present a different picture. Not so the case,as the next two charts • show. • • NAIL MKT • AVG-Pop. 100,000 to SLCC/NATL • Position SLCC 499,000 MKT • City Attorney $ 132,268 $ 112,107 117% ` Purchasing Director $ 75,828 $ 73,204 107% Info Services Director $ 106,417 $ 96,064 116% • Recreation Director $ 84,604 $ 74,127 120% HR Director $ 98,758 $ 91,187 112% • Planning Director $ 94,822 $ 90,323 108% • Economic Dev Director $ 114,113 $ 97,339 119% • Fire Chief $ 120,640 $ 105,662 117% Police Chief $ 115,916 $ 107,139 109% • Engineer $ 108,647 $ 90,728 122% • Public Works Director $ 118,915 $ 109,712 111% • Treasurer $ 100,822 $ 80,411 128% Finance Director $ 110,032 $ 101,721 109% • Avera•e 115% • Result when the survey population scope is expanded to Include Wasatch Front: • • NATL MKT • AVG-Pop. Wasatch • 50,000 to SLCC/NATL Comp Group • Position _ SLCC 1,000,000 MKT (WCG)Avg SLCC/WCG City Attorney $ 132,268 $ 112,268 118% $ 122,208 108% • Purchasing Director $ 75,828 $ 72,811 104% No Match N/A • Info Services Director $ 106,417 $ 96,509 110% $ 96,874 110% Recreation Director $ 84,604 $ 73,610 115% No Match N/A • HR Director $ 98,758 $ 92,610 107% $ 97,497 101% • Planning Director $ 94,822 $ 93,563 101% $ 88,757 107% Economic Dev Director $ 114,113 $ 95,445 120% $ 101,452 112% • Fire Chief $ 120,640 $ 106,965 113% $ 116,738 103% • Police Chief $ 115,916 $ 101,149 115% $ 122,179 95% Engineer $ 108,647 $ 91,169 119% $ 100,231 108% • Public Works Director $ 118,915 $ 108,840 109% $ 117,658 101% Treasurer $ 100,822 $ 80,957 125% $ 87,932 115% • Finance Director $ 110,032 $ 106,372 103% $ 109,755 100% • Average 112% Average 106% • 20 • • • • • CCAC 2008-2009 ANNUAL REPORT • The following chart showing how professional employee salaries are distributed • around the range midpoints suggests that some in-range base salary ,i adjustments may be in order—not as a reaction to attraction/retention issues, but • merely as a matter of equity. • The chart depicts a significant shift in the distribution compared to the distribution • charted in our last report. Now the picture is far less symmetrical, with the • population below midpoint being nearly 2.5 times more than the population above • midpoint. We believe this results primarily from range-level increases occurring since we last visited the subject—that is, midpoints have increased without • accompanying salary increases. Assuming the midpoint increases were justified • based on market changes, then an argument is made to make in-range equity • adjustments as appropriate. We encourage the City to review cases in which incumbents, who have skill sets that meet market standards, have remained • below 90 percent of market-justified control points for extended periods. • • Where SLCC's Professional Employees Are in the Salary Range • December 2007 • • • 2 • • 2 200 • Z. • W 150 0 —Frequency • t E • i 100 • • . Ilk : • • 75% 80% 85% 90% 95% 100% 105% 110% 115% 120% • Percentage of Midpoint I • • `Lead' Versus 'Lag' • • Should city salary rates move ahead of market average, or instead should they adjust as the data indicates? In the final analysis, the issue will be decided by • taxpayers and fee payers—and we are confident that a lag strategy is the one • that will prevail. We are not aware of any public agencies who have adopted a • lead strategy and have managed thereby to continuously sustain a pay practice • that exceeds the identified market average. • 21 ' • r ' • • CCAC 2008-2009 ANNUAL REPORT • • Over the years we have cautioned the City to avoid striving to be the highest payer among employers with whom it competes for personnel. This includes • local government agencies. We repeat that caution once again. History has • shown that when SLCC increases its rates,other local agencies will do likewise. • Indeed,some agencies have made it a point at general-increase time to set their new rates slightly higher than SLCC's rates—after learning what those rates • are—and to do it all over again when SLCC"counters"during the next round. • This creates unnecessary inflation within the market area,and cannot be justified • to fee payers and tax payers. • As for competing with the local private sector,data indicates that SLCC can,and • does,compete effectively on the basis of attraction/retention aims.The City's • attraction/retention rates have been favorable when compared with that of other • employers—through ups and downs in labor availability. We believe the City has • accomplished this by paying a competitive wage(based on market average) combined with excellent benefits, relative job security,fair employment practices, • and career development and promotional opportunities. • We believe these are values likely to be held by the individual who seeks • employment in the public service. If making a high(above-market-average) • salary is paramount to the individual, he/she should look elsewhere. Does this • mean that the government employee's performance will be mediocre? As noted • earlier,apparently not. Every Salt Lake City citizen opinion survey that has been . conducted during our committee's existence has come back with high scores for City employees. • In Closing • • The EXECUTIVE SUMMARY contains our recommendations for the coming • year's general increases,and highlights our advice on several compensation • issues that have developed primarily due to the continued tight labor market. We • urge caution in reacting to attraction/retention challenges with base pay increases,but advise adjustments where equity warrants. • • As a citizen advisory committee,we are pleased to be called upon to help guide • the City's compensation practice. We look forward to reviewing this report with • the Mayor and the City Council,and we will be glad to answer any questions or discuss any needed follow-up. • • Allen Miller,Chair 411 Larene Wyss,Vice Chair • Bob Baty • John Campbell • Lourdes Cooke Cori-Dawn Petersen • Diane Wood • • 22 • RECEIVED FEB 19 2008 CITY RECORDER Citizens Compensation Advisory Committee MEETING AGENDA January 11, 2008 A meeting of the CCAC will be held Friday, January 11, 2008 from 9:00 a.m. to 10:30 a.m. in Room 118 of the City & County Building, 451 South State Street. The meeting is open to the public. AGENDA: 1. Adopt December 14, 2007 Minutes, if approved. 2. Review and discuss Citizens Compensation Advisory Committee Fiscal Year 2008-2009 Annual Report. 3. Confirm next meeting date.