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1/9/2020 - Meeting MinutesPage 1 of 3 Minutes Meeting Citizens’ Compensation Advisory Committee January 9, 2020 Members Present: Frances Hume (by telephone) Marlene Sloan Jeff Worthington Ray Schelbe Mike Terry Jeff Herring Brandon Dew Members Excused: Staff Present: David Salazar, City Compensation Administrator Jami McCart, Employee Relations/EEO Manager Jodi Langford, Acting HR Director Carolyn Campbell, Benefits Program Manager Dave Buchanan, HR Business Partner Guests: S. David Jackson, NFP Managing Director Ben Luedtke, City Council Staff A recording of these proceedings is on file and available by request from the SLC- HR Department. Meeting Open & Welcome: Chair Frances Hume joined the meeting via a conference call and welcomed everyone. Frances advised the Vice Chair Jeff Worthington will be facilitating today’s meeting. Jeff established a (full) quorum of members was present. Introduction of new committee member, Brandon Dew: Jeff welcomed new committee member, Brandon Dew, whose appointment was recently approved by the city council. Brandon noted his professional experience in the construction industry, as well as his affiliation with the Central Utah Labor Council (AFL-CIO) and Local 3 - Operating Engineers. Public Comment: None. Review and adopt October 10, 2019 & November 14, 2019 meeting minutes: A few changes were noted by committee members, including: - a correction was necessary to the confirmed 2019 meeting dates shown at the end of the October 10th minutes; - Jeff Herring’s name needs to be moved from the “members present” to the “members excused” section of the November 14th minutes; - a punctuation correction, including the addition of a period at the end of sentence; - a date correction on the “review and adopt” section of the November 14th minutes should read instead “October 10, 2019”; - repeated statement “will be available” removed from October 10th minutes, page 3, 2nd paragraph; - Frances asked the time the meeting was adjourned be added (she indicated according to her notes the November 14th meeting ended at 5:15pm.). A motion to approve the minutes with the changes identified above for the committee meetings held on October 10, 2019 and November 14, 2019 was made by Ray Schelbe and seconded by Marlene Sloan. The vote to approve the minutes was unanimous by all members present. Unfinished business: - None Page 2 of 3 Presentation of informational report/consideration of recommended response to city council letter to the committee dated February 7, 2019: David Salazar reminded members that Dave Jackson was asked to come back to the committee to provide information that would assist with formulating a response to a city council letter to the committee, specifically asking about: 1) Balancing the value and cost of retaining current employee’s vs hiring and training new employees, and 2) Whether the city’s longstanding salary practice of identifying 95-100% of market as a or preferred range is still adequate given today’s employment climate? Before launching his presentation, Dave Jackson from NFP introduced himself for the benefit of the new committee members present. Dave indicated his presentation and report would focus on three main areas: 1) Impact of cost of retaining employee’s vs hiring, training new employees and 2) Should the City’s benefit package be holistically reviewed more frequently, and 3) Do the city’s benefits provide enough economic value to employees to keep them at or above 95% of market. He also advised time would allow for committee questions and discussion afterward. Highlights of Mr. Jackson’s presentation included review of a report given to committee members, entitled “Salt Lake City Benefit and Compensation Analysis.” A summary of key points made during this presentation are listed below: • Most employers want the right people that are engaged and bring value to the workforce to stay with the company. If you lose those employees, the organization needs to look to see what is really going on. • Recruiting, or the cost to replace employees, is estimated to be 75% of salary for a given job. • Exit interviews are encouraged to better determine why people are leaving. Industry reports indicate while 89% of managers believe employees are leaving because of pay, 88% of employees indicate they left because of a cultural issue (e.g. bad boss), which is also known as “people quitting people.” • In order to determine a healthy number for attrition, employers need to study each subset of employees, as numbers and statistics will vary by department and position. • If the current strategy for the benefits package is working effectively, a holistic review should be performed no less than every five years. If there are any significant challenges in the benefits package, a review should occur more frequently, as needed. • Public employees Tier 2 retirement package is more similar to the private sector packages than Tier 1. • Above market value for benefits provided by the city include: medical plans, LTD, STD, longevity pay, tuition reimbursement, and EAP. • Benefit offerings that are equal to market include: HSA Contributions, retirement benefits, paid holidays and leave. • The city’s dental insurance benefit is below market based the employee cost-share, which is 100% paid by employees. • Areas where the city is above the median or leading in the market can count towards the city reaching or exceeding a 100% ratio. • Areas where the city is below the median or lagging the market work to pull the city down below the market. • The city’s strategy, which is to compensate at 95% of market rate and making up or exceeding the balance with exceptional benefits, functions correctly in most cases. • In the case of union employees, the city’s strategy is achieved when considering top-out pay rates. • The study found the only cases where the city falls short of meeting at least 100% compensation after benefits have been taken into account occurs when the salary offered does not meet the 95% city-to- market ratio. • Look for opportunity to enhance and improve organizational culture to increase retention of the best people. • In addition to reviewing turnover ratio by specific job classification, keep in mind other factors that have impact such as the availability of labor and marketplace pressure on a given position. • Advice is to continue to ensure employee actual pay rate remain no greater than 5% less than market. Page 3 of 3 Summary of findings indicate: - In most cases, the City meets or exceeds their policy—most employees earn or exceed 100% of the market rate once additional benefit value is taken into account. For employees whose compensation (salary plus added benefit values) does not meet the 100% threshold, it is not caused by a lack of top-of-the-line benefits, but rather the salary of that position that falls short of the 95% of market target. - In poor economic times, it is a wise choice to settle in at paying around 95% of market rate in salary and offering exceptional benefits whenever possible to add value. Given the strong state of the economy presently and the strong labor market, the right choice may be to aim for compensating at 100% of the market rate in order to aid in hiring and retaining employees—remember, our analysis finds that employee turnover can account for $7,751,001 annually. - So long as the City’s salaries sit between 95%–100% of the market rate, with the ability to adjust based on general economic and labor factors, the City’s current strategy can meet the needs of all of its stakeholders. Frances asked if the city routinely gathers information from departing employees to help determine if the reason was for a culture or pay issues. David Salazar noted this type of detail information was not provided to NFP. He stated although some information is gathered during exit interviews, this is an area that can be improved. Jeff Worthington suggested the committee spend the next two meetings reviewing the report and information provided, while at the same time working on the annual report that is due to be submitted in March. Confirmed meeting dates: - January 23, 2020, 3:30-5:30 PM; - February 6 & 20, 2020, 3:30-5:30 PM; - May 14, 2020, 4:00-5:00 PM; - October 8, 2020, 4:00-5:00 PM. Meeting adjourned at approximately 4:52pm. Minutes approved at January 23, 2020 meeting.