restarting raises… is it time for an employee compensation “extreme make over”? arizona city...

Restarting Raises…

Is it Time for an Employee Compensation “Extreme Make Over”?

Arizona City & County Manager’s AssociationJuly 24, 2013

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Restarting Raises…

It’s been a while…

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Restarting Raises…

It’s been a while since many jurisdictions have funded raises for staff. However, with recovering revenues and a recovering economy, funding for salaries is beginning to

flow again. But the years of furlough days and layoffs have many employee compensation professionals considering

whether to perform an “extreme make over” on their compensation systems rather than simply restarting their

traditional “cost-of-living” and “step plans”.

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Restarting Raises…

The Traditional Model

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Restarting Raises…

The traditional job “classification”… • Each job within the organization is studied, and

jobs that use similar knowledge, skills and abilities (KSA’s) are then grouped together into distinct “classes”.

• A compensation “range” is then identified for each class by either:• Collecting data from roughly similar job classes

in other “comparable” jurisdictions; or• Using a “point factoring” system to determine

the relative value of the specific skill attributes in the class.

Source:http://mheducation.com/management

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Information Tech IClassification

Restarting Raises…

Network Technician

Entry Level Data Base Administrator

PC TechnicianEntry Level Programmer

Individual Job

Min Mid Max

$15.25/hr $29.85/hr$22.55/hrMarket

“Range”

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Restarting Raises…

Once compensation ranges have been identified…

• All similar ranges are grouped together into “pay grades”.

• Grades may be further subdivided into smaller “steps” or increments based on fixed percentage.

• Increases are then awarded to employees based on…• The employee having reached the next “step”

based on seniority; and/or…• An increase awarded to all employees across

the board based on the “cost of living”.

Source:http://mheducation.com/management

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Pay Grade “H”

Restarting Raises…

Info Tech I

($15.25-$29.85)

Executive Secretary II($15.15-$29.50)

Licensed Practicing Nurse I

($15.90-$29.95)

Water Quality inspector III

($15.10-$29.75)

Classification

Min Mid Max

$15.35/hr $29.76/hr$22.55/hr

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Restarting Raises…

So what’s gone wrong with the traditional model? Every employee thinks their job is unique — “My job

doesn’t belong in that classification.” Leads to a proliferation of classifications with fewer and increasingly subjective distinctions.

While different classifications may initially have similar ranges, they may deviate dramatically over time — particularly when they are influenced by different non-governmental industry trends.

Current compensation trends typically do not follow rigid steps based solely upon seniority.

Current compensation trends often do not follow the cost of living index.

Lack of Flexibility: The traditional model does not reward individual performance.

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Restarting Raises…

So what can we do different this time?

Three different approaches…

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Restarting Raises…

The FlorenceExample

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Restarting Raises…

The EagarExample

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Restarting Raises…

The GilbertExample