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HomeMy WebLinkAbout2000-11-08 SCHOOL BOARD Agenda Item No. 2. Discussion: Compensation and Benefits Strategy. This entire report has been indexed as a separate document under "Financial Reports". COUNTY OF ALBEMARLE EXECUTIVE SUMMARY AGENDA TITLE: Compensation and Benefits Strategy SUBJECT/PROPOSAL/REQUEST: Request approval of Palmer and Cay Consulting Group recommendations on a Compensation and Benefits Strategy for Albemarle County STAFF CONTACT(S): Tucker, White, Foley, Castner, Morgan, Thompson AGENDA DATE: November 8, 2000 ACTION: X CONSENTAGENDA: ACTION: ITEM NUMBER: INFORMATION: IN FORMATION: ATTACHMENTS: Yes /~ ~ REVIEWED BY: ~/~7 BACKGROUND: A Planning Team that includes members of the Board of Supervisors and the School Board, local government and school division staff, and citizens has been working with the Palmer and Cay Consulting Group (PCCG) to study current compensation and benefits programs and practices in Albemarle County. The primary objective of this study has been to develop a proposed Compensation and Benefits strategy for the County, which would include the following components: · Overall Goal - A broad statement of the County's strategic direction for employee compensation and benefits. External Market - A definition of the external labor market. Internal Equity - A broad statement of the County's position regarding the issue of maintaining internal equity. · Positioning of Compensation and Benefits - The targeted positioning of both compensation and benefits relative to the identified external market. · General Salary Guidelines - Outline of the strategy for distributing individual base salary increases. DISCUSSION: The Planning Team began work in March of 2000. The process pursued by the Team in conjunction with PCCG included the following major steps: · Agreement on a list of benchmark jobs to be surveyed annually to establish the external competitiveness of the County's current compensation and benefits. · Agreement on a list of specific jurisdictions/organizations to be surveyed annually in the external competitiveness review. · Development of a survey instrUment to obtain specific information from survey participants concerning compensation and benefits and distribution of the survey to agreed upon external market organizations.. · Analysis of survey data by PCCG to compare Albemarle County's current compensation to the external market. · Agreement by the Planning Team on PCCG's analysis and findings based on the collected survey data. · Agreement by the Planning Team on where the County should target its compensation relative to the external market. · Development (by PCCG) of a proposed Compensation and Benefits Strategy based on the Planning Team's consensus. · Agreement by the Planning Team on the proposed Compensation and Benefits strategy to be presented. AGENDA TITLE: Compensation and Benefits Strategy November 8, 2000 Page 2 The attached document provides the proposed Compensation and Benefits Strategy. The survey data indicated that Albemarle County is at approximately 95% of its market in terms of pay and 105% of its market in terms of benefits. The major recommendation contained in the document is that the County should strive to achieve pay at 100% of the defined competitive market and benefits at ~05% of the defined competitive market. If the Joint Boards are in agreement with the proposed Compensation and Benefits strategy, the Planning Team would convene again to develop recommended implementation details for the strategy. These recommendations would be presented to the Joint Boards in approximately thirty (30) days. RECOMMENDATION: Staff recommends the following actions: · Adopt the Proposed Compensation and Benefits Strategy, as presented (see page 6 of attached PCCG Executive Summary). · Direct the Planning Team to submit the following to the Joint Boards wi{hin approximately thirty (30) days: A proposed base salary structure adjustment based on the approved Compensation and Benefits strategy. A proposed process for addressing pay compression within the new base salary structure. The costs associated with addressing pay compression within the revised salary structure. A proposed compensation increase to maintain market competitiveness for FY 02. Proposed salary administration guidelines outlining the following: · The process for determining the annual salary structure adjustment · The process for determining the annual merit increase 00.238 2 Albemarle County Compensation and Benefits Strategy External Competitive Analysis Executive Summary November 2000 This report was prepared by Karen G. Collins, PRINCIPAL, 800 755-8927 Tom MacKay, PRINCIPAL, 800 776-6931 PALMER & CAY CONSULTING GROUP PALMER & CAY CONSULTING GROUP Executive Summary PALMER & CAY CONSULTING GROUP (PCCG) was retained by Albemarle County (the County) to conduct an independent study to assess its current compensation and benefits programs and practices. The primary objective of our study was to finalize a proposed Compensation and Benefits strategy for Albemarle County. A Compensation and Benefits strategy is a written document that includes the following: · Overall Goal--a broad statement of the County's attitude toward employee compensation; · External Market-a definition of the external labor market; · Internal Equity-a broad statement of the County's position regarding the issue of maintaining internal equity; · Positioning of Compensation and Benefits-the targeted positioning of both compensation and benefits to the identified external market; and · General Salary Guidelines--outlining the Strategy for distributing individual base salary increases. We are requesting that the proposed Compensation and Benefits strategy be adopted formally by both Boards. PALMER.& CAY CONSULTING GROUP 2 Executive Summary Planning Team The County created a Planning Team of representatives from the County, the School Division, the Board of Supervisors, the School Board, the community and Palmer & Cay Consulting Group to develop the proposed Compensation and Benefits strategy. This was to ensure buy-in from all interested parties within the County. The following is a list of Planning Team members: 1. Ken Boyd - School Board Member 2. Jo Dixon - Teacher, AEA 3. Lindsay Dorrier - Board of Supervisors 4. Tom Foley - Assistant County Executive 5. Carolyn Fowler - Human Resources, Chamber of Commerce 6. Loma Gerome - Compensation & Benefits Coordinator 7, Steve Koleszar - School Board Member 8. Larry Lawill - Principal 9. Charles Martin - Chairman of the Board of Supervisors 10. John Miller - Police Chief 11. Frank Morgan - Assistant Superintendent 12. Maria Muntner - Teacher, AEA 13. Margie Shephard - Teacher, AEA 14. Willie Smith - Director of Transportation 15. Michael Thompson - Director of Human Resources 16. Jon Wells- Asst. Director of Information Services 17. Roxarme White - Assistant County Executive 18. paul Wright - Investment Broker, Conservative Coalition 19. Jackson Zimmerman - Director of Fiscal Management PALMER & CAY CONSULTING GROUP 3 Executive Summary Project Approach ~, The Planning Team met on a consistent basis (i.e., two to three times a month over a six month period) to come to an agreement on each element of information that was utilized to develop the proposed Compensation and Benefits strategy. To provide the Boards with an understanding of the due diligence behind the proposed Compensation and Benefits strategy we have outlined the process below. Major milestones are noted in italics. PALMER & CAY CONSULTING GROUP · The Planning Team arrived at consensus regarding a long-term list of benchmark jobs to be surveyed to annually establish the external COmpetitiveness of the County's current compensation and benefits. · The Planning Team agreed upon a list of specific organizations to participate in an annual external competitiveness review. · A survey instrument was designed by the County to obtain specific information from survey participants with respect to compensation and benefits. · The County conducted a private survey to obtain ~compensation and benefits information for the external competitiveness review. This consisted of placing phone calls to all targeted survey participants and sending the finalized survey to those organizations that agreed to participated in the survey. · Focus Group Meetings and Group Meetings. · Palmer & Cay consultants input the data received from participating organizations in the compensation and benefits survey. · Palmer & Cay consUltants compared the County's current compensation and benefits to the external market data received from the private survey and to published survey data (note: published survey data utilized to supplement the private survey data was for the Virginia/Charlottesville area). · The Planning Team reviewed the data collected by Palmer & Cay and the external competitiveness review conducted by Palmer & Cay and supported the findings. The overall findings concluded that the County's current cash compensation is approximately 4.5% below market (i.e., the 2000/2001 salary structure(s)) and its' current .benefits program is approximately 5% above market. · Palmer & Cay consultants had every Planning Team member submit in writing their personal view as to where the County should target its' compensation and benefits programs. · Palmer & Cay consultants developed a proposed Compensation and Benefits strategy based on the following: The County's organizational goals and objectives expressed by the Planning Team; Employee feedback from focus groups, e:mails and interviews; The external market as identified by the Planning Team; The importance of internal equity as identified by the Planning Team; and The desired positioning versus the external market for both cash compensation and benefits as identified by the Planning Team. 4 · The Planning Team voted and approved the proposed Compensation and Benefits strategy. The proposed Compensation and Benefits strategy is outlined on the following page. PALMER & CAY CONSULTING GROUP 5 Executive Summary Compensation and Benefits Strategy Overall Goal. The overall goal of the County's Compensation and Benefits strategy is to provide competitive compensation opportunities that reinforce high performance from all employees and the achievement of organizational goals. Therefore, the County's overall compensation and benefits programs should: · Support the mission, goals, and interests of the County, its customers and employees. Enable the County to attract and retain qualified and high-performing employees who are: Flexible and adaptable - Achievers Service-oriented - Customer-oriented · Motivate and empower employees to act in the best long-term interests of the County and its customers. · Reward employee innovation and performance. · Maintain both internal equity and external competitiveness. · Support teamwork throughout the County in meeting common objectives. · Promote ease and flexibility in compensation and benefits program administration. Competitive Market. The primary competitive market for all County positions is defined as Counties and School systems of similar size within the State of Virginia and/or are located in the same geographic region of the State of Virginia, and for positions that are not unique to government and/or education industry, the competitive market also includes local private employers within the Charlottesville area. Base Salary. Base salary range midpoints are targeted at approximately market levels (i.e., @100th percentile). Base salary increases will be based on competitive market increases and the availability of funds. The County's salary structure will be reviewed on an annual basis to ensure that the program: (1) is externally competitive; (2) meets our employee's individual needs; and (3) minimizes costs to the County. Internal Equity. Our focus on establishing an equitable compensation program is reflected in our dedication to considering internal equity, as well as market compensation levels, in establishing base salary ranges. Therefore, job scope and responsibility requirements will each play a key role in determining compensation levels relative to the external market. Benefits. Benefits will be targeted slightly above the County's competitive market (i.e., @105th percentile). The County's benefits program will be reviewed on an armual basis to ensure that the program: (1) is externally Competitive; (2) meets our employee's individual needs; and (3) minimizes costs to the County. PALMER & CAY CONSULTING GROUP 6 Executive Summary We recommend that the following step be taken as a result of this study: · Adopt the proposed Compensation and Benefits strategy that applies to all employees County-wide. Next Steps · Within approximately 30 days the Planning Team should submit to the Boards the following: A proposed base salary structure adjustment based on the approved Compensation and Benefits strategy. A proposed process for addressing pay compression within the new base salary structure. The cost associated with addressing pay compression within the revised salary structure. -- A proposed budgeted increase for next year. Finalize salary administration guidelines outlining the following: ~ The process for determining the annual salary structure adjustment ~ The process for determining the annual merit increase · Maintain current benefit framework which was determined to be slightly ahead (105%) of the competitive market while reviewing options to improve flexibility. Develop a strategy for anticipated medical care cost increases (10% to 15% annually) over the next three years to maintain competitive position( 105 % of market) on employee benefit package. · Develop a timing and action calendar for implementation of adopted pay adjustments. · Communicate in writing to all employees the adopted Compensation and Benefits strategy. PALMER & CAY CONSULTING GROUP 7 County of Albemarle Preliminary General Government & Schools Split of New Local Tax Revenue Chanae in Revenues over FY 00/01 Property Taxes Other Local Taxes Projected Revenue Increase Less: Hotel & Motel Tax to Tourism (3%) Less: Revenue Sharing Net Projected Local Taxes Proposed $0.01 Tax Rate Reduction Committed New Non-Departmental Ex0enditures Capital Outlay (Transfer to Capital Improvement Plan) [3) Debt Service (3) Capital Reserve 0.5% of Net Operating Budget Revenue Growth to Capital Budget (4) Board Reserve Fund Refunds Total Committed New Non-Departmental Exp. Appropriated Preliminary Budget Estimate FY 00/01 ~1~ FY 01/02 (2) 74,552,168 82,406,800 29,287,785 30,773,300 103,839,953 113,180,100 (840,000) (830,280) (6,093,101) (6,482,712) 96,906,852 105,867,t 08 $ Inc/Dec 7,854,632 1,485,515 9,340,147 9,720 (389,611 ) 8,960,256 3,124,500 3,330,717 206,217 9,600,000 10,233,600 633,600 1,290,000 713,020 (576,980) 755,053 755,053 123,630 200,000 76,370 34,300 41,400 7,100 14,172,430 15,273,790 1,101,360 $ Inc Over FY 00/01 8,960,256 (713,020) (1,101,360) Total Available Net New Local Tax Revenue ProDosed Preliminary/_ Distribution: Available New Revenues to School Division Operations @ 60% Available New Revenues to General Government Operations ~ 40% 7,145,876 4,287,526 2,858,350 (1) July 1, 2000 Appropriated General Fund FY00/01 Budget. (2) Finance Department Preliminary Revenue Projections 10/18/00. (3) Reflects a 6.6% increase based on Financial Advisor recommendation. (4) 0.5% revenue growth allocated to capital based on Financial Advisor recommendation.