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BC Public Sector
Compensation Review
Septem ber, 2014
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Con
tents
1
2
3
Executive summary
Objectives and scope
Variations in trends in compensation
4 Variation in philosophies and governance models
3
6
8
16
5 Talent management implications 25
6 Recommendations 30
7 Limitations 43
REPORT
D Spectrum of strategies for Local Government
A Approach to building the evidence base
B Total Public Sector wages
C Supplementary evidence
45
49
51
81
APPENDICES
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1. Executive summary
The Mandate
In N ovem ber 2013, the P rovince of British Colum bia engaged Ernst & Young to conduct a review of recent
trends in com pensation across the BC Public Sector and to assess the current m odels for setting m andates
and m anagem ent and executive com pensation A. The Province required that the review forem ost consider
the role of taxpayers, as w ell as recognize the need for leadership and talent in the BC Public Sector.
Summary of findings
There is clear variation in m odels used for setting com pensation across the BC Public Sector. Com pared
to the Provincial level of Governm ent, local G overnm ent com pensation is not coordinated (or
regulated); there are no lim its other than w hat local G overnm ents determ ine the sector can bear; and
there are less transparency requirem ents. This has resulted in a lack of alignm ent in com pensation
betw een levels and also across the Sector. W hile data w as not available to support robust and
com prehensive analysis, available data supported the follow ing observations:
W hile the variation betw een com pensation in the Core G overnm ent and other areas w ithin the P rovince is of
greatest concern, it is im portant to consider the talent m anagem ent im plications of freezes in com pensation
in the Core, w hich create com pression and retention risk.
Core Government(Public Service)
Broader Public Sector Municipality
Executive
The current governancestructure has enabled C ore
G overnm ent to very effectively
hold the lineon executive
com pensation,w ith average
executive salary rem aining flat
from 20 09 to 2 01 4
The m ajority of Broader PublicSector organizations appear to
have broadly held the lineon
executive com pensation from
200 9 to 201 1
In 2 011-12, com pensationacross the m ost senior
leadership roles (e.g. CEO vs.
D eputy M inister) w as higher in
the B roader Public Sector than
in the Core Governm ent
In 2011, com pensation across them ost senior leadership roles (i.e.
City M anagers and Chief
A dm inistrative O fficers of larger
m unicipalities vs. D M s) w as
generally on parity w ith the Core
G overnm ent, and com pensation in
Vancouver and M etro V ancouver
w as higher than the top of the D M
salary range
Management
andExcludedA t the m anagem ent level, Core
G overnm ent com pensation has
been essentially flat since 2 009
and there have been virtually no
increases in com pensation
A nalysis of a sam ple of salarybands indicated that m anagers
in the B roader Public Sector are
typical paid m ore than peers in
the Core Governm ent but less
than those in M unicipality
A t the m anagem ent level there is noclear alignm ent betw een Provincial
and M unicipality com pensation, w ith
M unicipality paying higher
com pensation in the m ajority of
cases for com parable roles
Barg
ainingunit A nalysisof settlem ent data indicates that betw een 2001 and 2012, Core Governm ent em ployees received 19%
cum ulative increase; those in the B roader Public Sector received 24%; and those in M unicipality received 38%.
This in com parison to inflation of 23%
A t the bargaining unit level there is no clear alignm ent betw een M unicipality com pensation and com pensation inthe Core G overnm entand Broader Public Sector. M unicipality are paying higher com pensation in the m ajority ofcases for com parable roles
N ote that given the lack of available data, com pensation of the m ost senior levels of leadership acrossG overnm ent w as com pared w ith the intent of providing on e potentially insightful com parator. Further inform ation
w ould be required as to responsibilities and spans of control of these groups, in order to enable interpretation of
the above findings
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PhilosophiesA and models for setting compensation
Significant variation w as found in philosophies and governance m odels for setting com pensation across the
BC Public Sector. This is challenging to understand from the taxpayers perspective-as there is only one
pocketthat pays for these services provided by the B roader Public Sector em ployees. The further
conceptuallyfrom the Core an entity sits, the m ore dim inished the level of control Cabinet and the
M inister have over the setting of com pensation. In practice, for exam ple, the G overnm ent has no direct
oversight or say in com pensation in the Local & Regional G overnm ent. If com pensation is to be alignedacross the B C Public Sector, these philosophies and m odels m ust be standardized and aligned.
A Philosophies refers to principles, m andates and rules for setting com pensation including alignm ent w ith m arket com paratorsB N ote that BC Ferries an d TransLink are not covered by the Public Sector Em ployers Act.
Core
BroaderPublic Sector
Reg. & Local Government
Decreasing level of centralcontrol and increased
variability
Summary of recommendations
There is a need to drive greater alignm ent in com pensation across the C ore, Public Service, Broader
Public Sector and M unicipality in order to m eet the expectations of the single taxpayerthat tax dollars
be spent consistently and effectively for com parable resources across all areas of G overnm ent
A lignm ent of com pensation needs to be created through a clearly defined philosophy and governance
m odel and enablers driven from the centre and adopted across the breadth of Governm ent
The Core G overnm ent had a com pensation philosophy previously approved by Cabinet but w as partially
im plem ented in 2008 due to the fiscal restraints it w as not sustained over tim e. It should be review ed
and updated and could form the basis for the philosophy for the breadth of the B C Public Sector
The P rovincial G overnm ents house m ust be in orderbefore the M unicipality can be expected to
follow ; but the G overnm ent should do w hat is necessary to bring M unicipal G overnm ent com pensation
into alignm ent over tim e, including using financial levers if necessary
N ote: Throughout the
docum ent, Core G overnm ent
refers to the public service;
the B roader Public Sector
includes the K-12, social
services, health, university,
college and Crow n
corporation sectors;M unicipality includes
M unicipal G overnm ent,
Regional G overnm ent, Fire
and Police, BC Ferries and
TransLink B
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A key conclusion that w as draw n from this analysis is that Core G overnm ent established a solid philosophy to
guide their approach to com pensation, w hich w as approved by Cabinet in 2008 and partially im plem ented. The
reality is that this w as not sustained because of the realities of fiscal restraint. It w ould be w orth refreshing
this philosophy, updating it as required, then use this to ground com pensation across the BC Public Sector.
Three connected initiatives are recommended
Make model moresustainable and market
sensitive
Design future stategovernance model to enablealignment of compensationacross BC Public Sector to
Core Government
Refresh Core Governmentphilosophy for application to
Broader Public Sector
3. Deploy andsustain
2. Build governance model and processes toenable alignment across BC public sector
1. Create commonphilosophy & enablers
Design strategic approachto bringing Municipalityunder this governance
models and design detailedtransition plan to move to
future state
1.D eploy and m ake sustainable
including:
Execute im plem entation plan
Conduct m arket review s
every tw o years to review
com pensation and adjust
bands as required
M ake ongoing adjustm ents
to m odels through a
standard approval process
Cabinet to approve
philosophy as required
Put process in place to
review and refresh
com pensation philosophy on
a regular and ongoing basis.
1.Com m unicate and set
expectation that Cabinet w ill
set philosophy and direction
across entire BC P ublic Sector
2.Revisit the role of Crow n
Corporation Boards in
establishing B roader Public
Sector Com pensation andrevisit the rem uneration
catego rization for Crow n
corporations an d adjust based
on com m on principles
3.Establish responsibilities,
process and procedure for
issuance of a single strategic
directive from Cabinet to align
com pen sation across all BC
Public Sector, including
rem oving need for Cabinet role
in day-to-dayprocedure, and
setting consequences for non-
com pliance
4.Finalize current review of
Provincial m odel including need
to align Em ployers
Associations in the B roader
Public Sector
5.Enable a com m on bargaining
approach in the R egional &
Local G overnm ent
6.Conduct a review of current
arbitration m odels
7.Select strategy to create
adherence to philosoph y and
governance m odel. It is
proposed that:
As data and benchm arking
capability im proves, educate
and set a fram ew ork of
expectations in order toprovide R egional & Local
G overnm ent with the
opportunity to do the right
thingby com plying
W here education and setting
of expectation s do no t yield
results, use financial levers
to directly encourage
m unicipalities to set
com pensation caps and
G overnm ent to stop
providing funding once cap
has been reached
W ith strategy selected,
design detailed transition
plan to future state,
including setting clear
tim elines as to expectations
for M unicipality
1.Revisit and update the
previously approved
com pensation philosophy for
the C ore w here necessary
2.Further develop this
philosophy to create a shared
philosophy for the entire BC
Public Sector, providingcom m on principles, processes
and guidelines
3.Establish standardized
ben chm arking tools in C ore
and roll out across the BC
Public Sector
4.Invest in m ore accessible and
com prehensive data in the
Core and roll out across the BC
Public Sector
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2. Objectives and scope
BC is undertaking a Core Review with clearlydefined objectives
British C olum bia is fortunate to not have been as
significantly im pacted by the econom ic dow nturn as
other jurisdictions, due largely to its strong fiscal
policy. H ow ever, continued financial restraint is
required in the face of an econom ic outlook of slow
recovery and prolonged econom ic risk.
In this context, in July 2013, the Province released
the Term s of R eference for its 2013/14 Core
R eview . A s part of its ongoing com m itm ent to fiscal
responsibility G overnm ent has initiated a core
review process w ith a goal to ensure the best
possible use of G overnm ent resources and respect
for the interests of taxpayers. The C abinet W orking
G roup on Core R eview is tasked w ith exam ining allG overnm ent program s including m inistries, SU CH
sector organizations (school districts, universities,
colleges and health authorities/hospital societies)
and all Crow n Corporations, agencies, boards and
com m issions, w ith a view of positioning the
province for sustained econom ic grow th and
prosperity.
The Core R eview process has six objectives:
Ensure that the program s and activities of
m inistries are focused on achieving
G overnm ents vision of a strong econom y and
secure tom orrow
Ensure that G overnm ent is operating as
efficiently and effectively as possible
Confirm G overnm ents core responsibilities
and elim inate program s that could provide
better service at less cost through alternative
service delivery m odels
Ensure budget targets are achieved
consistent w ith B udget 20 13 (June U pdate)
Identify opportunities w here further savings
can be re-directed to high priority program s
Ensure public sector m anagem ent w age
levels are appropriate w hile recognizing the
need for leaders w ho can positively im pact
the effectiveness and productivity of public
sector agencies.
The Core Review has created the mandate toreview variations in compensation
In considering the stated objective of the Core
Review of ensuring appropriate public sector w agelevels, it has been observed by the Province that
variation m ay exist in recent trends in
com pensation across the BC Public Sector. It is
believed that w hile som e areas of the P ublic Sector
have achieved year on year com pensation freezes,
other have seen significant increases.
This variation gives rise to tw o principle questions
concerning the appropriateness of public service
w ages:
O n the one hand, w hen view ed from a singletaxpayer' perspective, the apparent lack of
correlation betw een the province's econom ic
position and com pensation increases in
certain areas of Governm ent as w ell as the
m ere existence of inconsistency across
G overnm ent, creates concern that tax dollars
are not being spent consistently and
effectively on com parable resources across
all areas of the B C Public Sector
O n the other hand, the existence of sustained
com pensation freezes m ay lead to significant
talent m anagem ent challenges, givenconstraints in attracting and retaining skilled
resources
A s w ell as this issue being a priority for
G overnm ent, num erous com m unities of interest
external to the G overnm ent have recently draw n
attention to the issue of variations in com pensation
betw een com parable parties, including the
Business Council of British Colum bia; the
Independent Contractors and Business A ssociation;
the Fraser Institute; and the provincial press.
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Scope and approach
The Review focused on the scope outlined in the
diagram below . The R eview w as conducted through
analysis of available data, interview s w ith key
stakeholders and through consideration of publicly
available literature w hich in som e cases w as
assum ed to directly or indirectly represent the
opinions of taxpayers (See A ppendix A ).
CoreC
BroaderPublic Sector B
Regional andLocal Government A
BC Provincial G overnm ent
BC P ublic Sector
It is within this context that EY has beenengaged to conduct an independent review
The Province of BC has engaged E Y to conduct an
objective and independent review of com pensation
across select areas of the Public Sector in order to:
Review of recent trends in com pensation
across the BC P ublic Sector
A ssess the current m odels for setting
m andates and m anagem ent and executive
com pensation
In conducting the Review , the P rovince directed E Y
to consider forem ost the role of taxpayers as w ell
as recognize the need for continued strong
leadership and talent in the B C Public Sector.
Scope of review
(4) In scope employee groups
(3)Inscopee
lemen
tso
ftotalcompensa
tion
(1) In scope time series
(2) In scope areas of the public sector
2006 2007 2008 2009 2010 2011 2012 2013
Benefits
Performanceincentive orholdback
Base salary
Bargaining unitManagement &
excludedExecutive
* Federal Crow ns operating in B C w ere
out of scope of this review
It is important for the reader to be aware oflimitations in scope and use of terminology
It is im portant to note that the objective of the
R eview w as not to benchm ark com pensation to the
private sector, Federal G overnm ent com pensation,
or to M unicipality com pensation in other
jurisdictions.
It is im portant for the reader to understand a
num ber of key term s used in this report:
The BC Public Sectoris used to refer to the
Core G overnm ent, the Broader Public Sector
and the R egional & Local G overnm ent
collectively
The Provincial G overnm entis used to refer
to the C ore G overnm ent and the B roader
Public Sector collectively
The Public Servicem ay be used to refer to
the Core Governm ent
A M unicipality includes M unicipal G overnm ent, Regional G overnm ent, Fire and Police, BC Ferries an d TransLinkB Broader Public Sector includes Crow ns, Schools, Colleges, U niversities, Health A uthorities and social servicesC Core Governm ent includes M inistries and Agen cies as w ell as som e sm aller Crow ns
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3. Variation in recent trends in compensation within the sector
A t the m anagem ent and excluded level, the Core
Public Sector has been essentially frozen on
com pensation since 2009. N o com prehensive data
w as available to analyse how w ell the Broader
Public Sector is holding the lineon m anagem ent
com pensation; how ever, analysis of a sam ple ofm anagem ent level pay bands in use in B roader
Public Sector entities indicates that these bands
are m aterially higher than those used by the C ore
G overnm ent. In addition, com paring both the pay
bands and actual com pensation of M unicipality
m anagers to those of peers in the Provincial
G overnm ent indicates that the M unicipality is
paying m ore in the m ajority of cases for
com parable m anagem ent and excluded roles.
A t the bargaining unit level, data indicates that
local G overnm ent em ployees covered under
collective agreem ents have received significantlyhigher increases in com pensation than those in the
Core Governm ent and B roader Public Sector
betw een 2 001 -12. In addition, data indicates that
M unicipality is paying m ore than the P rovincial
G overnm ent in the m ajority of cases.
It is im portant to note that there is a fundam ental
difference betw een the com pensation governance
of Provincial entities and that of M unicipality. The
Province acts as both the legislator and the
em ployer, thus having m ore control and pow er
over em ployeescom pensation. The m unicipalities
do not have this sam e direct control, and in
additional the services they provide are closer to
the citizenry (e.g. garbage collection, recreation
centres, etc.) and thus councils feel enorm ous
pressure not to disrupt these services. This
fundam ental difference, exacerbated by a lack of
com m on data and processes m ay explain the
increm ental increases w e have observed in
m unicipal com pensation, particularly in the Low er
M ainland region.
It has been a challenge to access sufficientdata to allow a detailed comparison ofcompensation
The follow ing section presents findings as to
variations in recent increases in com pensation acrossthe B C Public Sector and absolute levels of
com pensation. It should be noted that significant
data lim itations w ere encountered in constructing
this analysis, including but not lim ited to: lack of data
across all areas of the B C Public Sector, lim ited tim e
series of data, lack of com parability in term s of the
elem ents of total com pensation included in data
reported, and lack of m eans of identifying job types
w ith com parable roles and responsibilities. In
addition, it should be noted that a num ber of
disparate sources of data w ere collected to construct
this analysis. A s a result, it has not been possible in
all cases to present findings in the m anner of aconsistent and integrated story.
Analysis of trends in compensation
W hile com prehensive data w as not available to
support robust and detailed analysis, available data
suggested a significant lack of alignm ent in
com pensation across the B C Public Sector. It should
be noted that robust data has becom e of increasing
im portance in the m ove to open data and
transparency, but a structure for consistent and
detailed data is not yet available. D ata to support
statutory requirem ents and related policy is in place
in the Provincial G overnm ent. Since local levels of
G overnm ent are not subject to the statutory
fram ew ork for the public sector, com parable data is
not available for the M unicipality.
A t the executive level, evidence w as found that the
Core G overnm ent and to a lesser extent the Broader
Public Sector have effectively held the lineon
com pensation since 2009. Com paring the
com pensation of the m ost senior levels of leadership
for exam ple, indicates that a significant num ber ofBroader Public Sector CEO s are paid m ore than the
average D eputy M inister (DM ) and that total
com pensation across this sector show s considerable
variability. In 2011, som e M unicipality leaders w ere
com pensated at a significantly higher level than
leaders in the Core G overnm ent.
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D ata suggests that the current governance
structure has enabled G overnm ent to effectively
hold the lineon executive com pensation in the
Core G overnm ent,w ith average base salaries
having been generally flat from 2009.
100
120
140
160
180
200
220
2007
2008
2009
2010
2011
2012
2013
2014
Averagebasesalary($000s)
Average annual base salary of executives in theCore Government (F07 F14)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
-0.95%to-0.9%
-0.85%to-0.8%
-0.75%to-0.7%
-0.65%to-0.6%
-0.55%to-0.5%
-0.45%to-0.4%
-0.35%to-0.3%
-0.25%to-0.2%
-0.15%to-0.1%
-0.05%to0%
0.05%to0.1%
0.15%to0.2%
0.25%to0.3%
0.35%to0.4%
0.45%to0.5%
0.55%to0.6%
0.65%to0.7%
0.75%to0.8%
0.85%to0.9%
0.95%to1%
1.05%to1.1%
1.15%to1.2%
Distribution of total compensationA increases forBroader Public Sector executives (2009-2011)
M ajority of Broader
Public Sector
organizations are
holding the lineon
CEO com pensation
The com pensation of Broader Public Sector CEO s
has also held the line, w ith C EO s typically
receiving 0% increase in com pensation betw een
20 09 20 11 .
It should be noted, how ever, that som estakeholders com m ented in interview s that a
num ber of Broader Public Sector entities have
found creative w ays to provide higher levels of
com pensation to their executives due to differing
lines of business. There is a trem endous variability
across the sector, w ith university presidents as
notable outliers, w here different com pensation
m odels apply, including treatm ent of tenure,
housing, and research leaves, w hich can add
substantial am ounts to their total com pensation
packages. If there is a m ove to creating m ore
consistency in com pensation philosophies, a
reduction in the variability should be seen.
N ote that salaries exclude 10% executive holdback paym ent
Increases in executive compensation in theBroader Public Sector
Increases in executive compensation in theCore Public Service
A Com pensation assum ed to include base salary, perform ance incentive and other com pensation
Deputy Minister
Associate DM
ADM Band D
ADM Band C
ADM Band B
ADM Band A
Source: The Public S ervice A gency, H istorical Average
Salaries for Executives and M anagem ent(201 3) Source: PSEC , Statem ent of Executive C om pensation
(2013 )
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A t the m anagem ent level, data indicates that the
Core Public S ector has been effectively holding the
lineon com pensation since 2009.
50
60
70
80
90
100
110
2007 2008 2009 2010 2011 2012 2013 2014Averagebasesalary($000s)
Strategic Leadership
Business Leadership
A pplied Leadership
Average annual base salary excluded management(F07 F14)
Sou rce: The Public S ervice A gency, H istorical Average
salary for executives and m anagem ent(201 3)
0 100,000 200,000
City of V ancouver
BC H ydro
Translink
HEABC
U niversity of BritishColum bia
BC Institute of Technology
BC L ottery Corporation
BC T ransit
G overnm ent of BC
BC A ssessm ent
M ax of BC
Governm ent
salary range
($1 13k)
A nalysis of Strategic Leadership salary bands
indicates that there is m aterial variation in pay
bands across the BC Public Sector:
Core G overnm ent pays at the low er end, w ithseveral entitys m inim um com pensation
exceeding com pensation caps in the Core
Broader Public Sector entities such as BCLottery Corporation and B CIT are in the m iddle
of the range
BC H ydro and UBC stand out am ong BroaderPublic Sector entities as paying tow ards the top
end of the range
The C ity of V ancouver is the highest payingorganization of those for w hich data w as
available
Strategic Leadership salary ranges across the BCPublic Sector
Source: The P ublic Service A gency, Strategic Leadership
Review : Com pensation challenges(201 3)
Salary
Comparisons of management and excludedemployees compensation across the sector
D ata is not readily available to support analysis of
increases in com pensation of m anagem ent andexcluded em ployees across other areas of the BC
Public Sector. Som e data, how ever, is available to
enable com parison of absolute levels of
com pensation, including inform ation on salary
bands collected by The Public Service A gency;
Labour Force Survey data; data reported under the
Financial Inform ation A ct; and com pensation
survey data from professional associations.
W hile the num ber of available data points and the
lim ited ability to identify com parable positions m ay
not support robust conclusions, data consistentlyindicates that M unicipality typically pays higher
com pensation than the Provincial G overnm ent for
com parable positions.
Comparison of Strategic Leadership levelsalary bands across the BC Public Sector
Increases in management compensation inthe Core Public Service
Provincial
Regional and localKEY
In A ppendix C -24, the salary ranges of four
Strategic Leadership job categories are presented
for a sam ple of BC Public Sector organizations. In
all cases, the BC Public S ervice is the low est paying.
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Comparison of Business Leadership levelsalary bands across the BC Public Sector
0 50,000 100,000 150,000
Public Service
BC H ydro
BC Lotteries
BCIT
HEABC
U V ic
BC T ransit
A nalysis of the salary bands of a sam ple of
com parable roles in the Business Leadership level
indicates that there is variation in pay bands across
the BC Public Sector and in all cases the B C Public
Service pays at or near the low er end.
IT Manager salary ranges across the BC PublicSector
Source: Provided by PSEC
0 50,000 100,000 150,000
Public Service
BC H ydro
BC Lotteries
BCIT
HEABC
U Vic
BC T ransit
Budget Manager salary ranges across the BC PublicSector
So urce: Provided by PSEC
0 50,000 100,000 150,000
Public Service
BC H ydro
BC Lotteries
BCIT
HEABC
U Vic
BC T ransit
OHS Manager salary ranges across the BC PublicSector
Source: Provided by PSEC
Comparison of Applied Leadership level salarybands across the BC Public Sector
A nalysis of the salary bands of a sam ple of
com parable roles in the A pplied Leadership level
show s m aterial variation in pay bands across the
BC Public Sector. A t this level, the P ublic Sector
appears to be m ore com petitive in som e instances.
0 50,000 100,000 150,000
Public Service
BC H ydro
BC Lotteries
BCIT
HEABC
U Vic
BC T ransit
HR Consultant salary ranges across the BC PublicSector
So urce: Provided by PSEC
0 40,000 80,000
Public Service
BC H ydro
BC Lotteries
BCIT
U Vic
BC Transit
Executive Coordinator salary ranges across the BCPublic Sector
Source: Provided by PSEC
0 40,000 80,000 120,000
Public Service
BC Lotteries
HEABC
U V ic
Policy Advisor salary ranges across the BC PublicSector
Source: Provided by PSEC
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0 50 100
In order to com pare com pensation for sim ilar
positions across the BC Public Sector, one years
w orth of Labour Force Survey data w as collected
from Statistics Canada. This dataset included
approxim ately one m illion records. A nalysis w as
perform ed on the subset of respondents w hoidentified them selves as being em ployed by the
Provincial and M un icipality in BC. Hourly earnings
w ere calculated for those w ithin this subset w ho
declared them selves to not be a m em ber of a union
or not covered by collective agreem ents. The
results indicate that in m ost cases, M unicipality
pays higher com pensation than Provincial
G overnm ent.
Compensation of management and excludedemployees (J an 2013 to Dec 2013)
# of data points
18
27
47
25
24
38
36
52
74
60
52
59
51
29
Earnings (assum ed to be
base salary only) ($/hour)
Protective
Services
Professionals in
N atural and
A pplied
Sciences
Clerical
A dm inistrative
and Regulatory
O ther M anagers
Specialist
M anagers
Senior
M anagem ent
Comparison of management and excludedcompensation across the BC Public Sector
0 50,000 100,000 150,000
The A ssociation o f Professional Engineers and G eoscientists of
BC Report O n M em bersCom pensation A nd B enefits(20 12 )
Base salary comparison Professional Engineersand Geoscientists of BC (2012)
# of data points
Region al &
Local
35
Provincial49
Comparison of compensation for specializedskills across the BC Public Sector
Stakeholders com m ented that the ability to recruit
and retain em ployees w ith technical expertise such
as law yers, IT specialists, auditors or engineers is
increasingly at risk in the Provincial G overnm ent due
to uncom petitive com pensation packages w hen
com pared to the M unicipality. The hypothesis thatM unicipality pays higher com pensation for
specialized skills w as validated on data available for
professional engineers.
In addition, interview ees w ere able to provide
m ultiple exam ples of specific individuals being
attracted from G overnm ent to w ork in the natural
resources private sector including m ining and LN G .
It w as generally expressed by stakeholders that
areas w ith transferable skills such as Finance, H R, IT
and data adm inistration w ere also vulnerable. N o
specific exit interview data w as available to validate
this assertion.
Salary
So urce: Labour Force Su rvey D ata
Provincial
R egional and localKEY
Provincial
Regional and local
KEY
Lo w er quartile H igh er quartile
M edian
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0%
10%
20%
30%
40%
50%
$75,000 $150,000
Percentage of employees receiving between$75,000 to $150,000B
Share of total FIA disclosed compensation paid tothose earning more than $75,000C
0% 50%
A bbotsford
Surrey
Prince George
Vancouver
Victoria
Kelow na
Kam loops
Provincial
% of total FIA disclosed com pensation >$75,000
Percen
tageofemployeesreceiving
between$75Kto$150K
A nalysis of FIA data A indicates that M unicipality
has a higher percentage of em ployees receiving
higher levels of com pensation than is the case for
the Provincial G overnm ent.
FIA data also indicates that m unicipalities allocate a
higher percentage of total com pensation
expenditure to those earning over $7 5,000 than is
the case for the Provincial G overnm ent -this m ay
be an issue of high com pensation or it m ay be an
issue of organizational design or m ore likely both.
A EY analysis of Financial Inform ation A ct dataB A nalysis provided by PS ECC D ata includes salary, w ages, bonuses, gratuities, taxable benefits
Regional &
Local has
higher % of
high earners
Comparison of distribution of salaries betweenRegional and Local and Provincial Governments
Salary, w ages, bonuses, gratuities,
taxable benefits
A nalysis prepared by P SEC of H RSD C settlem ent
data for the Core G overnm ent, Broader Public
Sector and M unicipality indicates that M unicipal
G overnm ent em ployees covered under collective
bargaining agreem ents (covering m ore than 500
em ployees ) have had significantly higher increasesin com pensation in recent years than their peers in
the P rovincial G overnm ent from 2001 to 2012.
Cumulative percentage wage increase in bargainingunit compensation vs. inflation (2001 to 2012)
Increase in bargaining unit compensation in theProvincial and Municipality
So urce: FIA D ata
Source: FIA Data
So urce: Provided by PSEC
Provincial
Regional and localKEY
0%
5%
10%
15%
20%
25%
30%
35%
40%
Core BPS
R egion al and L ocal In flatio n
Betw een 20 01 and 201 2, Core Governm ent
em ployees received 19% cum ulative increase; those
in the B roader Public Sector received 24%; and
those in M unicipality received 3 8%. This in
com parison to inflation of 23% over the sam e tim e
period.
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# of data points
Protective
Services
29 3
79
Technical
related to
N atural and
A pplied
Sciences
92
92
Professionals
in N atural and
Applied
Sciences
61
13 7
Clerical
16 7
20 0
A dm inistrative
and
Regu latory
22
11 7
0 20 40 60
Exam ination of Labour Force survey data betw een
January 2 01 3 to D ecem ber 201 3 indicates that for
those em ployees w ho identified as being union
m em bers or covered by collective agreem ents, in
the m ajority of cases, the M unicipality pays higher
com pensation than the Provincial G overnm ent forcom parable roles.
Comparison of compensation of employees coveredby collective agreements (J an 2013 to Dec 2013)
Earnings (assum ed to be base salary only) ($/hour)
Compensation of union members in theProvincial and Municipalities
The m ajority of m unicipal spending goes to
em ployeescom pensation. The Independent
Contractors and Business Association of BC (ICBA )
estim ates that m ore than 50% of typical m unicipal
budgets goes to w age and benefit costs1. A study
also calculated that in V ancouver 67% of operatingspending w ent to w ages, salaries and benefits, on
average, annually betw een 2 000 and 2011 2.
A fter adjusting for inflation, as w ell as population,
real per capita m unicipal spending across M etro
V ancouver grew by 32 % betw een 200 0-10 ,
com pared w ith approxim ately 10% in the Provincial
G overnm ent1.
Increase in compensation expenditure inMunicipality
95
100
105
110
115
120
125
130
135
Rea
lper
Cap
ita
Expen
diture
(In
dexe
d2000=
100)
N ote: Excludes capital spending
Source: BCBC, Up and aw ay: The G row th of m unicipal
spending in M etro V ancouver(20 12)
Real per Capita Expendituresmunicipalities in Metro Vancouver and Provincial
1 ICBA of British Colum bia , Construction M onitor(2012)2 CFIB, Big C ity Spenders: A n A nalysis of m unicipal Spending Trends(2013)
G iven that there has been a rapid escalation in
m unicipal per capita expenditure, it is reasonable to
assum e that there has been a correspondingly rapid
increase in com pensation expenditure w ithin the
m unicipal sector.
N ote that additional analysis of 2006 Census data
supports the finding that M unicipality pays m ore for
com parable positions. This analysis is provided in
the appendix. (See A ppendix C-1)So urce: Labou r Force Su rvey D ata
Provincial
Regional and localKEY
Provincial
Reg ion al and localKEY
Lo w er qu artile H igh er quartile
M edian
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4. Variations in Philosophies and governance models
Compensation mandate:Cabinet and the M inisterhave clear pow ers to set rules around executive and
m anagem ent com pensation and bargaining unit
m andates across the Provincial G overnm ent. In the
Regional and Local m odel, no one party sets the
rules around executive com pensation and collectivebargaining m andates across the entire sector. This
pow er is fragm ented, w ith each m ayor and council
having responsibility for their ow n jurisdiction.
Employers Associations:W hile E m ployersAssociations provide sector co-ordination in
response to organized labour in the Provincial
G overnm ent, there is currently duplication of
m andate and a lack of coordination and know ledge
transfer. The M unicipalitys approach to collective
bargaining is highly fragm ented and inefficient.
Crown Corporation Boards:M any public sector
boards m ay not be adequately considering theinterests of their shareholders in setting
com pensation. There are m any different
philosophies in place depending on the
organization.
Collective bargaining models: There is a m ixedapproach to collective bargaining across the
Province, w ith som e pockets of arbitration for
Police and Fire w hich appears to be resulting in
com pensation escalation.
Benchmarking tools and enablers: There is a lackof consistent classification of job types w ithin and
across areas of the Public Sector w hich lim its the
ability to build alignm ent of com pensation. There
are no consistent benchm arking processes or
standards.
Data: Legislated sources of data cannot feasiblyprovide the BC G overnm ent w ith the m eans to
understand variation in total com pensation across
the breadth of the Provincial and M unicipalities,
and the G overnm ent does not currently use all
available sources of inform ation to gain a picture of
com pensation across the breadth of G overnm ent.
In sum m ary, w e conclude that the identifiedvariations in com pensation are driven by variations
in philosophies and governance m odels for setting
com pensation across the BC Public Sector.
Summary of findings Philosophies
The Core G overnm ent articulated a clear
philosophy for the setting of m anagem ent and
executive com pensation in 2 008 w hich w as
approved by cabinet, but only partially
im plem ented due to the fiscal restraints im posed
shortly thereafter. U nderpinning this philosophy
w as a recognition that people are attracted to
public service for the satisfaction and com plexity of
the w ork, not just for the com pensation. The
philosophy also recognized that it w as not generally
relevant to benchm ark against the private sector.
The philosophy contem plated ongoing alignm ent
w ith Federal and Provincial roles in order to sm ooth
the cycle and m ake it m ore predictable. It w as
intended to provide a dynam ic rather than static
fram ew ork, requiring m inim al Cabinet involvem ent
in daily one-off decision m aking.Specifically, the philosophy m andated that DM
com pensation be set at 83% of equivalent
executives in the Federal G overnm ent; that A D M
com pensation be set at 85% of the BCs DM s; and
that Strategic Leadership com pensation be set at
85% of BCs AD M s. W hile this philosophy w as
im plem ented at the D M and A D M level, it w as not
im plem ented for Strategic Leadership, hence w e
are seeing the current com pression issues, etc.
In contrast, the B roader Public Sector and
M unicipalities are understood to have varied
philosophies. Crow ns often operating m onopolyservices benchm ark to private industry including
m ultinationals to w hich they arguably do not have
com parable scale and com plexity. For exam ple, tw o
stakeholders expressed their concern that som e
Crow ns consider m ultinational organizations such
as Coca-Cola and M cD onalds to be fair
com parators. Instances are also apparent of
Crow ns avoiding benchm arking to organizations for
w hich there is a strong case for direct
com parability. O ne interview ee cited the exam ple of
BC Ferries not benchm arking to W ashington State
Ferries (See A ppendix C-7). In addition, M unicipal
G overnm ent m ay cherry pick peers to benchm arkagainst and calibrate to a high percentile w hich
creates invariable ratcheting up.
Summary of findings Governance models
Overview:In sum m ary, the Provincial G overnm entm odel for setting com pensation is relatively
centralized w ith Cabinet oversight and legislative
authority, w hereas the m odel in the M unicipality is
decentralized w ith no central oversight (See
A ppendix C-6).
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4a. Philosophies
Core Government compensation philosophy
Executive: In 2008, Cabinet approved a philosophyfor executive com pensation in the Core Governm ent.
This philosophy m andated that Deputy M inisters
com pensation be set at 83% of equivalent executives
in the Federal G overnm ent that Assistant D eputy
M inister com pensation be set at 85 % of the
com pensation of BCs D M s. It w as also determ ined
that BCs target position for executive com pensation
in the public sector w as to rank 3rd to 5th highest
am ongst other Provincial G overnm ents. A specific
determ ination respecting the appropriate ranking
w as to be m ade based on consideration of
dem ographic and labour m arket trends, and
econom ic variables.
U nder this philosophy, the critical com parators for
Core G overnm ent executives are the Canadian
provincial and federal jurisdictions. A s a result, w hilethe philosophy explicitly identifies the prim ary
com petitors for talent as including the private
sector, the philosophy m akes it inappropriate to set
com pensation based on private sectorcom parators.
U nder this philosophy, ranges for executives w ere
last set in A ugust 20 08. W hile C abinet approved that
executive salary ranges w ill be periodically review ed
subject to changes in executive com pensation in the
federal G overnm ent, there have been no
adjustm ents to the salary ranges since
im plem entation because of the restraint m easures
subsequently im plem ented.
Management: The Strategic Leadershipcom pensation w as m andated to be set at 85% of the
com pensation of BCs A D M s; how ever, w hile this
philosophy w as im plem ented at the D M and A D M
level, it w as not im plem ented for Strategic
Leadership due to fiscal constraint.
Bargaining unit: Cabinet has the prerogative to setphilosophy in the form of m andates for increases in
unionized em ployee com pensation. Since 1993,
bargaining w ithin the Core Governm ent has been
governed by m andates established by the
G overnm ent. (See A ppendix C -2).
Broader Public Sector compensation philosophy
The G overnm ent sets certain param eters for Broader
Public Sector executive com pensation. CEO
com pensation m axim um s are set by P SE C across the
Broader Public Sector in accordance w ith a
classification structure for entities that w as last set in
2008 (See Appendix C-3). M any C row ns perceived
the classification categories to be illogical and
inconsistent. In addition to CEO caps, in 2012, the
G overnm ent introduced a policy to cap executive
com pensation in C row ns at no m ore than 85 % of CEO
salary.
Each organization develops and applies its ow n
philosophy to create an executive com pensation
w ithin these param eters. A nalysis indicates little
consistency in the philosophies applied by Broader
Public Sector entities to develop com pensation plans
(See A ppendix C-5). C EO salaries tend to be set atthe top of the available ranges.
A t the bargaining unit level, Cabinet has the
prerogative to set philosophy in the form of m andates
for increases in com pensation across the Broader
Public Sector (See A ppendix C-4). Since 1993,
bargaining w ithin the Broader Public Sector has been
governed by the sam e m andates that have applied to
the Core Governm ent. (See A ppendix C -2).
Municipality compensation philosophy
A sam ple of 10 local G overnm ents w as investigated.
O nly one G overnm ent reported publicly on itscom pensation philosophy. The com pensation
philosophy for the one reported instance that of the
City of R ichm ond is to ensure that em ployees
receive a base salary w ithin the 75 th percentile of the
defined external m arketplace. It is assum ed that
m aterial variation m ay exist in the com pensation
philosophies applied across M unicipality.
(See R ecom m endation 2.1).
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4b. Compensation Mandate
Under the Provincial Government model, theCabinet and Minister have powers to set thecompensation mandate across the ProvincialGovernment
The Cabinet m ay set m andates and rules for the Core
G overnm ent. The Public Sector Em ployers A ct also
provides the M inister w ith the authority to: (1) direct
public sector em ployers to prepare com pensation
plans consistent w ith the M inisters direction; (2)
requires that em ployee com pensation plans and
contracts be approved by the M inister responsible
for the A ct prior to im plem entation; (3) em pow ers
the M inister to direct parties to provide specific
inform ation including inform ation on the
m ethodology used in devising plans, and (4)
com parisons of actual com pensation provided to
persons em ployed in the sam e or sim ilar sector,position or occupation. The M inister also has the
pow er to issue m andates covering public sector
bargaining.1
There are a number of exceptions in theProvincial model
A num ber of G overnm ent entities are excluded from
the provisions of the Public Sector Em ployersA ct
and the Public Service A ct that are not directly
controlled by the centre, e.g.: BC Investm ent
M anagem ent Corporation, British Colum bia FerryServices and TransLink.
W hile not explicitly covered by G overnm ent rules and
m andates, these entities are ultim ately accountable
to the G overnm ent, and generally claim to follow
G overnm ents guidelines in setting em ployee
com pensation. For exam ple, a recent TransLink
spokesperson com m ented: w hile w e are not a
Crow n corporation, w e operate prudently w ithin
G overnm ent guidelines." W ith a 14% increase in the
num ber of em ployees m aking over $100,000 dollars
in TransLink in 2 012, a num ber of com m unities of
interest have expressed doubts about the validity ofsuch claim s.2 In sum m ary, the additional levels of
com pensation autonom y have led to som e
em barrassm ent for Governm ent over one-off or
overly rich com pensation for executives.
In the Municipality, no one party sets mandatesand rules across the entire sector. This poweris fragmented
In the M unicipality, there is no entity, policy or
procedure across the sector that is intended to
support the establishm ent of sector w ide rules on
executive com pensation and m andates for bargaining
unit com pensation.
A uthority for setting com pensation is held by
individual m ayors and councils, w hich have the
prerogative to set direction for their region only.
W hile there are indications that m unicipal
expenditure constraints exist, (e.g. M etro V ancouver
regional G overnm ent scrapped plans to raise taxes
and fees by 1 2%, and set a new target that lim its the
increase for each household to a m axim um of 2.5% in2013), stakeholders generally pointed out concerns
around the lack of governance to enable setting of
consistent m unicipal m andates to constrain
com pensation grow th. W ithout such governance,
unions can focus efforts on m unicipalities w here
outcom es are m ore likely to be favourable and use
the resulting agreem ents to ratchet up increases in
other m unicipalities. N o evidence w as found,
how ever, of other jurisdictions in Canada setting
consistent regional m andates and rules apart from in
the face of extrem e fiscal pressure (See A ppendix C -
9).
In conclusion, the variation in m odels for setting
m andates and rules across the three groups results in
a lack of alignm ent in com pensation across the Public
Sector. (See R ecom m endation 2 .1) .
1 BCPS EA , Public Sector M anagem ent & E xecutive C om pensation Freeze Policy(2012 )2 N ew sleader, TransLink staff earning 6-figu re salaries(2013)
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4c. Strategic advice, coordination and enforcement
Strategic coordination is provided to the Core
G overnm ent by the Public Service A gency and to the
Broader Public Sector by the Public Sector
Em ployers Council (See A ppendix C-10). BCs
Provincial m odel is one of the m ost coordinated
across Canada indeed a num ber of otherjurisdictions are looking to m ove to the PSEC m odel
and this is reflected in a relatively low Provincial
G overnm ent / private w age differential.
The Regional and Local jurisdictions do not have a
com parable PSEC or the Public Service Agency to
provide strategic advice, co-ordination and
enforcem ent. N o evidence w as found that other
Canadian jurisdictions have in place a governance
m odel that supports strategic advice, coordinationand enforcem ent across the m unicipal sector.
(See A ppendix C-13)
-5% 0% 5% 10% 15%
BC
perform ance
Yukon
N W T
N ew foundland
PE I
N ova ScotiaN ew Brunsw ick
Q uebec
O ntario
M anitoba
Saskatchew an
A lberta
British Colum bia
There has been controversy and confusion around
the m andate to set executive com pensation w ithin
the B roader Public Sector, w ith variation on w hat is
contained and reported as part of total
com pensation. W hile greater consistency has been
driven, there have still been exam ples of exceptions
to the rule. In som e cases the breach had been
approved by PSEC. In addition, in som e cases, there
m ay be legitim ate reasons for this variation
including, for exam ple, severance pay or additional
com pensation for unused vacation. PSEC reports
that action has been taken m ore recently to bring
CEO com pensation back into line.
(See A ppendix C-12).
Provincial Government / private wage differential(See A ppendix C-11)
Source: CFIB, W age W atch(2008)
BC is, how ever, the only C anadian jurisdiction to have
an A uditor General for the Local G overnm ent (SeeA ppendix C-10). W hile A G LG plans to conduct a
perform ance audit of M anaging the Inherent Risks of
Lim ited H um an R esources w ithin Sm all Local
G overnm ents, it does not currently have a publicly
stated plan to review com pensation as a specific
issue.
The initiative to create A G LG has been w idely
applauded, but som e parties suggest that A G LG could
be m andated to focus on com pensation, and to go
beyond validating if policy has been applied, to
investigating w hether outcom es are fair and
equitable. (See R ecom m endation 2.3).
0% 10% 20%
N ew Brunsw ick
Q uebec
V ictoria
Vancouver
N ova S cotia
British Colum bia
M anitoba
O ntario
A lberta
Saskatchew an
N ew foundland
Prince Edw ard Island
N W T
Yukon
BC
perform ance
Municipality / private wage differential
Source: CFIB, W age W atch(200 9)
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4d. Employers Association
The Public Service A gency provides employersassociation services to the Core Government
U nder the P ublic Service Act, the Public Service
A gency has the responsibility to act as the
bargaining agent on behalf of the G overnm ent, w iththose unions w hich represent em ployees directly
em ployed by the G overnm ent.
Six Employers Associations provide servicesto the Public Sector
The purposes of an Em ployersAssociation are to
coordinate the follow ing w ith respect to the sector
for w hich they are responsible:1
Com pensation for em ployees w ho are not subject
to collective agreem ents
Benefit adm inistration
H um an resource practices
Collective bargaining objectives . N ote that an
Em ployersAssociation m ay bargain collectively
on behalf of its m em bers if authorized to do so
In addition, it is the purpose of an EA to:
Foster consultation betw een the association and
representatives of em ployees in that sector
A ssist the council in carrying out any objectives
and strategic directions established by the council
for the em ployers' association
W hile Em ployersAssociations provide sector co-
ordination in response to organized labour in the
Provincial G overnm ent, stakeholders com m ented
that there is currently duplication of m andate and a
lack of coordination and know ledge transfer.
(See R ecom m endation 2.4) .
At the local Government level, there isdisparity in the power of those at the table
A t the sm aller local G overnm ent level, elected
officials are often unw illing to delegate bargaining to
professionals, despite the lack of skills of theirnegotiating team s com pared to their union
counterparts.2N o evidence w as found of
coordination in sm aller m unicipalities in BC.
V ancouver and V ictoria have built m ore co-ordinated
responses to organized labour in the form of the
Labour Relations departm ent of M etro V ancouver
and the G reater V ictoria L abour Relations
A ssociation. H ow ever, the co-ordination of labour
relations in the Low er M ainland, is increasingly
fragm ented w ith m em bers leaving the association.
(See A ppendix C-14)
The im plications of the lack of co-ordination are
clear. The vast m ajority of m unicipal w orkers are part
of large and sophisticated unions. Even local
G overnm ent unions, for exam ple, are local chapters
of the C anadian U nion of Public Em ployees, w hich is a
m em ber of the C anadian Labour Congress. CU PE
provides even sm all local unions w ith sophisticated
assistance for bargaining and contract negotiations.
(See Appendix C-15).
A s Langley T ow nship Councillor, Bob Long
com m ented: It w ould be nice if w e w ere all m em bers[of the B ureau]. W e dont have the resources in m y
tow nship [to bargain on our ow n] but the reality is
the big players w ant to leave. W e w ish them the best,
but w ere all going to be paying for it.W ithout a co-
ordinated response to organized labour, there is a
real risk, that unions can divide and conquer. A s one
stakeholder observed in interview , unions can target
a given m unicipality w hich exhibits a m ore favourable
attitude tow ards union interests and use that factor
to secure a favourable outcom e at the bargaining
table.This then sets the precedent for negotiations
w ith other m unicipalities. A s Port M oody M ayor Joe
Trasolini com m ented: N obody can tell m e anycontract negotiating in one city is not going to be
part and parcel of the negotiations in another
m unicipality.3
In conclusion, the M unicipality approach to collective
bargaining is highly fragm ented and inefficient.
(See R ecom m endation 2.5).
1 G overnm ent of BC, Public Sector Em ployers Act(2013)2 R.L. Bish, Local G overnm ent in B ritish Colum bia(2008)3 Vancouver Sun , Labour Relations broken(2011)
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4e. Crown Corporation Boards
Most entities in the Broader Public Sectorhave their own boards
The B oards have responsibility for setting
com pensation philosophy, approving com pensation
plans, and ensuring that executive com pensationpaid is w ithin approved plans. In the case of Crow ns
and school districts, there are boards of directors,
and in the case of universities, there are boards of
governors.
O ne of PSECs intended roles is to provide a control
on the risk for excessive executive com pensation, at
the sam e tim e, there is an expectation that Boards of
D irectors act in the interests of their shareholders
(i.e. the G overnm ent and population) and act to keep
executive com pensation costs at reasonable levels
and follow G overnm ent guidelines.
Crow n com pensation categories w ere established in
2006, am id significant controversy. Each
organization w as placed in a specific category, and
these w ere not subsequently updated. Crow n
com pensation categories have subsequently been
replaced by CEO com pensation m axim um s the
m axim um sets the highest level for the rest of the
organization. Boards spend significant tim e and
energy in determ ining com pensation for their
executive and em ployees, but are given little in the
w ay of standard tools, benchm arking guidelines,
com parable data and processes to support theirdecision m aking.
W hile Boards can be replaced, there are few other
m echanism s to hold B oards accountable for
decisions that they m ake w ith respect to
com pensation. There is a w ide variation in skill sets
and com pensation expertise on Crow n broads, as
w ell as confusion as to their role in establishing
com pensation. There is concern that Boards do not
alw ays consider the interests of their shareholders in
proposing and setting com pensation; one senior
interview ee com m ented that they m ay even be
being held captive by their executiveson them atter of com pensation. A num ber of com m unities
of interest have also highlighted this concern.
A num ber of stakeholders com m ented that Boards in
both the P rovincial and M unicipalities m ight benefit
from retraining as to their fundam ental roles and
responsibilities including ethics, operating values and
codes of conduct. It w as suggested that such efforts
are already underw ay on the Provincial G overnm entside.
There are exam ples of the use of com pensation
com m ittees in the B roader Public Sector. U BCs
board of directors, for exam ple, delegates
responsibilities for executive com pensation to its
M anagem ent Resources Com pensation C om m ittee. It
appears som e m unicipalities m ay have such
com m ittees. H ow ever, other sm aller m unicipalities do
not have com pensation com m ittees.
In conclusion, w hile Boards have internal guidelines
and standards for determ ining com pensation, thoseguidelines are not necessarily consistent across the
public sector. Furtherm ore, they m ay not be
adequately considering the interests of their
shareholders in setting com pensation, nor be aw are
of their fundam ental responsibilities.
(See R ecom m endation 2.2).
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4f. Benchmarking tools
The approach to benchmarking is also highlyfragmented in Municipality
In addition, evidence from individual m unicipalities
outside of the Low er M ainland suggests that they
initiate their ow n benchm arking studies to support
com pensation setting. It is not apparent that
centralized benchm arking sources are available to
m unicipalities in BC. This is in contrast to O ntario,
w here every year M ercer and the O ntario m unicipal
H um an Resources Association (O M H RA ) an
organization created to enable the sharing of
inform ation and ideas betw een m unicipalities in the
Province issues the O ntario m unicipal
Com pensation Survey:
The survey consists of 22 2 benchm ark jobs
for m unicipalities across O ntario
In addition to com pensation data,
participants are also be able to access
inform ation on pay policies and practices
such as job rate adjustm ents, perform ance
pay, attraction and retention, hours of w ork,
overtim e, vacation entitlem ent, autom obile
benefits and m ore
M ercer also offers a sm all m unicipalities
report, w hich includes data for 32 of the 2 22
survey positions1
It can be considered that the approach in O ntario
w ould potentially:
O ptim ize the efficiency of benchm arking
Increase the population considered for
com parison
Increase the reliability of analysis
In conclusion, there are no standardized tools and
support for benchm arking across either the BroaderPublic Sector or the M unicipality (See
recom m endation 1.3).
1 M ercer, O ntario m unicipal Com pensation Survey(2012)
No evidence was found of a comprehensivemapping table across the BC Public Sector
In order to enable m eaningful com parisons betw een
organizations, a m apping of job types across
organizations of som e sort is required. W hile a full
m apping table is the 'holy grail' across all
jurisdictions, no evidence w as found that BC has a
standard approach to com parators, that w ould
enable m eaningful analysis of a single source of a
single source of truthdataset. The lack of a
standardized m apping tool restricts the ability to
im plem ent philosophies effectively.
Broader Public Sector entities conduct theirown benchmarking
Typically Broader Public Sector entities conduct their
ow n benchm arking generally through the hiring of
third party consultants. There is no consistent use of
com parators -som e Crow ns use private sector
m ultinationals, for instance. There are, how ever
som e exceptions to this. For exam ple, V IH A , PH SA
and Interior H ealth rely on H EA BC to develop salary
ranges based on 5 0 th percentile of the blended
healthcare and external m arket pay policy guidelines.
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Unions may have undue influence in thecollective bargaining process at theMunicipality level
The m odel of collective bargaining w as originallyadopted by the Public Sector from the private
sector. It is now held as a basic principle in m ost
areas of the P ublic Sector that em ployees and
em ployers should voluntarily agree the conditions
of em ploym ent, w ith either side having the right to
w ithhold agreem ent through strikes or lockouts.
H ow ever, as m uch academ ic and com m unity of
interest literature on the topic argues, this m odel
has tw o key potential im plications for m ost public-
sector activities that are fundam entally different to
the im plications in the private sector:
Influence of strikes on political players:W hen w ork ceases in the public sector,
services cease to be available w hich causes
significant inconvenience for citizens. The
inconvenience m ay potentially cause the
electorate to w ithhold support or deliberately
vote against elected officials in pow er at the
tim e of the w ork-stoppage at future elections
Political influence of unions: U nion m em bersm ay contribute to cam paigns or w ork on
behalf of elected officials w ho prom ise to
provide them w ith m ore generous settlem entsor to increase services and m ay w ork against
those w ho prom ise to cut taxes or reduce
services. (See appendix C-16)
Som e stakeholders interview ed speculated that this
pressure m ay be m ore acutely felt at the m unicipal
level, w here m unicipal em ployees m ay have a
strong influence on election results, if they decide
to organize. Stakeholders com m ented that turnout
at m unicipal elections is m uch low er than at the
Provincial level w hich gives such political action a
greater im pact on outcom es. U nions m ay therefore
be able to influence com pensation policy inadvance.3 In addition, unlike the Provincial
G overnm ent, M unicipality cannot legislate
em ployees back to w ork, and faces higher
pressure due to the im m ediacy of the services at
risk, such as refuse collection. A num ber of
stakeholders sum m arized this as m unicipalities
being m ore prone to union capture4.
See recom m endation 2 .5).
1 Labour Relations B oard B C, Guide to the Labour Relations
Code Province of BC (20 14 )2 JIBC, Police Com pensation/ N egotiation of Contracts
video(2013)3 R.L. Bish, Local Governm ent in B ritish Colum bia(2008)4 The Fraser Institute, W age board: The solution to reining
in public sector com pensation(2012)
4g. Collective bargaining models and processes
There is a mix of arbitration and collectivebargaining models in the Municipality
In BC, legislation requires em ployers and unions to
m aintain certain essential services to the public w hen
they take job action in a labour dispute. Essential
services are those related to the health, safety or the
w elfare of BC residents, or to the provision of prim ary
or secondary education program s and specifically
include Fire and P olice S ervices.1
U nder the Fire and Police Services Collective
Bargaining A ct, strike action is not perm issible for
Fire and Police services and in the event of a failure
to reach a collective bargaining agreem ent the
dispute m ust be referred to an arbitrator.
There is a belief am ongst som e parties that
arbitrators m atch outcom es to those of recent
settlem ents already established in the larger cities.
For exam ple, the D eputy Chief Officer of A bbotsford
Police D epartm ent argues that police com pensation in
BC is largely set by aligning com pensation to the Big
12police services boards in O ntario. W hen one of the
Big 12boards w ill reach negotiated settlem ents and
this becom es the benchm ark or standard for
everyone else.2 A s a result, a num ber of parties are
attem pting to change the current arbitration system
in B C. (See appendix C-17).
It is interesting to note, how ever, that under current
legislation, the BC G overnm ent already has the right
to specify specific term s of reference for arbitration.
This could be used to lim it the range of outcom es.
Indeed, academ ic studies suggest that if arbitration is
set up to consider a range of factors, it w ill have
com parable outcom es to m ediation.
(See appendix C-17).
In conclusion, there is a m ixed approach to collective
bargaining across the P rovince, w ith som e pockets of
arbitration for Police and Fire w hich stakeholdersbelieve m ay be resulting in com pensation escalation.
(See recom m endation 2.6).
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The BC Government does not currently use allavailable sources of information to gain apicture of compensation across the breadth ofGovernment
There are legislated requirem ents for the public
reporting of public sector com pensation in British
Colum bia. There are also a num ber of aggregate
data sources available from Statistics Canada and
other sources (See A ppendix C-18).
The BC G overnm ent has m ade initial efforts to use
these sources to begin to understand variation in
com pensation across the breadth of the Public
Sector. N ot all sources are currently used, how ever.
For exam ple, data reported under the Financial
Inform ation A ct is not currently collected,
aggregated or analysed by the G overnm ent. W hilethe data m ay be available on organizations
respective w ebsites, to collect this data w ould take
considerable tim e and effort. This is com pounded
by the fact that m any organizations report their
data in scanned hard copy, lim iting the ability to
extract and m anipulate data. It is w orth noting that
the V ancouver Sun has collected and aggregated
this data in electronic form at over the last six years,
through Freedom of Inform ation requests subm itted
to individual organizations across both the
Provincial and M unicipalities. This dataset is, in
turn, m ade available in searchable form to the
public.
In addition, available sources of data cannotfeasibly provide the BC Government with themeans to understand variation in totalcompensation across the arms of the Provincial,Municipalities.
O ne of the m ajor constraints identified in
conducting this R eview w as the availability and
com parability of com pensation data of em ployees
across the B C Public Sector. In order todem onstrate this, in the appendix three prim ary
sources are reconciled against a num ber of key
fundam entals required to provide m eaningful
com parisons across organizations w ithin the BC
Public Sector including: data being available for all
areas of G overnm ent; reported for em ployees;
including all elem ents of total com pensation;
including inform ation on FTEs; including job
descriptions and provided w ith regular frequency in
electronic form at. (See A ppendix C-19).
4h. Data
The lack of standardized data createssignificant limitations
The lack of m eans to build a single com pensation
dataset m eans that entities w ithin the BC Public
Sector lack a key foundational dataset to enable
com parison and setting of com pensation. In addition
the BC G overnm ent does not have at its disposal the
evidence baseto identify and analyse (and thereby
potentially oversee and control if so desired)
com pensation across the different arm s of
G overnm ent, including considering com parability
across the Public Sector and understanding and
m aking trade-offs as required.
In the absence of a single dataset collected throughlegislated requirem ents, stakeholders are required to
supplem ent data through creative and m ore tim e
intensive m eans m ost notably through the use of
surveys.
The absence of an aggregated dataset m eans that it
is not possible to m eaningfully investigate, validate or
refute the analysis by com m unities of interest or
academ ics of public sector com pensation built on
other aggregate data sources such as Census data or
the Labour Force Survey. (See recom m endation 1 .4).
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5. Talent management implications of recent trends in compensation
Summary of findings
W hile the variation betw een C ore G overnm ent and other areas w ithin the P rovince is of greatest concern, it
is im portant to consider the talent m anagem ent im plications of freezes in com pensation in the C ore.
D ata indicates that at the Strategic Leadership level, BC is not achieving its target philosophy of paying the
50 th percentile of the BC public sector. A nalysis of com pensation ranges of a sam ple of 10 other BC Public
Sector entities suggests that the C ore G overnm ents Strategic Leadership pay band is 25% low er than the
50 th percentile and as a result BC is the second low est paying jurisdiction in Canada. The top of the band
w as never adjusted to 8 5% of the A D M range, and thus is too low to be com petitive. W hile data indicates
that this issue has not yet led to high levels of attrition, there is a risk that the Strategic Leadership group
could be draw n to seek em ploym ent in the B roader Public Sector and the M unicipality as a direct result of
com pensation. The private sector, especially in the natural resource industries. is also considered to be an
increasing draw for talent.D ata show s that com pression betw een em ployees covered under the collective agreem ents and m anagers
in the Provincial G overnm ent is real. Stakeholders com m ented m any unionized em ployees are reluctant to
be prom oted on the grounds that they w ill receive less com pensation w hile being given additional
responsibilities.
Executive holdbacks are poorly understood by the public, considered punitive by internal em ployees, and
there is increasing concern am ongst stakeholders that they are not an effective m eans of driving desired
perform ance outcom es.
0 50 100 150 200 250 300 350
Bargaining unit
A pplied leadership
Business leadership
Strategic leadership
A ssistant Deputy M inister Band A
A ssistant D eputy M inister Band B
A ssistant D eputy M inister Band C
A ssistant D eputy M inister Band D
D eputy M inister
D eputy M inister of the P rem ier
Compensation ($000)
Key issues mapped to prescribed salary ranges within the Core GovernmentA
Issue #3: Com pression exists between B argaining unit andm anagem ent, created by lack of increase in m anagem ent
com pensation from 20 09 and restrictions on m ovem ent of
individuals within m anagem ent ban ds
Issue #2: Because the 20 08 com pensation philosophyw as never im plem ented at Strategic Leadership level,
the top end o f this band is too low and thus pay is
uncom petitive
Issue #1: The BCGovernm ent is not
m aking full use o f its
existing com pensation
bands at DM /A DM level
The years of compensation freezes within the Core Government have led to a number oftalent management issues
Interview s w ith stakeholders suggested three hot spotsw ith respect to talent issues in the Core
G overnm ent and to a lesser extent the Provincial G overnm ent. These issues are outlined and explored in
m ore detail below .
A N o salary bands for Bargaining unit em ployees data indicates range of actual com pensation
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Issue 1 Use of ADM/ DM bandsCom parisons of m axim um achievable executive
salary ranges to those in other jurisdictions indicate
that the C ore is close to m eeting its philosophy of
m axim um achievable com pensation being ranked
3rd to 5th highest. BC is currently ranked 2 nd for
m axim um achievable D M com pensation. H ow ever, it
is im portant to note w hile the ranges exist they arenot being fully used. BC is also currently ranked 3 rd
for m axim um A D M com pensation bands.
0 200
Federal
British Colum bia
O ntario
Nunavut
Quebec
N ew foundland
N ew Brunsw ick
Cross-jurisdiction ranking of maximum ADM levelexecutive salary ranges (2013)
Source: The P ublic Service A gen cy, DM and A ssistant
D eputy M inister Review : Com pensation U pdate(201 3)
Salary (000s)
(inclusive of any bonuses and incentive paym ents)
0% 20% 40% 60% 80% 100%
Executives
O verall Public Service
Work Environment Survey: I am fairly paid for thework I do Executive responses
Percentage of respondents
Source: Th e Public Service A gency, Deputy M inister and
A ssistant D epu ty M inister Review : Com pensation Update
(20 13)
Indeed, the philosophy on executive com pensation
appears to be being successfully applied in the C ore
G overnm ent at the A D M level w here good use is
m ade of available salary ranges (See A ppendix C-
20). A t the D M level, how ever, w hile the philosophy
is being applied for m axim um ranges, the lack of
use of the ranges puts BC in 6 th place in term s of
actual average base salary paid w ell short of the
philosophy objective. Based on public accounts
available, other jurisdictions com pensate at or near
the m axim um of the range w hile BC com pensates
around 75% of the range m axim um .
Stakeholders provided m any exam ples of individual
executives w ithin the Core G overnm ent being
attracted to positions in the Broader P ublic Sector
and M unicipality. In considering the findings
outlined in the previous section of com parable or
greater levels of executive com pensation in other
areas of the BC Public Sector w hen com pared to
the Core G overnm ent, the incidence of individualsm oving is not surprising.
A s the The P ublic Service A gencysDeputy Minister
and Assistant Deput y Minister Review:
Compensation Update (April 201 3)concluded,
Based upon the data available, there is no
im m ediate need to adjust salary ranges for
executives w ithin the B C public service.It m ay,
how ever, be appropriate to exam ine how the
ranges could be better utilized, as the flexibility
exists to do so.
Survey results indicate high levels of satisfaction
w ith com pensation am ongst the executive group as
a w hole w hen com pared to levels of satisfaction
across the overall public service.
D ata indicates, therefore, that Core G overnm ent
executives in BC have the potential to be relatively
w ell com pensated.
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Issue 2 - Competitiveness of StrategicLeadership pay
The C ore G overnm ent previously developed a
philosophy of paying excluded m anagers at the 50th
percentile of other m angers in the BC Public Sector.
A s a result of the econom ic crisis, how ever, thiscom pensation philosophy w as not fully im plem ented
nor sustained. Indeed, analysis of com pensation
ranges of a sam ple of 10 other BC Public Sector
entities suggests that the Core G overnm ents
Strategic Leadership band is ~25% low er than the
50th percentile.
D ata analysis indicates that this group is not aligned
to Canadian peers in a m anner com parable to the
approach taken for Core G overnm ent executives.
W hile D M s and A D M s salary band m axim um s rank 2 nd
and 3 rd highest in Canada respectively, Strategic
Leadership, for exam ple, is receiving the second
low est m axim um achievable com pensation in
Canada.
0 200
N W T
Q uebec
Federal
N unavut
A lberta
N ova S cotiaYukon
O ntario
Saskatchew an
PEI
N ew foundland
N ew Brunsw ick
British Colum bia
M anitoba
Cross-jurisdiction ranking of maximum achievableStrategic Leadership salary range
Source: The P ublic S ervice A gency, Strategic Leadership
Review : Com pensation challenges(20 13)
Salary ($000s) (unknow n constituents)
It is im portant to note that w hile m ost Public Sector
w orkers indicate they are m otivated by factors other
than com pensation, there is clear evidence that
uncom petitive com pensation can cause Public
Service w orkers to leave their em ployer.
In a recent exit survey of BC Public Service
em ployees w ho resigned, 51% of those w ho resigned
said that they w ere leaving the BC Public Service for
another em ploym ent opportunity: 50% of those w ent
to another public sector organization and 6 6% of
those w ho left for other em ploym ent indicated that
com pensation w as one of the factors that attracted
them to new em ploym ent.
In addition, uncom petitive com pensation has clear
im plications for recruitm ent. It is interesting to note
that, out of 288 em ployees w ho w ere hired in
Strategic Leadership positions over the last fiveyears, 232 w ere internal redeploym ents. The
stakeholders stressed concerns that the P ublic
Service has not been successful in recruiting
external candidates in part due to com pensation
freezes.
In sum m ary, there is a grow ing concern am ongst key
stakeholders that the Province is at risk of losing
highly talented strategic leaders to opportunities
outside of the Core G overnm ent.
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Issue 3 - Compression between Bargaining unit and management
D ata show s that com pression betw een em ployees covered under the collective agreem ents and m anagers in
the Provincial G overnm ent is real. Stakeholders com m ented m any em ployees are reluctant to be prom oted
to m anager on the grounds that they w ill receive less com pensation w hile being given additional
responsibilities.
1,258
1,592
2,115
2,767
5,657
4,909
4,104
1,626
463
108 36 40
1,000
2,000
3,000
4,000
5,000
6,000
113
Salary (un know n constituents) (000s)
M in M ax
Strategic 80,767 113,074
Business 69,998 95,843