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\ PROPOSEDBUDGET ""

2014-2016,

2014 BUDGET - INFORMATION REQUEST

Budget IR Number: Meeting Date: Author: Department: Date of Response: General Manager Approval: CFO Approval: City Manager Approval:

BIR135-2014 November 29, 2013 Doug Gairns Human Resources November 29, 2013 Maya Pungur-Buick Anita Ho rfflWvr Patrick Dra

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Date: Date: C ̂ V/3

Question:

Please provide council with a copy of the 2010 Hay Report concerning wages and salary surveys.

Response:

Please see attached report.

•November 25, 2010

Compensation Review

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For: The City of St. Albert

Review conducted by: Herb King David Payne

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Contents

Executive Summary 1

Introduction and Background 5

Interview Findings... 7 3.1 Paying Fairly 7

3.2 Pay-for-Performance "Disconnect" 7

3.3 Concern over Compensation Increases During a Recession 8

3.4 Performance Management 8

3.5 External Comparison/Reference Market 8

3.6 Concern Over Retroactive Payments 8

3.7 Ability to Recruit, Retain and Motivate 9

3.8 Uneven Non-Union Market Adjustments 9

3.9 Non-Union Job Evaluation Program 9

4 City of St. Albert Draft Compensation

Philosophy 10

5. Union Compensation System Review 11 5.1 Overview n

5.2 City Collective Bargaining Process 12

5.3 City Unionized Compensation Levels 13

5.4 Employee Benefit Program 14

6 Non-union Compensation System Review...... 15 6.1 City Non-Union Job Evaluation System 15

6.2 Establishing Market Adjustments 16

6.3 Pay For Performance Gap 17

6.4 Retroactive Pay Adjustments 17

6.5 Market Supplements or Market Modifiers 19

6.6 Employee Benefits Prevalence 19

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7 Recommendations for Improvement 20 8 Appendices 22

Appendix A: Draft Compensation Philosophy 23

Appendix B: Detailed Benefit Prevalence Comparison .......29

Appendix C: Current Non-union Salary Grid 39

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1. Executive Summary The Hay Group Limited was engaged by City Council for the City of St. Albert to undertake a comprehensive review of the City's compensation program that pertains to both unionized and non-unionized staff. This project was undertaken under the direction of a City Project Committee comprised of the Mayor, another Council member and a citizen at large, with support provided by the City Manager and Chief Financial Officer, during the period September - Noveinber, 2010.

The review undertaken was based on information provided through over 20 interviews with Council, City management and the City's human resource department. In addition, our firm has broad compensation knowledge and expertise and reflected on 'compensation best practices' as further criteria in evaluating the City's compensation processes and procedures. Our firm is also cognizant of compensation practices in the public sector, experienced in considering the differences between public and private sector organizations and has expert knowledge in the different ways in which compensation programs are designed for public vs. private sector organizations.

Overall, we are of the opinion that the City of St. Albert has a good compensation pi ogiam without any major gaps and while we make a number of recommendations, their intent is to make a reasonably good system even stronger. '

Summary of Interview Findings:

The 'themes' which evolved from our in-person interviews included the following:

• City Council believes in 'paying a fair wage for a good day's work', and felt that the City's compensation program was accomplishing this goal. Concern was expressed by Council with respect to the weak link between 'pay and performance' at the City,

• While concern was expressed that the link between employee performance objectives and Council priorities could be stronger, it is notable that the City administration is working on strengthening the relationship.

• Some Council members also questioned the methodology followed by the City in determining annual pay adjustments, particularly during a recessionary period. Most of Council appreciate that the City competes for staff talent in the Capital Region, normally among other public sector employers. However, concern was expressed that the comparator or external reference market may be "too thin" in that only 9 other organizations' compensation practices/levels are currently researched.

• Concern was also expressed with respect to the frequency of providing retroactive pay increases to accommodate prevailing market conditions.

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In general, City managers felt that the current compensation programs at the City support their ability to recruit and retain capable/qualified staff. As well, there is a consensus view that a vast majority of staff are performing in a satisfactory manner, even in the absence of a 'pay for performance' compensation program. Non-union staff pay range adjustment is not a standard industry or 'normal' compensation process. A typical annual review process would see most or all pay levels increased at the same level or at the same % amount. The City's non-union job evaluation system was also called into question by a couple of interviewees. It was asserted that on certain occasions or for certain job families it does not adequately distinguish between jobs. This raised concerns from an internal equity perspective.

Interview findings are elaborated on in greater detail within the body of this report.

City of St. Albert Compensation Philosophy:

The City of St, Albert has been following a market pay policy of paying at the P60 (or 60"' percentile) of its chosen market of nine other major organizations operating in the Capital Region and other municipalities within the Province of Alberta. Union pay rates are bargained with the City's two unions or certified bargaining agents.

All organizations periodically review their compensation philosophy or policies to ensure they are 'aligned' with a selected comparator/market reference group that it competes with for talent. They then determine the positioning they will take in the reference market, particularly for non-union positions. A draft compensation philosophy has been provided by our firm for further discussion by the St. Albert City Council and its senior management team.

Unionized Compensation Review:

Slightly over 50% of City staff is governed by one of three collective agreements; • CUPE Local 941 • CUPE Local 941 (R.CMP Administrative Support Staff) • Emergency Services Workers - IAFF agreement)

The City's human resource department undertakes compensation research and then seeks approval for a bargaining mandate to initiate collective bargaining discussions with each bargaining agent.

For all but approximately 30 employees covered by the CUPE Local 941 (RCMP Administrative Support Staff) agreement, unionized compensation is what is known as a 'single job rate' system. That is, a classification is aligned with a single compensatory rate as opposed to a salary range with a defined minimuin and maximum pay rate.

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While single rate systems do not permit 'pay for performance', the CUPE Memorandum of Understanding does require performance appraisals for its members, with the focus on employee development and not 'pay', Overall, our firm did not detect any major concerns over the bargaining process that was followed or the resulting pay levels in the three collective agreements. Independent research undertaken by our firm also indicates that unionized pay rates are 'within market' for the most pait when applying a +/-10% rule of thumb.

Non-Union Compensation Program:

Slightly less than 50% of City staff is employed in non-union capacities. Non-union positions at the City are classified into one of twelve pay levels, based on an evaluation of job content through the City's job evaluation system in order to ensure internal pay equity. Each pay level has a minimum and maximum with defined inciement steps that are intended to reward performance ('in-range' progression).

This compensation approach is quite typical, and is not difficult to understand or communicate to staff. However, we question the City's comparator/external reference market that is used to determine pay level maximums, as well as the practice of providing different percent increases to different pay levels.

We are recommending the introduction of an open range salary administration approach for non-union staff. While there is currently the ability to withhold an increment from a non-performer and the ability to award a double increment for a superior performer, these steps are rarely taken. An open salary range provides much greater ability to vary progression up the range based on individual performance assessments.

In addition, a majority of City non-union staff have already progressed to their pay level maximum (i.e., 'topped out'), which can be regarded as a disincentive by staff. While a i emedy to this situation could be the introduction of a short-term incentive, variable pay or bonus program, most agree that such programs are not viable ' options for the City for three reasons. One is the City's inability to determine quantitative performance measures for many jobs; the second is the egalitarian work culture; and finally, the additional cost of such programs could be preventative.

Based on the research our firm undertook with respect to non-union pay levels in relation to the broader public sector market, the City is 'in the ballpark' with respect to its current pay range structure and pay levels (i.e. by applying the +/-10% rule of thumb),

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City Employee Benefit Program:

Detailed research was undertaken with respect to the competitiveness of the City's employee benefit program (see report Appendix B). The employee benefit program at the City applies to both unionized and non-unionized staff. In general, we determined that the City often shares the cost of particular employee benefits as opposed to general practice, However, its vacation policy is better than those offered by other organizations, which could be considered to make up for the fact that cost sharing of employee benefits is done at the City.

Overall, we believe that the City's employee benefit program compares well with general industry practice in the broader public sector (i.e. pure public sector plus agencies, boards and commissions of government).

Recommendations for Improvement:

A series of 11 recommendations is made within this report to assist the City of St. Albert in improving its compensation practices in the future, including:

1. Reviewing and updating the City's overall compensation philosophy, including confirmation as to the City's comparator/external reference market and P60 market positioning.

2. Broadening the comparator/external reference market(s) to include a range of employers within and outside the Capital Region.

3. Improving the 'job matching' approach to interpreting competitive market data,

4. Continuing with extensive pay research for non-union positions on an every other year basis.

5. Providing a uniform % increase to non-union pay levels on an annual basis. 6. Reviewing the % spread between adjoining pay ranges for the non-union

pay structure to ensure a measure of'symmetry' in design. 7. Eliminating retroactive pay increases for non-union positions by

commencing pay research sooner and applying an 'aging' factor and/or moving pay adjustments for non-union staff to April from January.

8. Retaining the job rate system for all unionized staff as il is already enshrined in existing collective agreements and is not presenting any administrative or design issues.

9. Establishing non-union 'open ranges' for all pay levels, accompanied with administrative controls such as a merit guideline chart.

10. Review or confirm the practice of employer initiated market supplements (sometimes referred to as market modifiers) to attend to 'hot market' or high demand circumstances that arise periodically in the market.

11. Re-establish the City's employee recognition program to more formally recognize employee performance.

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2. Introduction and Background Hay Group was engaged by the City of St. Albert (City) to conduct a thorough review of its compensation programs and processes for all groups and levels of City staff, up to but excluding the City Manager position. Overseeing this project was a small ad hoc Project Committee comprised of the Mayor, a Member of Council, and a member of the public, and supported, as needed, by the City Manager and other staff. At the project initiation meeting it was made clear that the Project Committee desired a thorough review, including a comparison to compensation "best practices".

While the City did not request development of a compensation philosophy per se, a comprehensive assessment of a compensation program cannot be undertaken without establishing a clear philosophical framework on which an organization's compensation program can then be developed and compared to the external market. From the data we gathered through over 20 interviews and in discussions with the Project Committee, we have developed a draft compensation philosophy for the City that forms one key basis on which the City of St. Albert's compensation programs and processes can be assessed.

This review was focused on compensation programs and processes, and not comparative pay levels. However, the Hay Group did examine, in detail, how the City's' benefit and perquisite provisions compared to Hay Group's database of the Western Canadian Broader Public Sector organizations (i.e. this sector includes other pure public sector organizations such as other municipal and provincial governments, health care organizations and educational institutions; as well as other agencies, boards and commissions of provincial governments). In addition, we undertook a general examination of both union and non-union compensation levels in comparison to this market.

The review included a number of interviews with Members of Council and City senior management. Interviews were followed by a detailed examination of the City's compensation programs and processes, paying close attention to areas that may have been highlighted as a concern through the interviews. Lastly, preliminary findings were presented for feedback to the Project Committee, which provided the foundation for the construction of a draft compensation philosophy. As well, the Project Committee indicated that the preliminary findings largely focused on nonunion jobs and that the nature of the review was for all employee groups. We therefore ensured that we considered both non-union compensation practices, as well as unionized staffs compensation practices, in this final report. '

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The balance of the report is organized into the following sections; Interview Findings Draft Compensation Philosophy Union Compensation System Review Non-Union Compensation System Review Recommendations for Improvement


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3. Interview Findings The Hay Group interviewed the Mayor, six Councillors, a member of the public, the City Manager, eight other City Managers, and three Human Resources Managers. The content of the interviews was focused on "what is working well?" and "what aspects of the current compensation program require improvement?" with respect to the current compensation processes and programs, as follows:

• Compensation philosophy and more macro issues were explored with the Mayor, Members of Council, the public member and City Manager;

• Adequacy and construction of compensation programs was explored with the City Manager, other City managers and human resources;

• Detailed compensation programs and processes were focused on with knowledgeable human resources staff.

The following "themes" emerged from the interviews conducted:

3.1 Paying Fairly:

Council believes in sustaining a high quality of life for St. Albeit citizens and ensuring maximum value from their tax dollars through the provision of various civic services. Philosophically consistent with these goals, most would say that they believe in "paying a fair wage for a good day's work". Generally, most interviewees felt that the City's current compensation programs were achieving this overall goal.

3.2 Pay-for-Performance "Disconnect":

Currently, there is little explicit or formal linkage between compensation and City management and staffs performance. However, it is worthy of note that the City does have a reasonably good performance management system that can, in theory, impact an employee's progression through their pay range, with low performers not progressing and superior performers receiving double increments. In reality, these exceptional situations rarely happen.

Nearly all interviewees stated that there is a need to "close the gap" between pay and performance. However, there is little appetite to adopt a bonus program or any other form of short-term incentive plan (e.g. merit lump sum pay for those employees that have reached their pay level maximum) to further reinforce the connection between pay and performance, Through a deeper exploration of these issues with the Project Committee, it was determined that the re-establishment of a City-wide recognition program would represent a much better cultural fit with the City.

Most interviewees agreed that the elimination of increments or 'steps' within nonunion salary ranges, and varying progression within a salary range dependent on performance, would be highly desirable. It is also widely recognized that there is much less opportunity to accomplish this for union compensation plans, as most union roles have a single job rate versus a salary range.

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3.3 Concern over Compensation Increases During a Recession:

Some Council Members are concerned that the City's current pay research methodology supports providing base pay increases even during a recession. Their views on the reason for this were varied and ranged from the use of too small a comparison market or possibly the City's alignment with the 60"' percentile or referred to as the P60 for market positioning. (Note: the 60"' percentile means that 60% of reported survey is below this amount and 40% of survey data is reported above this amount), Analysis undertaken by our firm, outlined later in this report, does not support these propositions as primary reasons for the provision of salary increases during a recession.

3.4 Performance Management:

Several interviewees felt that the link between employee performance objectives and Council priorities is relatively loose today. However, this gap has been recognized by the City's senior administration and is currently being addressed through an enhanced performance appraisal system for management employees.

3.5 External Comparison/Reference Market:

Most of Council agree that the City competes for labour or "talent" in union roles largely within the Capital Region, among other public sector employers and municipal government employers. The 'catchment area' for exempt staff can go beyond the Capital Region to include other major employers inside and outside of the municipal sector, particularly for 'generic or general'job families (Finance, HR IT, etc.).

Hay Group is concerned over the focus on the current nine organizations the City aligns its pay practices with, as this is too small a competitive market (or comparator group) to be considered a valid and statistically reliable external labour market.

3.6 Concern Over Retroactive Payments:

There was a concern expressed with the practice of providing retroactive increases on what some thought was becoming "a regular basis", While retroactivity is typically a bargaining issue for unionized employees, City Council has discretion in the use of and control over retroactive increases for non-union positions.

We note that non-union market adjustments are often applied retroactively. When we explored the process followed, we found that it starts 'late' in order to allow the City to have the most recent market intelligence. 1 lowever, this situation could be solved by starting the external survey process earlier and applying an "aging" factor to the data to account for any subsequent market movement, or alternatively, by delaying annual pay adjustments to April lsl,


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3.7 Ability to Recruit, Retain and Motivate:

Managers felt that the compensation programs at the City supported their ability to recruit and retain high performing human resources, Even though the City has a "pay-for-performance" gap in the current system, the consensus view is that most employees are performing at a satisfactory level. Additionally, turnover statistics at the City have typically been very low, by industry standards, other than in a few "boom" years where it increased to approximately 10%. This usually indicates that an organization's pay programs are assisting in retaining qualified and competent staff.

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It was noted that there are currently a few roles that are difficult to fill, and thus, requiring the use of a "market pay modifier". Building Inspectors and Planners are examples of such 'hard to recruit' roles that may require market supplements,

3.8 Uneven Non-Union Market Adjustments:

Market adjustments to non-union salary grades are not applied uniformly. That is, if market survey data indicates that Pay Level 5 requires a 7% increase and Pay Level 4 requires a 2% increase, these are applied as is. This could have negative consequences such as;

• Employees in grades receiving relatively modest or lower annual increases could feel unfairly treated;

• Uneven adjustments can, over time, upset internal relativities, possibly creating compression situations between senior unionized roles and frontline supervisory positions; and,

• Different increase percent could be the result of other non-union "sampling noise" in the survey data, rather than a true reflection of the external labour market.

A common, or more typical practise, is to review all market data and determine a uniform market adjustment applicable to all salary levels. Attention is paid to recruitment and retention statistics to determine if a particular salary level needs an additional adjustment (i.e. This is an exception situation rather than being a normal circumstance),

3.9 Non-Union Job Evaluation Program:

While not identified as a problem by the majority of those interviewed, a couple of interviewees thought the City had out-grown its non-union job evaluation plan. They believe the plan does not adequately distinguish between jobs at some levels. The reason this is mentioned in our report is that this identified deficiency is consistent with our firm's understanding of the non-union job evaluation plan.

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4. City of St. Albert Draft Compensation Philosophy Philosophically, the City has been, and desires to continue to be, a mid-market payer; more precisely, to pay its non-union staff at or about the 60"' percentile of Capital Region and provincial municipal public sector employers. While it is easier to maintain a specific market position for non-union positions, as these are not bargained pay rates, the City's goal is to also align its union positions to the same market and market positioning. While the City desires the ability to recognize high performance, the City's work culture is likely not consistent with the concept of an annual bonus plan. Rather, the City wishes to introduce, or more correctly revitalize, its employee recognition program. The draft compensation philosophy speaks to both monetary and non-monetary recognition of higher performance by its employees.

The City has traditionally aligned its non-union salaries to the 60"' percentile of nine comparator organizations, While we encourage the City to continue to survey these nine organizations for pay purposes, philosophically, we recommend that the City expand this group to include additional broader public sector organizations in the Capital Region. Further, we recommend the City also examine a well populated sample such as Western Canadian Broader Public Sector organizations as a secondary data source. A third possible data source could be the HR Trading Post, which includes data from 100 municipal organizations.

The draft compensation philosophy also speaks to allowing flexibility for those situations where "normal" pay rates are insufficient to attract and retain scarce skills (i.e. the continued use of market supplements or market modifiers, when supported by a business case).

A draft compensation philosophy is included in Appendix A for your review and further discussion.

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5. Union Compensation System Review

5.1 Overview:

A little over half of the City's employees are covered under three collective agreements:

• CUPE Local 941 covering trades, foremen, utilities workers, etc.;

• CUPE Local 941 (RCMP Administrative Support Staff) covering a small number of employees that supporl the police service;

• IAFF Local 2130 covering Emergency Services Workers.

All agreements include a number of classifications where an employee is matched to a working title (i.e. painter, carpenter, building foreman, utility operator, first-class emergency services personnel, front-counter clerk). While some classifications, such as the Utility Operator have certification requirements documented in their collective agreement, classification is, for the most part, by working title.

In situations, where occupations are clearly identifiable, and without successive levels of complexity, classification, by working title, works well. We also wish to note that no significant administrative difficulties or variance from market pay practices were identified through this compensation review.

For all but a small number of employees covered under the CUPE 941 (RCMP) agreement, compensation is a single job rate system, That is, a classification is aligned with a single compensatory rate, rather than a salary range. This type of system is typical for unionized hourly paid occupations, such as the trades, and has the advantage of being easier to understand and administer,

The downside of a single job rate system is that it has no way of differentiating and rewarding staff based on the performance of an incumbent, different skill sets or technical competencies, Normally, as occupations increase in complexity, productivity variations also increase based on an incumbent's level of competency, Therefore, managerial or non-union employee levels typically have assigned salary ranges, rather than a single job rate, allowing more variation in pay administration.

However, we are of the opinion that a job rate system is appropriate for the City's union jobs, as this is atypical practice for union hourly paid occupations. As well, any change to the single job rate systcm vvould have to be bargained with (he unionized groups, who have historically shown that they prefer a job rate method of pay administration.

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5.2 City Collective Bargaining Process:

Preparation for collective bargaining begins by examining recent settlements and market adjustments with the City's general comparator group. Once Human Resources have collected and analyzed updated market data, a mandate is provided by City Council, based on this market intelligence. Human Resources then bargains with the certified bargaining agents, and attempts to settle within the mandate they have been provided, If an agreement is reached below or at the mandate, the bargaining process concludes. However, if an agreement cannot be reached within the given mandate, Human Resources must return to City Council, who then must decide on whether the mandate should be increased in order to reach a settlement.

There is only one alternative to increasing a bargaining mandate - this is to apply for binding arbitration. This then provides a difficult decision for any City Council; on the one hand settling a union agreement for more than Council originally mandated or alternatively, putting the settlement decision in the hands of a third party.

Up-to-date and 'informed' market pay data is the best tool available to the City to help it successfully negotiate collective agreements. Currently, detailed compensation data at the job-specific level, is not usually sought. The City derives data on the general level of market adjustments for a given year, but for the most part, is not seeking data on competitive job rates.

We believe that the City could benefit from the acquisition of competitive job-specific rate information for a sample of benchmark unionized positions each bargaining cycle from among other comparable employers in the Capital Region as well as other Alberta employers of common trade/occupational groups.

A good example of assembling job-specific information was the most recent IAFF negotiations, where the City actually did have access to specific job rate information for firefighters from across the province. Because of some generous recent settlements, the City found itself behind the market and was unable to reach a settlement within the original mandate, Council had a choice on whether to increase the bargaining mandate or to apply for binding arbitration, and exercised its authority to settle at a higher pay level consistent with the 'firefighter market' provincially.

The Hay Group believes that the City properly followed its own process in the case of this settlement. No one can say, with any degree of certainty, as to whether the correct course was taken with respect to this settlement. Binding arbitration may have resulted in a lower settlement, but there is, at least, as great a chance that the arbitrator could have awarded a higher settlement.


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5.3 City Unionized Compensation Levels:

While rates of pay are bargained, it is still important for the City to assure itself that salaries are aligned with its compensation philosophy. The City's philosophy is to pay base salaries at mid market, or specifically, a P60 level, of its chosen comparator market for unionized positions. We took a sample of eight unionized jobs and compared these to our own proprietary compensation database. The market data suggests that union salaries align reasonably well with the City's mid market pay philosophy, We used the Western Canadian Broader Public Sector, which is consistently used as the test market for all compensation elements outlined in this report (i.e. union and non-union compensation, benefits and perquisites),

The sample unionized jobs shown below are from the CUPE 941 agreement where the majority of unionized positions are employed at the City, We chose 8 benchmarks or approximately 30% of the roles identified in the agreement, This analysis suggests that, overall, the City of St. Albert union base salary rates are 'within the market', (i.e. applying a commonly accepted rule of thumb, a City rate of pay that is considered to be 'in the market' (OK) if a pay rate is within +/-10% of reported survey data.

City Unionized Positions vs. Hay Compensation Database

City of St. Albert -CUPE 941 f

'Hourly. Rate ! (Dec 28

:2009V Dec 31 2010) ;

Annualized • ' Hay Job Match Title -Pase

Salary . Policy:

P50

City vs. Hay

Databas

Foreman - Building $36.9

Maintenance Unit Supervisor III Maintenance $36.9 $71.9 (1215) $77 94%

Maintenance Unit Supervisor III Foreman (Utilities Level IV) 35,6 $69.4 (1215) $77 90%

Maintenance Unit Supervisor III Maintenance Planner 35.2 $68.7 (1215) $77 89%

Maintenance Unit Supervisor III Forman (Utilities Level III) 34,3 $66.9 (1215) $77 87% Plumber 33.0 $64.3 Plumber/Pipe Fitter (1226) $61 106% Carpenter 31.3 $61.1 Carpenter(1228) $55 110% Painter 29.4 $57,3 Painter (1229) $52 111% Utility Operator V 28.7 $56,0 Maintenance Technician (1218) $52 108%

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5.4 Employee Benefit Program: As part of the review, a comprehensive benefits and perquisites comparison report was prepared. Where provisions differed between union and non-union employees, which are relatively rare, these di (Terences were identified. The detailed benefit prevalence comparison is provided in Appendix B.

On the down side, the City often shares the cost of the premium with the employee while the majority of employers in our database pickup the cost of the entire premium for most plans. However, on the upside, the City's vacation entitlements are better than those offered by organizations in the data set.

Overall, the City of St. Albert offers a reasonable package of employee benefits that compares well with other organizations in the broader public sector.

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6. Non-union Compensation System Review A little less than half of the City's employees are classified as non-union or exempt. The terms and conditions of their employment are described in a number of documented regulations at the City, as opposed to being enshrined in a collective agreement, as are unionized staffs employment conditions, The Policy Framework should be endorsed by City Council with the application or implementation of the policy, other than for the City Manager's position, being left to the City's senior management.

Compensation is organized into eight salary levels, with some levels divided into two sub-levels for a grand total of twelve pay levels. What level a job is slotted into is determined through an application of the City's non-union job evaluation plan. The job evaluation plan's primary evaluation criterion is the hierarchical decisionmaking level of the job, which determines its salary level. A number of typical job evaluation criteria (often referred to as compensable factors) determine a position's sub-level (indicated with as "A" or "B").

Each of the twelve levels has an accompanying salary range and each salary range has six incremental steps from its salary grade minimum to its maximum, The minimum of a salary range is approximately 82% of the maximum and each increment provides for a 4% increase over the previous step, up to the 100% or 'job rate' level, The current non-union salary grid is provided in Appendix C.

A newly hired employee, commencing a new City job, is placed at an increment that is commensurate with their experience at the salary level. The employee then moves up the range an increment per year, subject to satisfactory performance. While there is a provision to provide a double increment for superior performance, in reality, this is rarely done. While the system is easy to understand, there needs to be a better connection between actual pay and an employee's performance.

6.1 City Non-Union Job Evaluation System:

Job evaluation was not identified as an issue by the majority of the interviewees. However, comments that were made are consistent with the known limitations of this plan. Specifically, the compensable factors, within the plan, do not, in some cases, provide for sufficient differentiation between positions and pay levels.


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6.2 Establishing Market Adjustments:

Every second year the City gathers market data on a sample of non-union benchmark jobs from nine organizations as follows:

• City of Edmonton

• City of Red Deer*

• City of Lethbridge*

• City of Medicine Hat*

• Strathcona County

• City of Grande Prairie'

• Parkland County

• Government of Alberta

• University of Alberta

* denotes the four comparator organizations outside the Capital Region.

Benchmark jobs are representative jobs, at each level, upon which comparative pay data is collected. There are one to two benchmarks for each level. The City then calculates market adjustments, by individual salary level, by aligning to the 60"1 percentile of the survey benchmark for that level.

We believe this process can be improved. First of all, greater attention needs to be paid to ensuring that job matches are reasonable, Matching a benchmark to a job that has greater or lesser complexity and responsibility, will provide erroneous results.

As well, the number of organizations in the sample is insufficient and not robust enough to provide confidence in the data. With such a small sample, one or two pay anomalies can have an impact.

Lastly, the practice of adjusting each level, by a unique amount, dependent on such a small sample, is questionable. Our research suggests that market adjustments do not vary by level significantly.

We believe that the variation in market adjustments could have more to do with sampling noise rather than a true reflection of what is happening in the market, We recommend that a single market adjustment be adopted, much the way union rates are. Attention needs to be paid to recruitment and retention statistics to identify specific pay levels that may require a "special" adjustment on an exception basis.

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6.3 Pay For Performance Gap:

While we heard from many interviewees that there was very little to link compensation with level of performance at the City, a bonus plan was not considered to be a cultural fit for City management and staff. Bonus plans are difficult to design in the public sector, as there are fewer quantitative measures available and the measures of greatest importance are usually qualitative, making assessment more difficult. As well, the amount of budget available to pay bonuses is typically small and bonuses are rarely substantial enough to actually impact City staffs behaviour or contribution.

There are measures that can be taken, however, to tighten the link between base pay and performance, which are further addressed in report Section 6. Step rate increments, versus an open salary range, often results in increases occurring in a "lock step manner", almost regardless of an incumbent's performance. Creating an open range with a defined minimum and maximum allows an organization to vary progression within a salary range, dependent wholly on an employee's performance rating, To support this type of salary administration approach, a strong and reliable performance management system must be in place. While somewhat outside the scope of this review, we believe that the City does have a reasonably good performance assessment system and is currently working on tightening up an employee's "line of sight" to Council priorities.

A constructive measure the City can take to recognize high performance would be to resurrect its employee recognition program. An employee recognition program can be easily implemented, on a fair basis, with all employees, union and nonunion, and can be used to highlight the demonstration of desired behaviours, as well as achievement of results. '

6.4 Retroactive Pay Adjustments;

The City begins the process of examining non-union market adjustments with their comparator group too late to allow market-based adjustments without retroactivity. The City does their market research in this manner to capture accurate data with an effective date similar to their annual adjustments. As documented earlier, if pay market research is started earlier, and an aging factor applied to bring the data up-to-date, adjustments would be calculated and approved by the normal time of increases, and thereby, eliminate the need for retroactive adjustments. Alternatively, the City can consider delaying salary adjustments for non-union staff to April 1st,

Market data, from Hay Group's Western Canadian Broader Public Sector database, was provided to determine whether a more robust compensation data set would impact compensation levels. Overall, our analysis suggests that most non-union compensation levels, while ahead of the 60th percentile, the difference is less than 10% in most cases. The data is in the following table.


HayGroup

City Non-union Salary Levels vs. Hay Broader Public Sector

Pay

Level

Level Start

Points

Level End

Points

City of St. Albert Maximum

Salary

%Difference

Between Adjoining Pay Levels

P90 P75

Total Cash Design ($000

P60 P50 P25 P10 AVG.

City of SA vs. Mkt P60

8 1056 1260 166,863 23% 216.9 190.7 173.8 162.5 135.4 127.1 167.0 -4.0% 7B 735 879 135,591 9% 152.8 135.9 130.2 126.4 108.1 100.3 125.7 4.1% 7A 614 734 124,045 8% 130.0 117.8 112.3 108.6 100.0 90.8 110.1 10.5% 6B 519 613 114,754 10% 114.1 106.1 100.7 97.1 88.3 81.8 97.3 14.0% 6A 439 518 104,456 20% 101.8 96.3 90.3 86.3 80.0 74.7 87.9 15.7% 5 371 438 87,122 15% 88.0 84.0 79.9 77.2 72.1 64.6 77.7 9.0% 4 314 370 75,997 12% 80.5 75.7 72.0 69.5 64.6 57.7 69.6 5.6%

3B 269 313 67,957 13% 72.9 66.6 64.1 62.4 57.4 52.1 63.0 6.1% 3A 192 268 60,199 16% 65.0 60.9 57.2 54.8 50.0 45.5 55.3 5.2% 2B 135 191 52,023 8% 54.3 49.3 46.9 45.3 41.0 37.5 46.2 10.9% 2A 98 134 48,006 18% 46.2 43.0 41.4 40.4 38.7 35.1 41.0 15.8% 1 85 97 40,664 39.9 39.6 1.9%

Notes: The data in this table was generated from Hay Group's compensation database and compares salaiy range maximums of the City of St. Albert's non-union salaiy levels to salaries of Western Canadian Broader Public Sector organizations for jobs with comparable complexity and responsibility. "P"s (i.e. P90. P75, etc) are percentiles in the market data. "% Difference Between Adjoining Pay Levels ^ indicates the percentage difference between the maximums of adjoining pay levels in the Citv of St Albert's grid. Comparisons were made utilizing Hay Group's job sizing methodology indicated by Level Start and End points.


HayGroup

6.5 Market Supplements or Market Modifiers:

The City has a well written market supplement policy that provides the flexibility it needs to recruit scarce or high demand occupations, such as planners and building inspectors, as well as address compression situations between subordinates and supervisors.

The Hay Group sees no flaw in the policy itself, but heard in some of the interviews that a market supplement request can be employee-initiated, particularly from employees that might be classified in a pay level that received a modest or lower market adjustment. The market supplement should be a temporary adjustment tool, only utilized with management discretion, and usually where recruitment/retention or salary compression statistics support its application.

6.6 Employee Benefits Prevalence:

In the public sector, employee benefit programs do not vary significantly between union and non-union or management and non-management positions.

On the down side, the City often shares the cost of the premium with the employee, while the majority of employers in our database pickup the cost of the entire premium for most plans. On the positive side, the City's vacation entitlements are better than those offered by organizations in the data set,

Overall, the City offers a package of employee benefits that is reasonable and competitive with other organizations in the broader public sector.


HayGroiip

7. Recommendations for Improvement The results of our research into the integrity of the City of St. Albert's compensation program indicate that it is reasonably constructed and fairly well managed. However, we do believe there are a number of specific administrative and design improvements that should be made to strengthen its integrity, as outlined below.

1) Review and approve the Draft City of St. Albert Compensation Policy,_to ensure that it represents the basic principles and practices that need to be considered on an annual or periodic basis, by the City, when undertaking market pay research in terms of "what will be the primary sources?" (e.g. Capital Region broader public sector organizations and secondary sources of market data, including published survey data) that will be used to determine the market positioning the City (i.e. currently P60 for non-union and union employees) in the context of an 'expanded' market.

Compensation philosophy

Job analysis and evaluation

Compensation -> strategy and

programs

Performance

Market analysis i

management and appraisal

Oetermine ->• salary grade

and range

j Determine • target position

in range

• Determine individual pay

level

2) We suggest that the City needs to seek additional sources of broad based market data in preparing for both union negotiations and for non-union pay increase recommendations. While the Hay Group is not recommending abandonment of the current market of nine comparator organizations accessed for non-union jobs, we are suggesting that other data sources with a higher number of survey participants, needs to be incorporated into such external market analysis to ensure that a more comprehensive profile or picture of the external pay market is obtained (e.g. more senior non-union positions at the City may need to be market competitive on both a Capital Region and Western Canadian basis).


HayGroup

In the case of unionized jobs, specific job to job match market research should be undertaken to ensure that recommended bargaining mandates are reasonable and truly reflect current market pay rates, In circumstances where multiple data sources may not agree, further research could be required until the City is satisfied that the pay recommendations truly do reflect the movement in its selected labour market.

3) More attention needs to be paid to accurate job matching when analyzing market data. Wide variations in reported job match data often indicate that there may be jobs in a sample that are not well aligned,

4) Continue the process of an extensive market review of non-union salary rates every two years, with a general review of market changes every other year.

5) Provide a single, uniform increase to all non-union pay levels on an annual basis, to conform to normal pay administration practices and to avoid potential unintended 'internal competitive situations'.

6) Review the '% spread' between the adjoining pay range maximums of all nonunion levels to ensure that pay compression situations are eliminated.and which may result in applying unequal annual pay increases. For example, the distance between pay level 6(b) and 7(a) is only 8% currently, while the % differential between pay levels 7(b) and 8 is 23%! (Note: ordinarily organizations seek to define some measure of 'symmetry' with respect to % differentials between adjoining pay levels, recognizing that overall market competitiveness is also important).

7) Eliminate the need for retro-active increases for non-union salary rates by commencing market pay research at an earlier date, and applying an aging factor, if necessary, or change the adjustment date to April lsl.

8) Retain the job rate system for unionized jobs. For the few union jobs in the RCMP Administrative Support Staff agreement, that have a salary range with increments, retain this system. Any change to salary administration processes, for unionized positions, must be bargained with the applicable City union,

9) Establish open salary ranges for all non-union jobs, Open ranges enable varying range progression, based on performance, and helps create a better pay for performance culture, sometimes supported by a merit guideline chart that can be explained and used by line managers, as illustrated below.


HayGroup

l !i Vol

Simplified Merit Guideline Chart

Employee Performance Rating

% Annual Merit Adjustment (in range

progression)

Typical Proportion of Employees*

5 - Excellent 10% 5%

4 - Very Good 7% 5%

3 - Satisfactory 5% 80%

2 - In Training 2% 5%

1 - Not Acceptable 0% 5%

* Presumes a normal distribution of performance ratings across the City.

10) Review market supplements or the use of market modifiers annually, as per City regulations. Market supplements are typically used sparingly at the approval of the City Manager and should not be approved, in future, unless specific recruitment/retention circumstances can be proven and documented.

11) Re-establish an employee recognition program where high performance and desired behaviours are celebrated and made an example of, Too often, recognition programs celebrate tenure or job longevity to the exclusion of more important factors such as 'performance'.

While employees of the City are fairly well compensated, our additional research, based on a well populated data set and accurate job matching, does not suggest that they are paid significantly beyond the City's chosen compensation philosophy. However, it will be important for the City to further substantiate this finding by:

a) Agreeing on The City of St. Albert Compensation Policy;

b) Undertaking more rigorous market pay research consistent with the Compensation Policy beyond what has been done in the past; and,

c) Comparing 'new' market data to existing non-union pay grades and unionized pay levels to determine if there are any specific anomalies requiring attention or correction.

Hay Group, November 25, 2010


HayGroup

8. Appendices

Appendix A: Draft Compensation Philosophy Appendix B: Detailed Benefit Prevalence Comparison Appendix C: Current Non-union Salary Grid


HayGroup

Appendix A: Draft Compensation Philosophy


The City of St. Albert

DRAFT FOR DISCUSSION PURPOSES

„ „ Compensation Philosophy - November 2010 HayGroup —

Guiding Principles: The City of St. Albert has identified the following guiding principles lhal have served to inform the design criteria of Ihe various elements of reward. They will continue to guide the further design and implementation of compensation and reward programs going forward.

> Total Rewards The City wants to provide employees with a work environment where they are iccogni/ed for their contribution to the organization's succcss with something more than just a paychcck. Therefore, the City offers employees an enabling and challenging work environment where people have the tools, training and support for professional development.

> Competitive Rewards The City wishes to reward employees fairly and equitably in relation to each other but also recognizes that they must compete for talent with external organizations. Therefore, base salary and total compensation will be internally fair but also aligned with the public sector(s), with which the City competes for talent.

> Easy to Administer and Communicate The City wants to keep its focus on its corc service businesses, which means minimizing the detail of salarv administration internally. Reward systems should be easy to communicate and administer while providing a reliable means of managing salary costs and other compensation related expenses.

> Recognition of High or Superior Performance The City wishes to recognize strong performance where employees exceed performance expectations. This means that employees can expect:

• Regular performance reviews where employees receive feedback on their performance and recognition lhal is commensurate with the level of contribution lhal was made; and.

• Accelerated base salary increases if a staff member exceeds expectations determined through their performance review up to a position's job rate (i.e. the market competilive rale for (he level of position).

• Recognition awards (monetary and non-monetary) to recognize desired behaviors and superior performance.

> Market Sensitive The City's compensation program is designed to ensure a level of flexibility in order that it can respond to "high demand'job functions.

I'd rain fin I Si V ("HIM -! \\ \\ n iw!> j) r:i

The City of St. Albert DRAFT FOR DISCUSSION PURPOSES

Plan Objectives HayGrOlip The City compensation program is designed to achieve the following key objectives:

• Attraction of a high quality and competent workforce;

• Retention of high performing staff;

• Reinforcement of a performance-driven and a "team focused" work culture;

• Recognition of the organization's "ability to pay" in the interest of all stakeholders, including all types of City tax payers;

• Maintenance of a balance between internal equity and external competitiveness: and.

• Be regarded as fair and equitable employer.

Base Salary The City views Base Salaiy as its core compensation mechanism lor rewarding individuals for the work that they do and how they perform within a role. Base salary is a key element with respect to attracting and retaining high quality employees in all roles.

As such, base salary levels should be designed to reflect a balance between:

• the size and scope of the job;

• base salaries offered in the external market for similar positions;

• the incumbent's competence in the role.

Market Salaries

Job Size/ Scope

Individual Performance

The impact of job size on base salary is a function of the job evaluation methodologies used to measure job size in relation to other City jobs. '

i d i / Kin i! ! I a\ i vKi! i I 'iSU-5 ^ \> U .iKI; LM'OUp

The City of St. Albert DRAFT FOR DISCUSSION PURPOSES

External market positioning will be incorporated into base salary through using external market data to establish salary ranges or a job rate for each job. For non-union jobs, salary ranges will be reviewed in detail against the market every second year, and adjusted as necessary to ensure thai they continue to reflect the appropriate external market(s). On alternate years, adjustments will be aligned with prevalent adjustments in the Alberta public sector. In the case of unionized positions, the rales of pay for such positions arc negotiated with a certified bargaining agent.

Individual performance levels will be reflected in the rale al which individual incuinbenl's progress through their salary range for all City non-union positions. On balance, the base salaries of high performers will progress more quickly than ihe base salaries of average performers for non-union positions.

Job Evaluation The City will use a fair and equitable method of job evaluation to assess the relative worth of non-union jobs across the organization. Implementing such a methodology will allow the City to:

• Fairly evaluate all types of non-union jobs;

• Accurately compare non-union job sizes across different occupations; and,

• Accurately compare the size of non-union jobs al the City with jobs in other relevant external organizations.

Job content will be evaluated using a valid job evaluation methodology every 5 years or when a signi(leant change to a job has occurred. Job information data for City non-union positions is primarily collected through job descriptions and through interviews with incumbents or supervisory staff.

Base Salary Ranges and Market Positioning A salary range will be developed of each City non-union job that reflects base salary at developmental, competitive and maximum levels. These salary ranges will remain in effect, but will be reviewed against the external market on a bi-annual basis, and adjusted as required.

Salary ranges will be developed based on external market data including the following criteria:

• The market reference point for base salary ranges will be sel al approximately the 60'1' percentile of organizations that the City competes with for talent. Secondarily, the City will align with the 60lh percentile of the Western Canadian Broader Public Sector.

• The maximum of each salary range will be 100% ofthe market reference point and the minimum will be approximately 80% of that amount.

In instances where a "hot market' is experienced (i.e. supply exceeding demand for specific roles/job functions), a 'temporary market modifier' can be applied with the approval ofthe City Manager. Salary ranges will be adjusted for changes in the cost of living annually, with a more thorough review against the external market every 2 years,

For unionized positions, negotiated rates of pay are outlined in respective collective agreements.

Employee Benefits and Perquisites Employee benefits at The City will generally be aligned with Western Canadian Broader Public Sector practices. Additional perquisites that are unique to a municipal organization will be compared against those provided at other major municipal organizations in Alberta.

HayGroup

Appendix B: Detailed Benefit Prevalence Comparison

The reader will note in this prevalence report denotes whether an employee benefit or an important feature of a particular benefit is less than (-), greater than (+) or equal to (=) that of other major employers in the western broader public sector.

C 'ukiwu- ! >u


HayGroup City of St. Albert

Selected Western Broader Public Sector Organizations Prevalence of Benefit Features

Selected Western Broader Public Sector Organizations City of St. Albert Group Benefits Flexible Benefits Eligibility

TypeofPian

Employer Allocation of Flex Credits Health Spending Account

Unused Flex Credits

48% of employers offer flexible benefits. Not offered.

©

Eligibility

TypeofPian


Unused Flex Credits

AmongTFte providers, 19% offer full choice/flex credit plans. 76%A>ffer Health Care Spending Accounts. 75% atttfcate flex credits using a percentage of base salarv plus a flat amount.

©

Eligibility

TypeofPian


Unused Flex Credits

AmongTFte providers, 19% offer full choice/flex credit plans. 76%A>ffer Health Care Spending Accounts. 75% atttfcate flex credits using a percentage of base salarv plus a flat amount.

©

Eligibility

TypeofPian


Unused Flex Credits Average Health Care Spending Account is $613 jaeryear.

Unused flex credits are paid out in cash orSeposited to a Health Care Spendina Account.

©

Eligibility

TypeofPian


Unused Flex Credits Average Health Care Spending Account is $613 jaeryear.

Unused flex credits are paid out in cash orSeposited to a Health Care Spendina Account.

© Basic Group Life Eligibility

Employer Paid Premium

Definition of Earnings

Coverage

Retirement Coverage

100% of the employers offer basic life insurance.

For executives. 64% of plans are employer paid and 27% require employees to share the premium cost. For non-executives, 63 % of plans are employer paid and 30% require employees to share the premium. 9% of plans require all of their employees to pay the full premium. 84% of plans use base salary for calculation of benefit. The remaining 16% of plans have benefits that are not based on earnings. The typical coverage is 200% of annual salary. If the benefit is not based on annual salary, then typical coverage is $80,000 for executives and $60,000 for non-executives.

68% terminate the coverage upon retirement; the remaining plans reduce coverage after retirement.

Offered to all employees.

+

Eligibility



Coverage

Retirement Coverage




Inside & CUPE employees: Employer pays 80% of the premium.

SAFFU employees: Employer pays 75% of the premium. Base salary.

+

Eligibility



Coverage

Retirement Coverage




Option 1: 100% of base salary (rounded up to nearest $1,000) Option 2: 200% of base salary (rounded up to nearest $1,000) Option 3: 300% of base salary (rounded up to nearest $ 1,000) (SAFFU members oniy eligible for Option 3 coverage) Maximum of $400,000.

+

Eligibility



Coverage

Retirement Coverage




Reduced to 50% at retirement. Further reduced to 10% at age 70. +

page 1 of 10 www.haygroup.com/cs



Selected Western Broader Public Sector Organizations City of St Albert Comment Optional Group Life Eligibility


Coverage

73% of the employers offer optional group life insurance.

91 % of plans are employee paid.

Typical coverage is in $10,000 units up to a maximum of 30 to 40 units.


=

Eligibility


Coverage




Employee paid. =

Eligibility


Coverage




Units of $10,000 to a maximum of 30 units.

=

Basic Accidental Death & i yismemberment Eligibility


Coverage

84% of the employers offer basic accidental death and dismemberment benefits. 76% of plans are employer paid; 16% of plans require employees to share the premium cost, and 8% require employees to pay the full premium.

The typical coverage is 250% of base salary or between $50,000 and S100.000 if the benefit is not based on earnings.


-

Eligibility


Coverage



Inside & CUPE employees: Employer pays 80% of the premium.

SAFFU employees: Employer pays 75% of the premium.

-

Eligibility


Coverage



Coverage is equal to Employee Life Insurance.

-

Optional Accidental Death & Dismemberment Eligibility 39% of the employers offer optional accidental death and

dismemberment benefits. 94% are employee paid.

Typical maximum coverage is $200,000 to $400,000.

Not offered.


39% of the employers offer optional accidental death and dismemberment benefits. 94% are employee paid.

Typical maximum coverage is $200,000 to $400,000. Coverage

39% of the employers offer optional accidental death and dismemberment benefits. 94% are employee paid.

Typical maximum coverage is $200,000 to $400,000.

Dependent Life Insurance Eligibility


Coverage

7.7% of employers offer dependent life insurance.

29% of plans are fuliy employer paid; 65% are employee paid. Typical spouse maximum coverage is $10,000. Typical child maximum coverage is $5,000.

Offered to all employees. Eligibility


Coverage



Employee paid.

Eligibility


Coverage



Coverage for spouse is units of $10,000 to a maximum of 30 units. Children: No coverage.

page 2 of1C www.haygroup.com/ca



Selected Western Broader Public Sector Organizations Dependent Accident Insurance Eligibility


Coverage

16% of employers offer dependent accident insurance.

86% of plans are employee paid.

Typical coverage is 40% to 50% of employee's coverage.

Short Term Disability (STD) Eligibility

Definitions of Earnings

Coverage

100% of employers offer short term disability.

City of St Albert Comment

Not offered.

Base salary is used by 100% for calculation of benefit.

For executives: • 52% of plans are based on a uniform benefit. Typical

benefit is 11 weeks at 100% pay and 6 weeks at 75% pay.

• 23% of plans are based on accumulative sick days. • 18% of plans are based on a service schedule. • 7% offer a combination of the above. For non-executives: • 48% of plans are based on a uniform benefit. Typical

benefit is 8 weeks at 100% pay and 9 weeks at 75% pay.

• 25% of plans are based on accumulative sick days. • 20% of plans are based on a service schedule. • 7% offer a combination of the above.

=al, the benefit for accumulated sick day plans, an average of 15 days per year and a maximum bank of 150 sick days, is the same for all employees. 1^ Similarly, the typical service schedule benefit is the same for all employees. For the first 5 years of service, the benefit is 11 weeks at 100% pay followed by 6 weeks at 70% pay. The benefit increases to 100% of pay for 14 weeks followed by 3 weeks at 70% pay after 20 years. The typical maximum payment period is 17 weeks.

page 3 of 10


Base saiarv.

Accumulated sick days. Employees accrue 6 hours per semimonthly pay period, or 18 days per year. Maximum sick day bank is 120 days.

11 insulficient sick days accrued, employees are eligible for a sick leave credits plan 30 days after illness. Coverage is 66.67% of earnings.

www.haygroup.com/ca



Selected Western Broader Public Sector Organizations City of St Albert Comment Long Term Disability (LTD) Eligibility 100% of the employers offer iong term disability. Offered to all employees. = Employer Paid Premium 43% are employer paid, 20% share the cost with the

employee, and 36% are fully employee paid. (A significant number of plans require employees to pay the full premium because of the favourable tax treatment of any future benefit payment.)

Option 1: Employer pays 0% of the premium. Option 2: Inside & CUPE employees: Employer pays 80% of the premium. SAFFU employees: Employer pays 75% of the premium.

=

Definitions of Earnings Base salary is used by 100% for calculation of benefit. Base salary. = Waiting Period This is coordinated with short term disability. Average

waiting period is 120 days. Waiting period is 120 days. =

Coverage Typical coverage is 70% of earnings up to an average monthly maximum benefit of $8,500.

\> Option 1: 66 2/3 % of earnings up to a monthly maximum benefit of $6,000. _

Typical coverage is 70% of earnings up to an average monthly maximum benefit of $8,500.

\> Option 2: 75% of earnings of up to a monthly maximum benefit of $6,000. (SAFFU members are only eligible for Option 2 coverage)

=

Cost ol Living 39% offer some sort of indexing. Full CPI up to a maximum of 3% per year. + Health Care Benefits Eligibility 95% of employers offer extended health care benefits. Offered to all employees. = Employer Paid Premium 76% of employers pay the full premium for both employee

and family coverage. Inside & CUPE employees: Employer pays 80% of the premium. SAFFU employees: Employer pays 75% of the premium.

-

Annual Deductible 33% have an annual deductible; the average annual deductible is $39 for single and $110 for family.

No deductible. =

Reimbursement Rate Average reimbursement rate is 94%. Option 1: Drugs reimbursed at 75% and all other expenses at 100%.

=

Option 2: All expenses reimbursed at 100%. (SAFFU members are only eligible for Option 2 coverage) +

Hospital Room and Board 98% offer semi-private coverage with an average reimbursement of 95%. 52% offer private coveraae with

Private room coverage reimbursed at 100%. + page 4 of 10 - ... ....

www.haygroup.com/ca



Selected Western Broader Public Sector Organizations City of St Albert Comment average reimbursement of 93%.

Drugs 100% of health care plans cover drug expenses. The average reimbursement is 88%.

Option 1: Reimbursed at 75%. Option 2: Reimbursed at 100%. +

Vision Care 93% of employers offer vision care. Average reimbursement is 97% up to $235 every 2 years.

Option 1: Reimbursed at 100% up to $350 every 2 years. Option 2: No coverage.

+

Hearing Aids 98% cover hearing aids: the average reimbursement is 92% up to $215 per year.

Reimbursed at 100% up to $1,000 every 6 years. =

Paramedical 95% cover paramedical sen-ices; the average reimbursement is 93% up lo $550 per year.

Reimbursed at 100% up to $750 per year per practitioner. + Out of Province Expenses 95% cover out of province expenses: average

reimbursement is 98% up to a $1,000,000 lifetime maximum.

Reimbursed at 100%. No maximum. =

Out of Country Expenses 95% cover out of country expenses; average reimbursement is 98% up to a $1,000,000 lifetime maximum.

Reimbursed at 100%. No maximum. =

Dental Care Benefits Eligibility 98% of employers offer denta! care benefit. Offered to all employees. = Employer Paid Premium 79% are employer paid for both employee and family

coverage. Inside & CUPE employees: Employer pays 80% of the premium. SAFFU employees: Employer pays 75% of the premium.

-

Annual Deductible No plans have an annual deductible. No deductible. = Provincial Fee Guide 95% of plans use the current year's dental fee guide for

reimbursement. Current fee guide. =

Basic Services Typical reimbursement rate for basic services is 90% or 100%. The average reimbursement for basic services is 92%.

Reimbursement rate is 100% for basic services. +

Major Services Average reimbursement for executives is 62% for major restorative. For non-executives, average reimbursement rate is 60%.

Option 1: No coverage. Option 2: Reimbursement rate is 50%. -

www.h3ygroup.com/ca



Selected Western Broader Public Sector Organizations City of St Albert Orthodontics 67% of employers offer orthodontics to adults and 93%

offer to children. Average reimbursement rate is 56%. Option 1: No coverage.

Option 2: Offer orthodontics to children reimbursed at 50%. Maximum Coverage On average, the maximum for major services is SI.700 per

year and $2,250 lifetime for orthodontics. $3,000 for all services annually, and $3,000 lifetime for orthodontics. +

Retirement Benefits Registered Pension Plan Eligibility For executives. 59% of employers have a defined benefit

(DB) pension plan only. For non-executives, 57% of employers have a DB plan only. 34% have a defined contribution (DC) plan only for all employees, and 7% offer both DB and DC plans for all employees.

All employees belong to Local Authorities Pension Plan. Directors and General Managers also belong to APEX Pension Pian and MuniSERP. =

Defined Benefit (DB) Plan DB Pensionable earnings

DB Employee Contribution

DB Benefit Formula

DB Final Average Earnings Period DB Cost of Living Adjustments

DB Normal Retirement

page 6 of 10

90% of DB plans use base salary to calculate retirement benefits; 10% of plans use base salary plus bonus to calculate the benefit. 93% of plans require employee contributions. For those requiring employee contributions typical contributions for executives are 7.0% to 9.0% of earnings up to the YMPE, then 8.0% to 1 ] .0% of the excess earnings. For nonexecutive staff, typical contributions are 7.0% to 8.0% of earnings up to the YMPE, then 8.0% to 11.0% of the excess earnings.

Typical benefit level is 1.4% of earnings up to YMPE and 2.0% above.

Typical final average period is 60 months.

93% of the plans have cost of living adjustments. 43% of these plans use full CPI. while 54% use a percentage of CPI. typically 60%.

Normal form of payment is typically life guaranteed for 5

Base salary.

+

DB Pensionable earnings


DB Benefit Formula



page 6 of 10






Employees contribute to LAPP at a rate of 8.06% of salaiy up to YMPE plus 11.53% of earnings above YMPE up to the maximum salary allowed under the Income Tax Act ($138 882 in 2010).

In addition, employees participating in the APEX Pension Plan contribute 2.5% of salary up to APEX salarv maximum ($124,722 in 2010).

+



DB Benefit Formula



page 6 of 10






LAPP benefit is 1.4% of earnings up to YMPE and 2.0% above per year of service. APEX benefit is the difference between the LAPP benefit and 2% of earnings per year of service (I.E. 0.6% of earnings per year of service).

+



DB Benefit Formula



page 6 of 10






Final averaging period is 60 months.

+



DB Benefit Formula



page 6 of 10






60% of Alberta CPI.

LAPP: Normal form is lifetime pension guaranteed for 5

+

www.haygroup.com/ca



Selected Western Broader Public Sector Organizations City of St Albert Comment DB Normal Retirement or 10 years, or joint and survivor with 67% survivor's

pension. years.

APEX: Normal form is lifetime pension guaranteed for 5 vears with 67% survivor pension. +

DB Early Retirement Unreduced pension is available, on average, at age 59; age 56 plus 24 years of service; ""magic" number of 85.

Unreduced pension available at "magic number" of 85. =

DB Benefit Maximum Canada Revenue Agency (CRA) maximum for registered Pension Plans.

CRA maximum. =

Defined Benefit - Supplemental Executive Retirement Plan (SERP) DB SERP Of those that offer a DB plan, 59% offer a defined benefit

type of SERP plan. SERP plan in place (MuniSERP) for Directors and General Managers.

=

DB SERP Employee Contribution

29% of those with a DB SERP require employee contributions.

None. =

DB SERP Benefit Typically same percentage as below CRA limit. Same percentage as below CRA limit; 2% per year of service. =

Defined Contribution (DC) Plan DC Plan Type 72% are Money Purchase Pension plans; 28% are Group

RRSPs. Not offered.

DC Pensionable Earnings 72% of the plans use base salary to calculate the benefit; 28% use base salary plus bonus.

DC Employee Contribution

Employees typically contribute 5.0% - 6.0% of earnings. Average contribution is 5.6%

DC Employer Contribution

Employers typically contribute 6.0% - 7.0% of employee earnings. Average contribution is 6.6%.

Vesting 28% of plans offer immediate vesting while the majority require a minimum 2 year vesting period.

DC Benefit Maximum Canada Revenue Agency (CRA) maximum for registered Pension Plans.

Defined Contribution- Supplemental Executive Retirement Plan (SERP) DC SERP Of those that offer a DC plan, 22% offer a SERP. Not offered.

DC SERP Benefit Typically, no maximum benefit is applied.

page / of 10 www.haygroup.com/ca



Western Broader Public Sector Organizations City of St. Albert Comment Holidays and Vacations Holidays Number of days 11 statutory holidays per year and 2 floating holidays per

year on average. \ 5 12 statutory holidays.

Vacations Vacations Granted Typical non-executive schedule:

Yearfsl Weeks After I 3 After 10 4 After 20 5 After 25 6

Typical executive schedule: Yearfs) Weeks After 1 4 After 10 4/5 After 15 5 After 20 6

For City of St. Albert employees' non-executive staff: Year(s) Weeks After I 3 After 7 4 After 14 5 After 21 6

For City of St. Albert leadership Stff Year(s) Weeks After 1 4 After 7 5 After 14 6 After 21 7 —•

For City ol St. Albert's executives: Year(s) Weeks After 1 5 After 5 6 After 15 7 -

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Selected Western Broader Public Sector Organizations City of St. Albert Perquisites and Other Benefits Company Car/Car Allowan ces Eligibility

Type of Plan

Monthly Car Allowance

Capital Cost

Monthly Lease Cost

Operating Cost

39% of organizations offer a company car or car allowance to executives. 5% of organizations offer a company car or a car allowance to non-executive staff.

For executives, 82% provide car allowances; 12% provide company owned cars and 6% provide company leased cars. For executives, typical ranges are from $400 to S800 with an average of S650. Insufficient data to report.

Insufficient data to report.

City Manager and General Managers are covered under a car policy, however the policy is meant to reimburse employees forjob-related expenses.

Eligibility

Type of Plan


Capital Cost

Monthly Lease Cost

Operating Cost




Eligibility

Type of Plan


Capital Cost

Monthly Lease Cost

Operating Cost




Eligibility

Type of Plan


Capital Cost

Monthly Lease Cost

Operating Cost




Eligibility

Type of Plan


Capital Cost

Monthly Lease Cost

Operating Cost

39% of organizations offer a company ca

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