restarting raises… is it time for an employee compensation “extreme make over”? arizona city...
TRANSCRIPT
Restarting Raises…
Is it Time for an Employee Compensation “Extreme Make Over”?
Arizona City & County Manager’s AssociationJuly 24, 2013
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Restarting Raises…
It’s been a while…
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Restarting Raises…
It’s been a while since many jurisdictions have funded raises for staff. However, with recovering revenues and a recovering economy, funding for salaries is beginning to
flow again. But the years of furlough days and layoffs have many employee compensation professionals considering
whether to perform an “extreme make over” on their compensation systems rather than simply restarting their
traditional “cost-of-living” and “step plans”.
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The Traditional Model
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The traditional job “classification”… • Each job within the organization is studied, and
jobs that use similar knowledge, skills and abilities (KSA’s) are then grouped together into distinct “classes”.
• A compensation “range” is then identified for each class by either:• Collecting data from roughly similar job classes
in other “comparable” jurisdictions; or• Using a “point factoring” system to determine
the relative value of the specific skill attributes in the class.
Source:http://mheducation.com/management
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Information Tech IClassification
Restarting Raises…
Network Technician
Entry Level Data Base Administrator
PC TechnicianEntry Level Programmer
Individual Job
Min Mid Max
$15.25/hr $29.85/hr$22.55/hrMarket
“Range”
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Once compensation ranges have been identified…
• All similar ranges are grouped together into “pay grades”.
• Grades may be further subdivided into smaller “steps” or increments based on fixed percentage.
• Increases are then awarded to employees based on…• The employee having reached the next “step”
based on seniority; and/or…• An increase awarded to all employees across
the board based on the “cost of living”.
Source:http://mheducation.com/management
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Pay Grade “H”
Restarting Raises…
Info Tech I
($15.25-$29.85)
Executive Secretary II($15.15-$29.50)
Licensed Practicing Nurse I
($15.90-$29.95)
Water Quality inspector III
($15.10-$29.75)
Classification
Min Mid Max
$15.35/hr $29.76/hr$22.55/hr
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So what’s gone wrong with the traditional model? Every employee thinks their job is unique — “My job
doesn’t belong in that classification.” Leads to a proliferation of classifications with fewer and increasingly subjective distinctions.
While different classifications may initially have similar ranges, they may deviate dramatically over time — particularly when they are influenced by different non-governmental industry trends.
Current compensation trends typically do not follow rigid steps based solely upon seniority.
Current compensation trends often do not follow the cost of living index.
Lack of Flexibility: The traditional model does not reward individual performance.
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So what can we do different this time?
Three different approaches…
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The FlorenceExample
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The EagarExample
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The GilbertExample