Restarting Raises…

1. Restarting Raises… Is it Time for an Employee Compensation “Extreme Make Over”? Arizona City & County Manager’s Association July 24, 2013

2. Restarting Raises… It’s been a while…

3. 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”.

4. Restarting Raises… The Traditional Model

5. Restarting Raises… The traditional job “classification”… • Each job within the organization is studied, and jobs that use similar knowledge, skills and abilities (KSA’s) are then grouped together into distinct “classes”. • A compensation “range” is then identified for each class by either: • Collecting data from roughly similar job classes in other “comparable” jurisdictions; or • Using a “point factoring” system to determine the relative value of the specific skill attributes in the class. Source:http://mheducation.com/management

6. Restarting Raises… Network Technician Entry Level Data Base Administrator Entry Level Programmer PC Technician Individual Job Information Tech I Classification Market “Range” $15.25/hr $22.55/hr $29.85/hr Mid Max Min

7. Restarting Raises… Once compensation ranges have been identified… • All similar ranges are grouped together into “pay grades”. • Grades may be further subdivided into smaller “steps” or increments based on fixed percentage. • Increases are then awarded to employees based on… • The employee having reached the next “step” based on seniority; and/or… • An increase awarded to all employees across the board based on the “cost of living”. Source:http://mheducation.com/management

8. Restarting Raises… Info Tech I ($15.25-$29.85) Executive Secretary II ($15.15-$29.50) Water Quality inspector III ($15.10-$29.75) Licensed Practicing Nurse I ($15.90-$29.95) Classification Pay Grade “H” $15.35/hr $22.55/hr $29.76/hr Mid Max Min

9. Restarting Raises… So what’s gone wrong with the traditional model? • Every employee thinks their job is unique — “My job doesn’t belong in that classification.” Leads to a proliferation of classifications with fewer and increasingly subjective distinctions. • While different classifications may initially have similar ranges, they may deviate dramatically over time — particularly when they are influenced by different non-governmental industry trends. • Current compensation trends typically do not follow rigid steps based solely upon seniority. • Current compensation trends often do not follow the cost of living index. • Lack of Flexibility: The traditional model does not reward individual performance.

10. Restarting Raises… So what can we do different this time? Three different approaches…

11. Restarting Raises… The Florence Example

12. Restarting Raises… The Eagar Example

13. Restarting Raises… The Gilbert Example