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Executive Summary


									                                City of Orlando
                              Development and Establishment
                              of Job Evaluation and Pay Plans

                                    Executive Summary

                                          July 2001

This report was prepared by

Karen G. Collins, PRINCIPAL, 800 755-8927
Michelle Selph, SENIOR CONSULTANT, 800 755-8927

PALMER & CAY CONSULTING GROUP                                   1
Executive Summary

PALMER    & CAY CONSULTING GROUP (PCCG) was retained by the City of Orlando (the City) to
evaluate its current compensation program and practices. Our proposal for assistance
identified the following objectives:

1. Develop a compensation strategy—a document which provides a framework for addressing
   compensation programming;
2. Conduct an external competitiveness review by implementing a private compensation
   survey among selected employers within the City’s external market (both the public and
   private sector), and utilizing PCCG's extensive library of published survey sources;
3. Develop and implement a job evaluation/classification system for all positions;
4. Establish salary ranges in accordance with internal equity (i.e., results of the job
   evaluation/classification system) and external competitiveness (i.e., results of the private
   compensation survey and published survey data);
5. Determine placement of positions within the revised pay plan structure;
6. Determine FLSA exempt/non-exempt status of designated job titles;
7. Develop policies and procedures (i.e., salary administration guidelines) that are
   professionally sound, administratively simple, and cost effective to maintain the integrity of
   the recommended compensation program;
8. Conduct a cost analysis associated with the implementation of the recommended
   compensation program; and
9. Respond to requests for reconsideration of position classification and/or pay grade
   assignment for up to thirty days after submission of final report.

We are requesting that the proposed Compensation Strategy and Job Evaluation and Pay Plan
be adopted formally by the Council.

PALMER & CAY CONSULTING GROUP                                                            2
Executive Summary (cont’d)

Task Force

The City appointed a Task Force of executive management level representatives from each
function to work closely with PCCG throughout the project. A list of the Task Force members is
presented below:

   Becky Ares, Admin Svcs/Mgmt & Budget Director
   Beryl Davis, Audit & Evaluation Director
   John Matelski, Assistant Chief Information Officer
   Jon Dorman, Orlando Centroplex Deputy Director
   Ken Wagner, Building Official
   Kevin Edmonds, Deputy Chief Administrator
   Lee Brown, Personnel Mgmt Bureau Chief
   Randy Tuten, Fire Deputy Chief
   Reinaldo Rivero, Police Assistant Chief
   Richard Howard, City Engineer
   Richard Unger, City Planning Bureau Chief

In addition to the Task Force, Michelle Tarrant, City Compensation Manager, acted as the
primary liaison between PCCG and the Task Force. As the primary liaison, Ms. Tarrant
coordinated meeting schedules, ensured the timely submission of requested written
documentation, and scheduled Job Description Questionnaire work sessions and
interviews/focus groups with employees. Collin Wright, Marily Gonzalez-Rivera, and Vanessa
Crawford Jones worked closely with Ms. Tarrant, the Task Force, and PCCG to ensure the
successful completion of the project.

PALMER & CAY CONSULTING GROUP                                                         3
Executive Summary (cont’d)

Project Approach

The Task Force met on a consistent basis (i.e., two to three times a month over a six month
period) to come to an agreement on each element of information that was utilized to develop
the proposed Compensation Strategy and Job Evaluation and Pay Plan. To provide the Council
with an understanding of the due diligence behind the proposed Compensation Strategy and
Job Evaluation and Pay Plan, we have outlined the process below.

      The Task Force finalized a list of benchmark jobs to be surveyed to establish the
       external competitiveness of the City’s current compensation program.
      The Task Force finalized a list of specific organizations to participate in the survey.
      A survey instrument was designed by the City to obtain specific information from survey
       participants with respect to cash compensation.
      PCCG administered the private survey to obtain cash compensation information for the
       external competitiveness review. This consisted of placing phone calls to all targeted
       survey participants and sending the finalized survey to those organizations that agreed
       to participate in the survey.
      PCCG compared the City’s current compensation to the external market data received
       from the private survey and to published survey data.
      The Task Force reviewed the data collected by PCCG for the external competitiveness
       review and supported the findings.
      Palmer & Cay consultants had every Task Force member submit in writing their
       personal view as to where the City should target its’ compensation programs.
      Palmer & Cay consultants developed a proposed Compensation Strategy based on the
          The City’s organizational goals and objectives expressed by the Task Force;
          Employee feedback from focus groups, e:mails and interviews;
          The external market as identified by the Task Force;
          The importance of internal equity as identified by the Task Force; and
          The desired positioning versus the external market for cash compensation as
           identified by the Task Force.
      PCCG, with extensive input from the Task Force, developed a point factor job evaluation
       plan to establish internal equity for all positions within the City covered under the scope
       of this project.
      PCCG conducted focus groups with 30% of the employees to obtain input as to the
       strengths and weaknesses of the City’s current compensation and performance
       management programs.
      All employees were provided the opportunity to fill out a questionnaire detailing their job
       scope and responsibility level. In addition, all employees were provided the opportunity
       to update their current job description.

PALMER & CAY CONSULTING GROUP                                                               4
Executive Summary (cont’d)

Project Approach (continued)

      Supervisors were provided the opportunity to review the input provided by their direct
       reports with respect to job scope and responsibility levels and proposed amendments to
       current job descriptions.
      PCCG made recommendations on the FLSA (exempt/non-exempt) status of jobs
       covered under the scope of the study.
      PCCG developed a salary structure based on both the external competitiveness review
       and internal equity.
      All position titles were assigned to a salary range based on their point total (Note: point
       totals were the result of the point factor job evaluation system).
      The Task Force was provided the opportunity to review preliminary recommendations
       and provide feedback to PCCG.
      The Executive group was provided the opportunity                 to   review   preliminary
       recommendations and provide feedback to PCCG.
      PCCG finalized their recommendations with respect to:
       (1) The City’s Compensation Strategy;
       (2) A new salary structure;
       (3) Each job title assigned to a salary range within the structure based on the
           recommended job evaluation system;
       (4) Salary adjustments based on addressing external competitiveness issues and pay
           compression (i.e., cost analysis);
       (5) Improvements to the City’s current performance-based pay system; and
       (6) Revised salary administration guidelines.
      The Task Force voted and approved PCCG’s recommendations.

PALMER & CAY CONSULTING GROUP                                                             5
Executive Summary (cont’d)

Recommended Compensation Strategy

Overall Goal. The overall goal of the City’s Compensation Strategy is to provide competitive
compensation opportunities that reinforce high performance from all employees and the
achievement of organizational goals. Therefore, the City’s overall compensation program will:

   Support the mission, goals, and interests of the City, the community and citizens of which it
    serves. Enable the City to attract and retain qualified and high-performing employees.
   Motivate employees to act in the best long-term interests of the City and themselves.
   Reward employee innovation and performance.
   Maintain both internal equity and external competitiveness.
   Support teamwork and trust throughout the City in meeting common objectives.
   Promote ease and flexibility in compensation program administration.

Competitive Market. The primary competitive market for all City positions is defined as cities
and counties of similar size (or that provide similar services) in Florida, and for positions that
are not unique to the government industry, the competitive market also includes private
employers within Florida. For management and specialized positions, the competitive market is
much broader and may include cities, counties and/or private employers in the southeast region
and/or nation-wide.

Base Salary. Base salary range midpoints are targeted “at” to “slightly above” market levels
(i.e., approximately the 50th - 55th percentile). Base salary increases will be based on
competitive market increases and the availability of funds. All employees will receive any
general increase so long as the employee’s appraised performance is deemed to meet
standards and the increase would not result in a pay level in excess of the maximum of the
range for which his/her position is assigned. The City’s salary structure will be reviewed on an
annual basis to ensure that the program: (1) is externally competitive; (2) meets our
employee’s individual needs; and (3) is cost effective for the City.

Internal Equity. Our focus on establishing an equitable compensation program is reflected in
our dedication to considering internal equity, as well as market compensation levels, in
establishing base salary ranges. Therefore, job scope and responsibility requirements each
play a key role in determining compensation levels relative to the external market.

Regulatory Compliance
Our compensation program will be designed and administered in compliance with all laws, and
will provide fair treatment for all employees regardless of race, color, creed, religion, gender,
national origin, age, marital status, family status, disability, military status, sexual orientation or
other differentiating factors.

PALMER & CAY CONSULTING GROUP                                                                   6
Executive Summary (cont’d)

Results of the External Competitiveness Review (Private Salary Survey)

   The comparison of the City’s current salary structure to the market median revealed:
          o Overall the minimums of the City’s salary structure are 4.2% below market
          o Overall the midpoints of the City’s salary structure are 4.3% below market
          o Overall the maximums of the City’s salary structure are 4.6% below market
          o Overall the average base salary for City employees is 9.8% below market

   The comparison of the City’s current salary structure to the market average revealed:
          o Overall the minimums of the City’s salary structure are 5.4% below market
          o Overall the midpoints of the City’s salary structure are 5.3% below market
          o Overall the maximums of the City’s salary structure are 5.4% below market
          o Overall the average base salary for City employees is 10.7% below market

Recommended Job Classification System

   PCCG, with significant input from the Task Force, recommended the following eleven (11)
    factors be utilized to establish internal equity within the City:

    o   Education
    o   Experience
    o   Job Complexity
    o   Consequence of Error
    o   Decision-Making Responsibility
    o   Inside/Outside Contacts
    o   Risk/Safety Demands
    o   Independence of Action
    o   Work Environment
    o   Strategic Visioning
    o   Type of Supervision

PALMER & CAY CONSULTING GROUP                                                          7
Executive Summary (cont’d)

Recommended Salary Structure

   PCCG developed the following salary structure based on the results of the external
    competitiveness review and internal equity established by the job classification system.

                                                                  Range     Midpoint
            Grade       Minimum        Midpoint        Maximum    Spread   Differential
              1     $     99,748   $     144,563   $    189,378    90%         n/a
              2     $     88,665   $     128,500   $    168,335    90%        12.5%
              3     $     78,813   $     114,222   $    149,631    90%        12.5%
              4     $     70,056   $     101,531   $    133,006    90%        12.5%
              5     $     62,273   $     90,250    $    118,228    90%        12.5%
              6     $     55,353   $     80,222    $    105,091    90%        12.5%
              7     $     54,947   $     73,262    $     91,578    67%        9.5%
              8     $     50,179   $     66,906    $     83,632    67%        9.5%
              9     $     45,826   $     61,101    $     76,377    67%        9.5%
             10     $     41,850   $     55,800    $     69,750    67%        9.5%
             11     $     38,219   $     50,959    $     63,699    67%        9.5%
             12     $     38,100   $     47,625    $     57,150    50%         7%
             13     $     35,608   $     44,510    $     53,412    50%         7%
             14     $     33,278   $     41,598    $     49,917    50%         7%
             15     $     31,101   $     38,877    $     46,652    50%         7%
             16     $     29,067   $     36,333    $     43,600    50%         7%
             17     $     27,165   $     33,956    $     40,748    50%         7%
             18     $     25,388   $     31,735    $     38,082    50%         7%
             19     $     23,727   $     29,659    $     35,590    50%         7%
             20     $     22,175   $     27,718    $     33,262    50%         7%
             21     $     20,724   $     25,905    $     31,086    50%         7%
             22     $     19,368   $     24,210    $     29,052    50%         7%
Note: Salary structure is based on a 2080/hr work year.

Performance Increase Program (PIP) and Performance Bonus Awards (PBA)

   We were impressed with the City’s current performance management system and consider
    the performance-based program currently being implemented as a clear “best practice” in
    the marketplace. After careful review of the City’s Performance Management Manual, our
    recommendation is to not only maintain your current performance management system—
    but to increase your PIP budget by 1% for the next fiscal year.

PALMER & CAY CONSULTING GROUP                                                             8
Executive Summary (cont’d)

Next Steps

We recommend that the following steps be taken as a result of this study:

1.   Implementation of Recommendations

         Adopt the recommended compensation and benefits strategy
         Adopt the recommended base salary structure and the assignment of each position into
          a salary range
         Adopt salary administration guidelines
         Salary Adjustments:
          (1) Bring employees to the minimum at the adoption of the new salary structure
          (2) Implement within range equity adjustments (i.e., address pay compression) as soon
              as economically feasible, preferably within the fiscal year.

2. Formal Communication Plan

After the adoption of the final report the City should communicate in writing to all employees the
outcome of the study. At a minimum the following should be communicated:
     The adopted compensation and benefits strategy.
     The employee's newly assigned range.
     The new Compensation Policies and Procedures Handbook.

3. Appeals Process

         At the discretion of the Personnel Management Bureau, a thirty (30) day appeals
          process should be implemented after the adoption of the final report.

4.       Address Salary Compression Issues

     An analysis was run to determine whether or not pay compression would occur with the
     adoption of the recommended salary structure. Salary compression occurs when the pay
     differences between employees are too small. For example, supervisors and subordinates
     may have comparable salaries because of the close proximity of pay ranges and the greater
     seniority of the subordinates or when a highly tenured employee has a similar salary to a
     newly hired employee. It was determined that pay compression would occur with the
     adoption of the recommended Compensation and Benefits strategy and the recommended
     salary structure.

PALMER & CAY CONSULTING GROUP                                                               9
Executive Summary (cont’d)

4.    Address Salary Compression Issues (continued)

     To address pay compression we implemented the following formulas to appropriately place
     current employees within their new pay ranges.

     Cost to Midpoint
     We separated the distance between the minimum and the midpoint in six (6) equal percent
     increments. We then placed employees at each increment based on years of service (i.e.,
     up to one year of service was at least at the minimum, two years of service equated to at
     least the first increment, etc.) in their current position or left their salary the same, whichever
     was greater. For employees with six or more years of service in their current position we
     placed the employees at the closest increment to the midpoint of the range or left their
     salary the same, whichever was greater.

     The estimated cost to adjust employees up to the midpoint* of their assigned salary range
     (based on tenure in position) is $1,739,511.

     Note that when using equal percent increments per year of tenure in position it is not
     possible to reach the exact midpoint; therefore the cost analysis brings employees to (and
     caps them) at a point in the salary range slightly below the actual midpoint.

PALMER & CAY CONSULTING GROUP                                                                   10

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