Req.#12024
RESOLUTIONNO. 37639
1 A RESOLUTION relating to pay and compensation; approving a pay structure
concept and compensation philosophy; and authorizing the implementation
2 of the pay structure concept for nonrepresented classifications.
3 WHEREAS, in 2007, the City undertook a classification and total
4 compensation study, and
5 WHEREAS, on October 15, 2008, the Government Performance and
6
Finance Committee gave a "do pass" of the pay structure concept, and
7
8 WHEREAS the compensation philosophy defines the values and goals
9 regarding the equitable and consistent implementation of the City's
10 compensation program for today and the future; Now, Therefore,
1 1 BE IT RESOLVED BY THE COUNCIL OF THE CITY OF TACOMA:
1 2 Section 1. That the pay structure concept and compensation philosophy
1 3
are hereby approved as substantially in the form of the documents on file in the
1 4
office of the City Clerk.
1 5
1 6 Section 2. That the proper officers of the City are hereby authorized to
1 7 implement the pay structure concept forzn-b-@represented classifications.
18 Adopted NOV I 8 2008
19 ayor
20 Attest:
2 1 "%@@@ Annd
City Clerk
22
23 A ov e d
ppr as to
24
25 dty-`Atto'rney
26
res12024.doc-EAP/1ad 2 8 8
LEG 004 (11/89)
CITY CLERK USE ONLY
Tacoma REQUEST FOR Request 12024
El ORDINANCE 0 RESOLUTION Ord./Res.
1. DATE: October 23, 2008
2. SPONSORED BY COUNCIL MEMBER(S): N/A (If no sponsor, enter "N/A")
3a. REQUESTING 4a. CONTACT (for questions): PHONE:
DEPARTMENT/DiviSION/PROGRAM Karen Short 591-5424
Human Resources Department 4b. Person Presenting: PHONE:
3b. Do PASS FRom GPFC Joy St. Germain 591-2060
Yes
No 4c. ATTORNEY PHONE:
F-1 Did not go before a Committee Cheryl Comer 591-5074
N/A
_@ZA_ 4Z@lm ,
Dii,ector/Utility Division Budget Officer/]Finance Director City@ @r@@ rUtilifies
5. REQUESTED EFFECTIVE DATE: Octobff 28, 2OG8
(If a specific council meeting date is required, explain why; i.e., grant application deadline, contract
expiration date, required contract execution date, public notice or hearing required, etc.)
6. SUMMARY AGENDA TITLE: (A concise sentence, as it will appear on the Council agenda. )
Resolution to approve a pay structure concept and compensation philosophy, and authorizing the
implementation of the pay structure concept for non-represented classifications.
7. BACKGROUND INFORMATioN/GENERAL DISCUSSION: (Why is this request necessary? Are there legal
requirements? What are the viable alternatives? Who has been involved in the process?)
The Government Performance and Finance Committee gave a "do pass" of the pay structure
concept on October 15, 2008. The compensation philosophy defines the values and goals
regarding the equitable and consistent implementation of the City's compensation program, for
today and the future.
8. LIST ALL MATERIAL AVAILABLE AS BACKUP INFORMATION FOR THE REQUEST AND INDICATE WHERE FILED:
Source Documents/Backup Material Location of Document
Draft GPFC minutes of 10/15/2008 City Clerk's Office
Pay Structure Proposal City Clerk's Office
Compensation Philosophy City Clerk's Office
9. FINANCIAL IMPACT: A. Z No IMPACT (NO FISCAL NOTE)
B. YES, OVER $1 00,000, Fiscal Note Attached
C. YES, UNDER $ 1 00,000, (NO FISCAL NOTE) Provide funding source
information below:
FUNDING SOURCE: (Enter amount of funding from each source)
Fund Number & Name: State $ city $ Other $ Total Amount
If an expenditure, is it budgeted? M Yes R No Where? Cost Center:
Acct
\g-cs\offsys\web page d---ts\RequestResolutiorK)rdinartce.doc Office of the aty Crerk (05/07)
Amendment Memorandum No. 1
TO: Mayor William H. l3aarsma and Members, Tacoma City Council
FROM: Joy M. St. Germain, Human Resources Direct
DATE: November 12, 2008 7
SUBJECT: Resolution 37639 -Pay Structure Concept and Compensation Philosophy
The City Council considered Resolution 3 763 9 at the November 4, 2008 Council meeting
regarding the approval of a pay structure concept and compensation philosophy; and
authorizing the implementation of the pay structure concept for non-represented
classifications.
Final consideration of the resolution was held over until a date to be determined in order
to consider possible revisions to the compensation philosophy document. Revisions were
considered by the Government, Performance and Finance Committee at the meeting
November 5, 2008, and received a "do-pass" recommendation.
The revisions in the compensation philosophy attached clarify the approach to determine
pay and benefits separately in comparison to the market, positioning pay between the
65th and 75th percentile, and targeting benefits in total to be competitive in attracting and
retaining our employees.
290
COMPENSATION PHILOSOPHY
The Tacoma City Council is committed to a results-oriented govenu-nent that provides efficient
and accountable government services.
To attract and retain the employees with the competencies, skills, knowledge, and dedication we
need to meet our high performance standards, the City of Tacoma (the City) strives to be an
employer of choice in the Puget Sound region. For our community that means our goal is to be a
well-managed municipal government that provides exceptional services to our residents. For our
employees that means we are committed to:
? Providing opportunities for our employees to grow and develop their skills, knowledge,
and ultimately their careers.
? Ensuring individual accountability for performance and results.
? Communicating openly with our employees about our business/mission, our successes
and our failures, and opportunities for us to do things better.
? Providing a competitive total compensation package.
The total compensation program at the City is designed to assist us in creating and supporting a
high-performance, responsive and competitive organization. The total compensation program is
made up of salary/wages and benefits.
MARKET DEFINITION'
We regularly assess our market to ensure that our salary ranges remain competitive.
Given the diversity and complexity of the duties and responsibilities for positions filled by the
City of Tacoma, the "market" for any individual position or classification will be varied. For
some positions, the market will be exclusively public sector governments. For other positions,
the market will be a mix of public sector and private sector employers. In markets such as Click!
and Tacoma Rail, the market may be exclusively private sector. The market will be defined in a
manner that reflects the primary industries where labor talent is found, recruited from and/or lost
to.
'Market Definition received a "Do Pass" recommendation from the GPFC on January 16, 2008, and was revised on
April 2, 2008.
291
Once the market is generally identified, then certain criteria come into play when considering the
potential pool of market data. Those criteria will include:
? Certain positions are recruited from and hired, or lost to local area employers (of
public, private or both sectors) so data from organizations within that geography are
most relevant.
? Certain positions are recruited from and hired, or lost to regional or national
employers (of public, private, or both sectors). Thus survey data for these positions
might be obtained from a regional or even national geography, based on past
experience and historical data.
? National data will only be used (adjusted for Tacoma regional cost of labor), if there
are insufficient local or regional survey data available to make reliable market
analysis, or the national market is the appropriate market for comparison.
? All data should be appropriately scaled and adjusted to reflect geographic differences
in the cost of labor; this is intended to insure that the survey data reflects comparable
information.
? Finally, at certain job levels, the complexity created by organizational size and
purpose is directly related to the scope of responsibility of the position and
consequently, its pay.
2 9 21
COMPETITIVENESS2
The City of Tacoma's total compensation philosophy is to provide pay and benefits sufficient to
attract and retain the qualified and skilled employees to accomplish the City's strategic plan:
* Position total eempew,,agep4pay and benefits)@ between the 65th and 75th percentile of
the market.
* Recognize that there are conditions where exceptions may be necessary, in situations
such as:
v' Recruiting the desired level of talent in certain jobs is a sustained problem and
results in negative impacts to the City;
Retention issues, including succession and turnover;
Significant changes in the economy or marketplace;
V Internal anomalies in alignment, disparities or inconsistencies.
BENEFITS
We target our benefits, in total, to be competitive in attracting and retaining ou
einployee@pFovide above average value to our- employees . We recognize that other less tangible
elements, such as the mission of the departments in serving the citizens of Tacoma, are valuable
to our employees. Each element plays a role in our pay strategy.
PAY ADMINISTRATION
The City's policies around pay administration (for both classified and non-classified employees)
are intended to ensure fair and consistent decisions surrounding employee pay, to provide hiring
managers with enough flexibility to be able to recruit and retain our talented employees, to
emphasize performance, and to increase accountability for all employees.
Our goal is to attract, retain and motivate committed, hard-working, creative and thoughtful
employees who support our mission to meet and exceed the expectations of our community, not
only in service delivery but in building a better place for all of us to live and work.
2From the minutes of the January 30, 2008 meeting of the GPFC: ". . . it is the consensus of the Committee that the
City's position in market should be between the range of 65% to 75%."
3Proposed edits from GPFC discussion on November 5, 2008.
4Proposed edits from GPFC discussion on November 5, 2008.
00-wo 9 13
3
Pay Structure Proposal
age
October 21, 2008
City of Tacoma
City Council Study Session
Joy St. Germain, Human Resources Director
Agenda
m Proposed pay structure
m Proposed management of new pay structure
0 Compensation philosophy
m Next steps
2
294
Proposed Pay Structure
? For non-represented employees only
? Proposed transition in first quarter 2009
? Structure
- What will it look like?
- How will we transition?
- How will we incorporate elements that emphasize
performance & accountability, and provide
flexibility for recruitment & retention?
3
Proposed Pay Structure (cont'd)
in What will it look like?
- Use 6 steps for all non-represented classifications
- ach step is a 5% increment (25% range)
- Step 6 is at the 65th to 75th percentile of the market
for the classification
Step 6 is at the
5% steps 65th to 75th percentile
1 2 3 4 5 6
New 4
Transition Principles
1 . The current pay scale moves so that the top step is
equal to pay at the 65th to 75th percentile of the
market for that classification (target market pay)
2. Employees move to the same relative position in the
ma pay scale, up to a maximum 15% increase
except where more is necessary to place an
employee within the market pay range
3. In 2009, annual progressions occur as scheduled
using existing guidelines
5
Transition Principles (cont'd)
4. The City Manager and Utilities Director have the
ability to recommend specific individuals that require
additional consideration for purposes of retention
City Manager/Utilities Director will submit documentation that
justifies special consideration to the HR Director for final
review and confirmation
6
'296
Transition Examples
m Example 1: Target market pay (TMP) is less than
current top step 6
- Em oyees paid at current step 6 are frozen at $40/hr until
TMO reaches $40/hr
- Employees paid in current steps 1-5 receive no market
adjustment; they are eligible for annual step increases in the
new market pay scale
$30 $32 $34 $36 $38 $40
Current Step # 1 2
$28 $30 $32 $ 4 6 $ 8
Market Step # 1 2 3 4 5 6
Note: numbers are for illustrative purposes only TMP 7
Transition (cont'd)
m Example 2: Target market pay (TMP) is greater than
the current step 6
- Employees keep relative position in market pay scale
- Pay increased 1 0% in this case
$30 $32 $34 $36 $38 $40
1 1 *==J
Current Step# 1 2 3 4
$34 $36 $38 $40 42 4
[- I I& 1 4 --*
Market Step # 1 2 3 4 5 6
Note: numbers are for illustralive purposes only TMP 8
2 917
Transition (cont'd)
m Example 3: Target market pay (TMP) is more than a
15% increase above current step 6
- Employees keep relative position in market pay scale, up to
a 15% increase
- Employees in current steps 1 and 2 are placed in new step 1
to get to market pay range
$30 $32 $34 $36 $38 $40
Current
Step # 1 2 3
$3 37 40 43 $49
Market Step # 1 12 3 5 6
Note: numbers are for illustrate purposes only $36.80 TMP 9
Transition (cont'd)
0 We will introduce "quarter steps" worth 1.25%
to facilitate placement in the new market pay
range
N Lays the foundation for linking pay to
performance evaluations
? Major steps are at 5% increments Step 6 is at the
? Quarter steps are at 1.25% increments 651,fi to 75IJI percentile
New I I I I I I I I I I I I I I I I I I I I
I a bc 2 a bc 3 a bc 4 a bc 5 a bc 6
10
298
Transition (cont'd)
m HR Director will work with General
Government and TPU joint leadership to
address transition issues and exceptions
- Internal equity
- Use of 6 steps for all non-represented positions
and timing for adjustment
- Accommodating retention concerns
Incorporating Performance,
Accountability and Flexibility
s Through 2009, we will:
- Develop classification and compensation
guidelines
- Implement a Citywide performance evaluation
system
- Develop an incentive program in General
Government similar to TPU's incentive program
- Develop additional goal-based incentive
provisions used to recognize individual or team
goals
12
Incorporating Performance (cont'd)
n In 201 0, we will:
Transition to non-automatic steps for all
non-represented employees, using annual
performance evaluations to advance through the
steps
13
Proposed Management of Pay Structure
m Successful implementation depends on:
- Organization-wide consistency
- Effective performance evaluation system
E Department management responsible for
consistent application of the guidelines
m HIR Department plays a pivotal role in the
implementation and ongoing operation of the
proposed pay structure
14
Proposed Management (contd)
? Classification and Compensation Guidelines
- Provide criteria and procedures for consistent
implementation and on-going management
- To be developed with joint leadership team
- HR Director plays a consultative role in guiding
department managers
- HR Director will ensure proper documentation and
compliance
? HR Director will provide GPFC periodic
implementation updates
15
Compensation Philosophy
16
Next Steps
October 28 Present resolution approving pay philosophy and
pay structure, and directing staff to bring back
corresponding TMC changes for Council
consideration
November 5 Present compensation survey recommendations at
GPFC
November Present compensation survey recommendations
for Council consideration
17
Next Steps (cont'd)
1 Q2009 Begin transition of non-represented positions to
new classification system and pay structure
1 Q2009 Begin training and roll out of performance
evaluation system
1 Q2009 Begin roll out of General Government incentive
goal program (similar to TPU)
1 Q201 0 Begin using performance evaluation to determine
pay adjustments for non-represented positions
18
Resolution No. 37 6 39 P, bft-le TZ
I rj E-@o
Adopted: NOV 1 8 2008
OCT 2 8 2008
Maker of Motion: Madikull-L
Seconded:
Voice Vote:
MEMBERS AYES NAYS ABSTAIN ABSENT
Ms. Anderson
Mr. Fey
Ms. Ladenburg 1-7111,
Mr. Lonergan
Mr. Manthou
Ms. Strickland
Mr. Talbert
Ms. Walker
Mayor Baarsma
Roll Call Vote:
MEMBERS AYES NAYS ABSTAIN ABSENT
Ms. Anderson
Mr. Fey
Ms. Ladenburg
Mr. Lone@qan
Mr. Manthou
Ms. Strickland
Mr. Talbert
Ms. Walker
Mayor Baarsma
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