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1g Pay Compensation Plan CITY OF CHANHASSEN 7700 Market Boulevard PO Box 147 Chanhassen, MN 55317 Administration Phone: 952.227.1100 Fax: 952.227.1110 Building Inspections Phone: 952.227.1180 Fax: 952.227.1190 Engineering Phone: 952.227.1160 Fax: 952.227.1170 Finance Phone: 952.227.1140 Fax: 952.227.1110 Park & Recreation Phone: 952.227.1120 Fax: 952.227.1110 Recreation Center 2310 Coulter Boulevard Phone: 952.227.1400 Fax: 952.227.1404 Planning & Natural Resources Phone: 952.227.1130 Fax: 952.227.1110 Public Works 1591 Park Road Phone: 952.227.1300 Fax: 952.227.1310 Senior Center Phone: 952.227.1125 Fax: 952.227.1110 Web Site W'INI.ci .chanhassen.mn. us ~~ MEMORANDUM TO: Todd Gerhardt, City Manager FROM: Justin Miller, Assistant City Manage~",^ 6~. DATE: December 2, 2005 RE: Amendment to Employee Compensation Plan BACKGROUND At the request of the City Council, staff has initiated a process to transition towards a completely merit-based compensation plan, beginning in 2006. Staff has already begun to make the necessary internal changes needed to make this process as smooth as possible, but official city council action is required to change the city's employee compensation plan. Attached is the existing "Position Classification and Compensation Plan" that has been modified to eliminate any reference to cost of living or step increases. This attached plan provides for an entirely performance-based compensation system, and clearly explains the roles and responsibilities of employees, supervisors, the city manager, and the city council in this process. RECOMMENDATION Staff recommends that the Chanhassen City Council approve the attached "Position Classification and Compensation Plan" for the employees of the City of Chanhassen. Approval of this item requires a majority vote of the city council. The City of Chanhassen . A growing community with clean lakes, quality schools, a charming downtown, thriving businesses, winding trails, and beautiful parks. A great place to live, work, and play. POSITION CLASSIFICATION & COMPENSATION PLAN CITY OF CHANHASSEN OBJECTIVES OF THE POSITION CLASSIFICATION PLAN The following represents objectives set in preparing the City's Position Classification Plan: . To review and define position responsibilities of each full time position. . To develop a position classification and related salary plan. . To develop sound salary administration policy guidelines. . To develop a sound approach to salary administration which will recognize the performance being rendered and provide incentive for development of the potential ability of each employee. . To develop performance review and implementation programs designed to improve employee-supervisor communications and individual employee performance. . To provide the City Council with observations and recommendations related to the organization. . To develop a means by which achievement goals can be set and means established to monitor and evaluate attainment of such. SALARY STRUCTURE AND PRINCIPALS OF APPLICATION A. Position Responsibilities: All full time job descriptions have been updated and are included as an integral part of this plan. It is important that these descriptions are reviewed annually and that employee input be sought every two to three years. B. Survey Comparisons: Information concerning rates paid for comparable positions by other employers was developed from published surveys and personal contacts. The City conforms to the State mandated "Comparable Worth" laws to ensure conformance and to properly establish comparable worth points for all positions in comparison to all other positions C. Principles of Application 1. Performance being rendered in relation to overall responsibilities delegated to a position is the principal determinant of where an individual's salary should be. 2. The percentage spread between the salary classes increases progressively from the lower to the higher responsibility levels to provide greater opportunity to recognize outstanding performance at the higher levels with meaningful salary adjustments. 3. The overall salary structures will be reviewed annually by the city manager and adjustments made, when necessary, to assure comparable salary ranges are maintained. E. Performance Reviews and Salary Reviews 1. The performance review program provides a planned and orderly means of evaluating individual performance in relation to the areas of accountability as defined in each position job description. "Performance Review" as used in this policy statement means a "face-to-face" discussion of on-job performance. 2. Salary reviews will be conducted by supervisory personnel for the purpose of determining what, if any, salary adjustment is to be recommended. The results of the performance review and the related conference conducted with each position incumbent will be an important consideration in this decision. If the employee has improved markedly since the performance review, the improvement should be taken into consideration as a positive factor when considering the salary increase. 3. In discussions with personnel, supervisors are encouraged to speak in terms of the opportunities for salary adjustments for each position. SALARY ADJUSTMENTS FOR IMPROVED PERFORMANCE A. Frequency of Salary Reviews 1. The frequency of performance evaluations and salary reviews is an integral part of the City's Compensation Plan and guidelines established for review should be strictly adhered to. 2. Salary adjustments shall be made only when earned, based on identifiable improvement in performance, supported by the recommendation of the immediate supervisor and the head of the department in which the position is located. B. Amount of Salary Adjustment Within Responsibility Level The amount of a salary adjustment shall be made in accordance with the Recommended Performance Merit Pay Guide on the next page. RECOMMENDED PERFORMANCE MERIT PAY GUIDE Effective January 1,2006 The "Position Classification and Compensation Program" governs the responsibilities and compensatiqn for all positions of the City. The Plan must be funded as a part of each year's annual budget. The amount of increase received by an employee is governed by two factors-performance and comparable salaries for similar positions. A. Procedure for Establishing Salary Adjustments 1. The responsibility for initiating a salary adjustment recommendation is delegated to the immediate supervisor. All recommendations must be approved by the department head before referral to the City Manager for review and approval. 2. The City Manager shall be responsible for administering and approving salary adjustments under this plan. B. Salary Adjustments Resulting from Promotions The objective is to provide a promoted employee with a salary adjustment sufficient to bring the salary within the new salary range. Such an adjustment would normally be made at the time of promotion, or within a reasonable period if a question as to qualifications for the position is involved. C. Hiring RateslNew Employees New employees should be hired within the lower quartile of the market determined range for their position - considering education and experience required. Exceptions to this general rule would be appropriate in the following situations: 1. An individual whose qualifications are less than normally required for the position may be hired, promoted, or placed in an "acting" capacity at a rate somewhat below the established minimum. Such an employee could be brought within the range through an accelerated adjustment when they meet the normal minimum requirements for the position. 2. An individual may be hired higher in the range where previous experience or more than normal qualifications make a higher rate appropriate, or when market conditions are such that persons with the required qualifications are not available at rates in the lower portion of the range. The City Manager may use discretion when negotiating salary/benefits when hiring Department Heads - such being consistent with the purpose and intent of this plan. 3. New employees shall serve a six-month probationary period and, if performance is less than adequate, termination may occur; or, the probationary period may be extended for an additional six-month period. G. Council Review The City Manager's position shall be reviewed by the City Council on or before the completion of the probationary period and on a yearly basis thereafter. H. Salary Adjustments Resulting from Pay Equity Establishment of pay equity for all positions found to be in non-conformance with the State mandated comparable worth standards shall be brought into conformance within a maximum four-year period. The date of the employee's next regular 12- month interval review period shall be used as the date for a promotional increase to conform to the Pay Equity Act. Comparable worth only assures an employee that the City will establish a pay range having pay equity with all positions having similar worth within the City. An employee's ability to move upwards within the position range shall be solely based on the performance of that individual and shall be administered similar to all positions within the City. 1. Part Time Employees, Reimbursement Policies 1. All part time employment shall be in accordance with the approved budget. 2. Part time employees shall be paid in accordance with the responsibilities for the job and in accordance with the position range for that responsibility level. 3. Only permanent part time employees, equaling or exceeding 24 hours per week shall receive pro-rated employee benefits, i.e. vacation accrual, holidays (regular part-time employees working thirty-two hours per week shall receive six hours pay per holiday), sick leave, etc., based on the number of regularly scheduled hours worked in comparison to a 40 hour work week. 4. The City will abide by all state/federal regulations in regards to hourly pay for youth employment as well as minimum pay. 5. The above policies shall not apply to youth employees hired for seasonal employment. The City Manager shall set salary ranges for youth employees considering pay requirements with the state/federal governments, type of work to be performed, tenure, and budgetary constraints.