HomeMy WebLinkAbout_Non-Represented Staff Compensation Review Workshop InformationCWSON
DETTMANN
CONSULTING
a Cottingham & Butler Company
October 11, 2018
MEMORANDUM
TO: John Fitzpatrick, Assistant City Manager/Director of Administrative Services
FROM: Patrick Glynn, Senior Consultant
RE: Non -Represented Staff Compensation Review
BACKGROUND
The City of Oshkosh retained our firm to update its non -represented staff pay plan with a market
review. This is a major pay plan, and City continues an emphasis on providing a competitive
compensation package for its employees. The City continues to keep the overall plan current with the
external marketplace by applying structural (general) increases, in addition to fostering an
environment of internal equity with both step movement (below the Control Point) and performance
awards.
MARKET ANALYSIS OF OVERALL PLAN POLICY
As in 2011, and again in 2015/16, the market analysis included benchmark data from both other cities
and private sector data. The ten cities used in the analysis were consistent and included: Green Bay,
Kenosha, Racine, Appleton, Eau Claire, Janesville, La Crosse, Fond du Lac, Beloit, and Wausau. Many of
these organizations either adopted new plans, or have updated their post -Act 10/32 structures.
In addition to the city benchmark comparisons, we analyzed area data from the U.S. Department of
Labor Bureau of Labor Statistics, as well as paid survey sources (Willis Towers Watson, CompData, and
Northeast Wisconsin Chambers of Commerce). We weighted city data and other survey data equally.
We were able to develop comparisons on forty-seven of the City's classifications. We regressed both
the current pay plan Control Points (the market target adopted by policy) and our market estimates
against benchmark position job evaluation scores. The RI = 0.9509 shown on the market graph (in the
PowerPoint presentation) is the correlation coefficient. This value is very high and means that our
market model (i.e. job evaluation scores, grade breaks, market matches, selected benchmark jobs, etc.)
are reasonably predicting the variance in market pay. One way to interpret the result is that 95% of the
variance in pay is explained by differences in job evaluation values. The result of the analysis was that
the current pay policy of the City and market practices are virtually indistinguishable. Although difficult
to see, the two lines are essentially on top of each other.
City of Oshkosh: Comparison of Current and Median Market
$70.00
$65.00
$60.00
Market
$55.00
momwCurrent
$50.00
$45.00
a
x$40.00
0.$35.00
00
.
3$30.00
0
$25.00
$20.00
$15.00
$10.00
$5.00
$0.00
250.0 300.0 350.0 400.0 450.0 500.0 550.0 600.0 650.0 700.0 750.0 800.0 850.0 900.0 950.01000.01050.OL100.0L150.0L200.OL250.a300.0
Job Evaluation Points
In addition to benchmark measurement for policy and market estimates, we also evaluate pay plan
performance using a statistic called a "compa-ratio." This is defined as the ratio between base pay for
each incumbent and the pay plan Control Point for the incumbent's allocated pay range. The overall
compa-ratio for this pay plan is approximately 1.035, meaning that, on average, current employee pay
is 103.5% of the market. Considering that the City of Oshkosh's overall policy is to employ a skilled,
experienced workforce, we believe this is an excellent position for the City. Further, the compa-ratio
for employees with less than 5 years of service 92.9%. This illustrates the fact the City has
demonstrated discipline in its hiring practices by hiring new employees at, or near, the plan minimum.
CONTINUED CHALLENGES AHEAD
The workforce challenges identified in 2012, and again in 2016, continue for the City. Although down
slightly, the City's workforce continues to show signs of aging, as the table on the following page
shows. Nearly 42% (123 employees) of the City's workforce covered by this plan are at or over age 50.
The poses two unique challenges for the City: [1] these employees have access to an outstanding
retirement system and the City needs to prepare for a significant turnover of very experienced staff;
and [2] one of the best strategies for addressing the workforce shortages is to create an environment
where retirement -eligible employees choose to remain in the workforce. The table below illustrates
the breakdown of the age demographic for those City employees subject to this analysis:
Grouping
Number
Percent of
Whole
Cumulative
Percent
Age 60 or Older
22
7.5%
7.5%
Age 55 to Age 60
44
14.9%
22.4%
Age 50 to Age 55
57
19.3%
41.7%
Age 45 to Age 50
48
16.3%
58.0%
Age 40 to Age 45
39
13.2%
71.2%
Age 35 to Age 40
25
8.5%
79.7%
Age 30 to Age 35
30
10.2%
89.8%
Age 30 or Less
30
10.2%
100.0%
Total
295
100%
Equally important is the analysis of the years of service with the City. Nearly a third of the studied
workforce (31.9%) have less than five years of service to the City. It's conceivable that these
employees have experience with other employers, but the challenge for the City is to retain and
develop these employees to fill key roles as the natural end -of -career turnover continues to be a
reality.
Years of Service with the City of Oshkosh
■ Greater than 35 Years of Service
■ 30 Years to 35 Years
■ 25 Years to 30 Years
■ 20 Years to 25 Years
® 15 Years to 20 Years
10 Years to 15 Years
■ 5 Years to 10 Years
■ Less than 5 Years of Service
3
RECOMMENDATIONS
Based on our analysis, we are confirming the market validity of the current pay plan. Aside from the
planned adjustment of the structure, as well as the recommended adjustments due to internal wage
compression, we do not see the need for a plan correction at this time.
However, we continue to observe a marketplace that presents challenges to most employers. The
continued exit of America's largest generation brings about one of the more challenging labor markets
in recent memory, and this will require the City to closely monitor its recruitment and retention
challenges (if any) and respond accordingly.
This is the second market update since the original study. We believe that the next update, which
would likely be conducted in the next two to three years, should be more comprehensive in nature.
Doing so would allow the City to not only reassess the ever-changing market, but also provides an
opportunity address design elements to ensure the City's structure remains competitive and relevant
well into the future.
One of the emerging concerns in our discussions with the City was the effect of recent market activity
on the lower end of the wage schedule. We've observed many organizations adjusting pay for entry-
level occupations due to changes in tax codes, market conditions, or other related factors. However,
such data has not found its way to the multitude of surveys to which we subscribe. The Sherman
Antitrust Act requires survey data to be at least three months old but it is our experience that, by the
time an organization responds to survey requests, the data tends to be older. This, in and of itself, is
not necessarily a problem. Survey providers will age the participant data forward to a common
publishing date, and it is our practice to age the data further—if necessary—from the publishing date
to an effective date for a structure. In situations where the market is moving faster than the surveys
can respond, we encourage our clients to monitor its recruitment/retention data and make
appropriate adjustments as necessary. The City is prepared to engage in such analysis and will bring
recommendations forward should the need arise.
In closing, we appreciate the opportunity to serve the City and look forward to our continued
relationship.
4
CITY OF OSHKOSH:
MARKET PRICING PROJECT UPDATE
CARLSON DETTMANN CONSULTING
A DIVISION OF COTTINGHAM & BUTLER INSURANCE SERVICES, INC.
PATRICK GLYNN, SENIOR CONSULTANT
OCTOBER 23, 2018
The World of Public Sector Compensation
• Shifting Market
• Numerous public sector compensation plans have been
completed/updated
"Hot jobs" are becoming increasingly difficult to recruit/retain
• Aging Workforce
• Future recruitment needs requires competitive compensation plan
• "Silver Tsunami"
• Younger Workforce
• Newer generations of employees have different expectations.
• "Stay a career" mentality is eroding ... More mobile with shorter (and
more) "careers"
1
Bureau of Labor Statistics: Job Openings and Labor Turnover Survey
(Midwest Data - Seasonally Adjusted)
00o Layoffs/Discharges vs. Voluntary Quits (In Thousands)
900
800 y,
i
700
600
500
400
300
200
—Voluntary Quits
—Layoffs & Discharges
too
o — - -- -
Jan -01 Jan -02 Jan -03 Jan -04 Jan -05 Jan -06 Jan -07 Jan -08 Jan -09 Jan -10 Jan -11 Jan -12 Jan43 Jan -14 Jan -15 Jan -16 Jan -17 Jan48
The Changing of the Generational Guard
Millennials became the largest generation in the labor force in MIS
U.S. laborforce, in millions
70 ---------- __.-....__... - ------ --- -- .... ........................... ....._...........
...........
60 . _....__--.-.._._....._•- gooney._....................._....:....,........,..........._._.,.........-......................-......_....... �........
53
Ce11 Xers
40.....; ._..-.............. ......... ............ ._............................................. .................. ............ ..... .41
Millennials
Silenvamatest
20 _.__........__.._....,_..-- ....__..._.__.__.__................
10 --...._-.,.......... ..... I.._ ...... ................. ........... .... .. . _.._.....__..._ -----_ 9
Post-Millennials - 3
0
1994 1997 2000 2006 2008 2010 2015 2017
Note: Lager force includes those ages 16 and older who are working or looking for work. Annual averages shown
Source: Pew Research Center analysis of monthly 19942017 Current Population Survey (IPUMS).
PEW RESEARCH CENTER
2
3
City of Oshkosh: Age Profile
Percent of
Cumulative
Grouping
Number
Whole
Percent
Age 60 or Older
22
7.5%
7.5%
Age 55 to Age 60
44
14.9%
22.4%
Age 50 to Age 55
57
19.3%
41.7%
Age 45 to Age 50
48
16.3%
58.0%
Age 40 to Age 45
39
13.2%
71.2%
Age 35 to Age 40
25
8.5%
79.7%
Age 30 to Age 35
30
10.2%
89.8%
Age 30 or Less
30
10.2%
100.0%
Total
295
100%
3
City of Oshkosh: Service Profile
Percent of
Cumulative
Grouping
Number
Whole
Percent
Greater than 35 Years of Service
8
2.7%
2.7%
30 Years to 35 Years
4
1.4%
4.1%
25 Years to 30 Years
26
8.8%
12.9%
20 Years to 25 Years
29
9.8%
22.7%
15 Years to 20 Years
49
16.6%
39.3%
10 Years to 15 Years
39
13.2%
52.5%
5 Years to 10 Years
46
15.6%
68.1%
Less than 5 Years of Service
94
31.9%
100.0%,
Total
295
100%
3
Internal Equity
• Job Documentation
• Management Interviews
• Organizational Structure
• Job Evaluation
Consistent
Methodology
• Industry -Accepted Standards
• Uniformity from Project -to -
Project
• Exceptions Based on Data
External
Competitiveness
• Reliable Market Data
• Proper Mix of Surveys
• Matching to the Duties of the
Job
Transparency
• Project Communication
(Board, Employees, etc.)
• Process vs. Full
Transparency
• Post -Project Communication
ne Market Comparisons
Determine Market Placement
Design Structure (i.e. Plan Type)
evelop Implementation Plan
City of Oshkosh: Regression of Current Pay on Job Evaluation - Benchmark
Jobs
566.ao _
ass.oa ............... ...__...._.._-------------- __._.__...._....______,_----.___,—.
aw.o6 ! ......... ......... --- --- ----
E45.00
s
io E40.00
S 535.00
O •
S
1j $25.00
$20.00 I _._. __............... __.
E15.00
EO.W
250 300 350 400 150 500 550 600 650 700 750 800 850 900 950 1000 1050 1100 1150 1200 1250 1300
Job Evaluation Points
5
Compa-Ratio Analysis (Current vs. Midpoint)
Compa-Ratio by Years in Job
Grouping
N -Count
Avg. C -Ratio
Greater than 35 Years
7
111.2%
30 Years to 35 Years
4
110.7%
25 Years to 30 Years
25
110.8%
20 Years to 25 Years
25
113.0%
15 Years to 20 Years
45
109.3%
10 Years to 15 Years
40
108.9%
5 Years to 10 Years
45
106.5%
Less than 5 Years
104
92.9%
Total Employees
Avg. C -Ratio
295
103.5%
City of Oshkosh: Regression of Market Estimate on Job Evaluation
250 300 350 100 150 500 550 600 650 700 750 600 650 800 850 1000 1050 1100 1150 1200 1250 1300
Job Evaluation Points
N
.__
•
•
SI6W
535.00
•
AiO.m
.25.E
—_ • y = 0.0477x + 4.4898
R= = 0.9509
$15.00
-
$10.00
-- -- -.
$&00
W.w
250 300 350 100 150 500 550 600 650 700 750 600 650 800 850 1000 1050 1100 1150 1200 1250 1300
Job Evaluation Points
N
City of Oshkosh: Comparison of Current and Median Market Regression Lines
of Best Fit
$70.00
$eo.00 —Market
Current..._...
ESo.ao
$45.00 __.....
$40.00
a $35.00 00000 —
T
S
2
$25.00
$20.00 -
$15.00
$10.00
$5.00
$0.00
250 300 350 400 450 500 550 600 650 700 750 800 850 900 950 1000 1050 1100 1150 1200 1250 1300
Job Evaluation Points
7
Compression Continues to be a Concern
(With Non -Represented Public Safety)
• Police Captain
Currently hiring in the merit range
Recommend a pay range reassignment by establishing Grade J.5 (C/P
$44.40)
• Assistant Police Chief
Requires adjustment by virtue of recommended movement of Captain
Recommend pay range reassignment by establishing Grade K.5 (C/P
$48.85)
• Assistant Fire Chief
Recommend pay range reassignment by establishing Grade K.5 (C/P
$48.85)
• Notes:
The creation of a half -grade (e.g. J.5/K.5) will allow the City to address
compression until such time that a future full -study occurs
The above recommendations are consistent with the observed market
data, but will need to be revisited in the future plan update
Shelf -Life of Plan
• Jobs Continue to Evolve
• Most organizations reevaluate duties when a position is vacant
• Programs and duties change as a community grows/reprioritizes
• As jobs evolve and/or are created, new or modified benchmarks are
likely for the next market review
Internal Equity Eroding
Although necessary, each independent adjustment brings the
possibility of disrupting the balance of internal equity and external
competitiveness
• Next logical step is to reevaluate all jobs and bring the plan back into
balance
Changing Marketplace
• Compensation Trend(s) at the Lower End of the Scale
• Several organizations have adjusted pay—or provided lump -sum
bonuses—following the recent federal tax cuts.
• Further, the movement of minimum wage laws in other states is slowly
having an effect across the nation.
• Some organizations have been quite aggressive in adjusting pay to
attract the necessary talent (e.g. manufacturing).
• Tradeoffs
However, there are often "strings attached" when such adjustments
are made. (e.g. reducing/cutting bonuses; significant changes to
health care; reduction of hours or positions; automation of duties; etc.)
• Possible Action
• The City will continue to monitor its recruitment/retention data and will
make recommendations—as appropriate—in the future.
10