Comprehensive Classification and Compensation StudyCity of Kalispell
Post Office Box 1997 - Ka spool. Montana 59903- 997 - Telephone (406)758-7700 Fax (406)75,8-7758
REPORT TO: Mayor Kennedy and City Council Members
FROM: Amy Robertson, Finance Director
Chris Kukulski, City Manager
SUBJECT: Comprehensive Classification and Compensation Study
MEETING DATE: June 14, 2004
BACKGROUND: Monday evening at 7pm, Jun Fox of Fox Lawson & Associates will
present to the Mayor and City Council the completed pay analysis.
Attached to this memo is a short synopsis from Fox outlining the
goals and procedures used for completing the pay study.
ftwT9414101KHAQUILTIM0
Amy H. Robertson
Finance Director
Please attend the work session.
Report compiled: June 10, 2004
Chris A. Kukulski
City Manager
INTRODUCTION
In November 2003, the City of Kalispell Fox Lawson & Associates
LLC to conduct a comprehensive classification and compensation study of all City
employee positions. The objectives of the study were to:
❑ Define the purpose, goals and objectives for the classification,
UUMPUILbUtiUlt and to identify the strategies to achieve the defined
purpose, goals and objectives.
❑ Review the City's job evaluation system to ensure the system was
appropriate for the City's needs.
Evaluate all proposed classes using the current job evaluation method
in order to align job classes internally.
❑ Collect and analyze ma benefits data from
public and private employers with whom the City competes for
employees in order to assess the competitivenessof the City's current
pay rates in the development of
program.
❑ Analyze the cost impli structure
recommendations.
❑ Provide the City with pay administration guidelines used to facilitate
the maintenance of the compensation plan in the future.
Fox Lawson & Associates began the study in December 2003.
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PHASE I - STUDY INITIATION & ADMINISTRATION
PURPOSE: TO DEVELOP AN UNDERSTANDING OF THE CURRENT
CLASSIFICATION AND COMPENSATION POLICIES AND
PRACTICES WITHIN THE CITYAND TO DEVELOP A
FRAMEWORK THAT SERVES AS A GUIDE FOR THE PROJECT
The objective of the study initiation and administration phase was to set the
ground work for a study which builds upon the organizational characteristics,
needs and philosophies of the City with respect to classification and
compensation to assure that results enhance organizational goals and objectives.
In order to do this Fox Lawson & Associates LLC did the following tasks:
1. Conducted a Study Initiation Session via Conference Call - We
discussed the issues, expectations, schedule, and deliverables for the
upcoming study.
2. Discussed Potential Salary Survey Participants - We discussed with
the City potential salary su from which to collect
market salary data. Final survey -participants were mutually decided
upon and approved by the City.
Phase I was completed in December 2003.
PHASE II - JOB ANALYSIS STUDY
PURPOSE: TO REVIEW THE CURRENT CLASSIFICATIONS UNDERSTUDY
TO GAIN AN UNDERSTANDING OF THEIR CURRENT DUTIES
AND RESPONSIBILITIES
Job analysis is the process of analyzing information about a position's content and
characteristics. The objective of job CLILU!ybib WCL to gather and analyze
information that is relevant to the nature and level of work being performed. In
conducting our analysis, we performed the following:
Reviewed Existing Documentation - We reviewed organizational
charts and existing job descriptions. The job desciiptiUIUS had been
recently updated by the City.
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Conducted Employee Interviews - FLA staff met with City employees
individually to conduct on -site interviews. The purpose of these
interviews was to gain a better understanding of the required duties
and the level of responsibility of each job. Interviews were conducted
in February 2004.
PHASE III - JOB EVALUATION STUDY
PURPOSE: TO REVIEW THE CURRENT SYSTEMAND DETERMINE THE
APPROPRIATE INTERNAL RELATIONSHIPS BETWEEN THE
CITY'S JOB CLASS117CATIONS UTILIZING THE CITY'S CURRENT
JOB EVRLUATIONSYSTEM
The object of phase three was to determine the appropriate internal relationship
of each job classification within the City's organizational structure. job evaluation
is the process of judging the relative importance of a job to the organization. The
basic premise is that the more important the job is to the organization, the more
valuable it is and, thus, the more it should be compensated. The objective of job
evaluation is to evaluate all classifications in a manner that is consistent, fair and
free of sex and racial bias. The results help to ensure that salaries paid in the
future are based on the importance and value of each classification to the
organization.
The City had a job evaluation methodology in place and this system was retained
for this phase of the project. FLA did, however, review the current system to
ensure that its characteristics were appropriate. Overall, the system was found to
be meeting the needs of the City. However, recommendations were made to
revise the system. Specifically, point spreads for the various grade levels were
adjusted. See the job analysis report for more detailed recommendations.
Fox Lawson & Associates LLC also evaluated each job classification using the
system. jobs were ranked in comparison to every other classification within the
classification structure. The job evaluation process focused solely on job content,
not individual employees within a class.
The City reviewed the results of the job evaluation process. Based on the
comments received, appropriate changes were made.
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PHASE IV— COMPENSATION STUDY
PURPOSE: TO UTILIZE MARKET DATA TO DETERNMINE THE
APPROPRIATE COMPENSATION LEVELS FOR ALL JOBS AND TO
DEVELOP A SALARYSTRUCT URE THAT REFLECTS THE GOALS
STATED IN THE FOCUS FRAMEWORK
The purpose of phase four was to develop appropriate compensation levels for
all job classifications covered under the study through the collection and analysis
of market salary data. This was completed by collecting and analyzing market
compensation and benefits data from employers with whom the City competes
for employees in order to assess the competitiveness of the City's current pay
rates, and to assist in the development of a new compensation program.
Fox Lawson did the following:
1. Developed the Salary Survey - We worked with the City in identifying
benchmark classifications to survey, selecting survey participants, and
reviewing survey methodology.
A copy of the Data Collection Form can be found in the final Salary
Survey report.
2. Collected and analyzed market data - We collected, compiled and
analyzed market data for each of the benchmark classifications from
employers that the City competes with for qualified personnel.
- 23 out of 31 organizations responded for a 74% participation rate;
- The City was found to be 24.3% below the market for actual salaries,
overall;
- Salary range minimums and maximums were found to be 18.4% and
13.5% below the market, respectively;
- The final Salary Survey Report is available for review upon request.
3. Compared the City's salaries to those in the market - We compared
City of Kalispell pay to market pay. Regression analysis was utilized to
compare the organization's internal pay to pay in the labor market.
Regression analysis produces "lines of best fit" through internal pay
and market pay. Regression analysis calculates average pay for each
benchmark classification considering pay levels throughout the
benchmark group, not merely for an individual benchmark job. The
pay lines were calculated using average pay levels from the
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benchmark jobs within the organization and in the labor market. Use of
regression analysis to compare the trend of pay within the organization
to the trend of pay in the labor market groups is a proven compensation
measurement technique. This process smoothes out any variation in
internal or market pay levels to discover the average compensation for
the benchmark jobs identified.
- A graphical representation of the regression analysis of Kalispell
average pay vs. market average pay is presented below:
City of Kalispell, Mbntana
Internal Average Salary vs. Market Median (50th Percentile)
Trend Analysis
Salary
90,000
80,000
70,000
60,000
50,000
40,000
30,000
Internal
20,000 `-
100
Market
Internal
105 110 115 120
Grade
Int. Trend Mkt. Trend
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4. Developed a New Salary Structure - We integrated the job evaluation
results with the labor market survey data and developed a new salary
structure. While the salary ranges for job classes will change under the
new structure, individual compensation levels are based on an
employee's current compensation level and where they will fit into the
recommended salary range for the classification for their position. The
salary range target rate is linked to the pay line value derived from the
labor pay trend comparison.
The new salary structure has salary range spreads of 35 - 40% from
minimum to maximum;
The recommended salary structure can be found in the Final Salary
Survey Report.
5. Analyzed Implementation and Costing* - The final task in
developing a new compensation structure involved determining how
each individual employee's compensation would be affected.
Currently, implementation options are being evaluated by the City.
However, we recommend than any implementation have the following
characteristics:
• no employee would be paid less than the minimum of the new
salary range for their job classification
• any employee whose current salary exceeded the maximum of
the new salary range for their job classification would not
receive any salary increase
Due to budgetary concerns, any implementation can be phased in over
a period of two to three years.