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1986 07 14 CC Minutes, Special60714-1 MINUTES OF THE SPECIAL MEETING OF THE CITY COUNCIL OF THE CITY OF BAYTOWN July 14, 1986 The City Council of the City of Baytown, Texas, met in special session on Monday, July 14, 1986, at 5:00 p.m. in the Council Chamber of the Baytown City Hall with the following attendance: Fred T. Philips Councilman Jimmy Johnson Councilman Perry M. Simmons Councilman Ron Embry Councilman Roy Fuller Councilman Rolland J. Pruett Councilman Emmett 0. Hutto Mayor Fritz Lanham City Manager Eileen P. Hall City Clerk The meeting was called to order with a quorum present, and the following business was conducted: Receive Report of Waters, Trego & Davis Concerning Personnel Study Jeff Grady, with Walters, Trego & Davis, was present to review the report with council. He explained that the company had initiated the study by visiting with the council, city manager and department heads to get a feel for the organization. A key element in the whole process is communi- cation. Representatives of the company met with the employees to explain how the study would be implemented and to answer questions. The foundation of the entire process is the job descrip- tions. That is the information from which you can go in various directions. It serves as a basis of communication between the employee and the supervisor. It provides information to perform the salary surveys, and allows one to compare jobs to each other. Each employee had the opportunity to complete a job description questionnaire which asked things like what are the major elements of your job, what kind of environment do you work in, what are the various responsibilities of the job, etc. There were numerous opportunities for review of that. Once the job descriptions were developed, the process of developing a salary structure was possible. He mentioned that a number of people in working with compensation systems are familiar with what is called a market driven system. In this system, there is a particular job and through a survey of the market, a determination is made that the market for that particular job is below or over, the structure is adjusted accordingly. The City of Baytown is moving away 60714-2 Minutes of the Special Meeting - July 14, 1986 from a solely market driven system into a system that combines the market with internal equity. In this system you con- sider what the market pays for the jobs, and how do those jobs compare with each other within the organization, not doing either independently of the other. To develop.that system, you start off going in two different directions. The first phase was the salary survey to determine where the city's jobs compared to the market. Here the data was obtained from area cities and from some of the area industries. The data from the private sector is more limited than that from public sector. Jobs are benchmarked for survey, not all jobs are surveyed. As a general rule of thumb, about 30% were surveyed. This survey determines that the City of Baytown is close to the market. The employees had been divided into two categories. System A was representative of managers and professionals and System B which included the majority of employees. System B was at 98.5% of the market which means that according to the jobs surveyed and the market defined, city salaries under System B are approximately 1.5% behind the market. This means that the city if very close to what the market will bear. System A jobs were down abut 92.3% which means that these were a little further behind, about 7.7%. While the salary survey process was going on to deter- mine external equity, another process was going on to determine internal equity. How does the job stack up compared to other jobs? Here is where jobs were divided into System A and System B. A compensable or point factor system was used to determine the worth of the job. To actually weigh the jobs, committees of employees were involved. System A had nine people and System B had fifteen. Both committees met over a two to three day period. The committees were selected to provide a cross-section of the entire organ- ization, the object being not to rely solely on the questionnaire, nor soley on consultants knowledge, nor solely on the department head's knowledge. There should be a mixture to develop a good product. The committees ranked each job using the factors provided and those weights were provided to determine total points for each job. The result is that the jobs then can be ranked from top to bottom. At this point in the process, internal and external equity are put together. On page 2.51 salary structure is discussed. Salary structure is nothing more than what is the job worth. Any job has a range which the organization is willing to pay. There is a minimum for that job, a mid- point and a maximum. The idea was to develop a structure using the job evaluation data and using the salary survey data. iN 60714-3 Minutes of the Special Meeting - July 14, 1986 The concerns that the company addressed are the width of the salary range. The public sector is notorious for being very narrow in ranges; therefore, the ranges are now wider. Also, mid -point progression was addressed, that is how much of a percentage raise is there from the mid -point of one range or grade to the next? It is possible for a senior employee in a lower level job to be making more than his supervisor. That is acceptable in some instances, but can be taken too far. Exhibit C of the report provides the actual proposed structure that has been developed. System A starts with Grade 40 and ends with Grade 50 with the minimum, mid- point and maximum salaries for each of those grades. System B starts with Grade 14 through Grade 26 with the minimum, mid -point and maximum salaries for those jobs. The result is that each job within the city organization is fixed into a grade with a new proposed salary structure. While the structure is being developed, the con- sultants began the work on the development of a per- formance appraisal system. This system will allow a person's performance in the job to drive his potential. Councilman Embry inquired how the study team weighed the public sector market input against the private sector market input. Mr. Grady responded that both were put on the same type of plot. The main thing is that with a private sector job, one must consider if the job matches that in the public sector. There is always going to be a job that someone may decide to go to, but that does not qualify as the market if the jobs are not comparable. When going into the private sector, the primary concern then is, do the jobs match? There were matches for secretarial jobs and maintenance personnel, but you get outside of that and there isn't a lot of good data. In the private sector, there are no street maintenance workers or building inspectors. Councilman Embry inquired if the data included time in the job, and Mr. Grady responded that it only included actual salaries paid. The group did look at the benefits but only to determine if the benefits were reasonable in comparison to others. In most cases, benefits are fairly similar. Now the city has a structure with minimum starting salaries based on a performance appraisal driven system, which says that council with the help of the staff will say that there is so much available for salaries. Therefore, if X is equal to 4%, then the exceptional performer can potentially get 5% or 6% and the performer who is not where he should be would get 1% or 2%, but the average will get 4%. 60714-4 Minutes of the Special Meeting - July 14, 1986 To develop the criteria for determining exceptional, average and below average performers, job families are developed. Eighteen job families were developed for the organization. Jobs that were similar in nature were gropped together. There were a few jobs that had enough people in them to have a manual to themselves, for instance police and fire. Employee groups developed the criteria for the manuals. The city will be provided with a software program called Computer Assisted Performance Evaluation (CAPE) that runs on the personal computers. This software will enable personnel to enter that data and keep track of it: It can determine if the raters are being too lenient or too severe in their ratings. Once the structure and performance appraisal manual are developed, the last thing -that the group will provide are some salary and performance appraisal guidelines. Two days of training have been completed thus far, but not all the supervisors have been through the training. The purpose is to get all the supervisors together and show them how it works. Supervisors must be told that performance evaluation is a relationship. It is a relation- ship that fosters communication..because the employee will be told immediately when something is done correctly and immediately when something is done incorrectly. There will be an exchange of information throughout the rating period. The group filmed five different scenes to illustrate points to be made during training. Council has the option of phasing out the old system and adopting the new one as of October 1, moving the new structures into place with new titles.and on October 1, begin doing performance appraisals. Do those from October 1 through March, but do that one solely for coaching and counseling. Identify the problem areas, and then look at from April through September as being the first six-month cycle for actual performance based increase. As part of this process, there are jobs that are identified as being below the minimum. It is recommended that those positions be moved to minimum as soon as possible. In System A, there are five employees below the minimum. The annual cost to adjust those salaries to minimum is $5,000. In System B, there are thirty (30) employees below the minimum and the annual cost to adjust those salaries to minimum is $23,000. As part of the process, there are those jobs that are historically over valued. The company recommended that council freeze salaries of those employees at their current levels. As the system grows, each year the structure will be adjusted as the market moves and eventually that structure will catch up. There are no employees in System A above the maximum. Within System B, there are thirty-three (331 who are at maximum'for a total amount on a monthly basis of approximat-ely $3,000. The average of those 33 is at $90 a month. Both systems are very close to what the group expected. 60714-5 Minutes of the Special Meeting - July 14, 1986 Civil Service employees that are under 1269m, Police and Fire, that statute prohibits the use of pay differ- ential based on performance. Therefore, the aspects of the program that deal with pay for performance would not apply to police officers and firefighters; however, this would serve as a tool for coaching and counseling. The council has several options: 1. If there is no money available, there are no salary increases. 2. Fund one across the board increase. 3. Fund one performance base increase either once a year or one cycle a year. 4. Fund two performance base increases. 5. A combination. Which options are based on three assumptions: a. No across the board increases. b. Bring all employees who are currently below the minimum and meet minimum job requirements to the minimum at a cost of $32,000 annually. C. Funding a salary increase of up to three (3%) percent on basis of performance. Employees would be eligible for increases based on their anniversary dates beginning in April. From October to March, all employees would be evaluated for purposes of counseling and then from April to September, everyone would be evaluated a second time and that evaluation would enable an employee to receive an average of three (3%) percent. Whatever council does for non -civil service employees, should be done for civil service employees. If the three (3%) percent figure is used for non -civil service employees, then the three (3%) percent would need to be included as a cost of living increase for civil service employees. Upon completion of the presentation by Mr. Grady, council made certain inquiries concerning the report. Councilman Embry requested that the group go back to compare jobs in the private sector such as financial institutions, commercial establishments and insurance companies to those jobs held in the public sector. Council instructed the city manager to develop a budget that would reflect monies necessary to bring those positions below minimum that meet the requirement of the job to minimum. Council had no problem with implementing the pay for performance study on October 1 as a tool for coaching and counseling and to have a structure by which to hire. However, no direction was given the administration with regard to attempting to implement the actual pay for performance since council has not been presented with the proposed budget for 1986/87. 60714-6 Minutes of the Special Meeting - July 14, 1986 Adjourn There being no further business to be transacted, the meeting was adjourned. Eileen P. Hall, City Clerk