Classification & Compensation 2018-19
People are the most important piece of making government work. A classification and compensation system—which defines the types of jobs in an organization and how much those types of jobs will pay—is the framework organizations set up to make sure we manage job classifications and pay employees in a manner that is fair, strategic, and competitive within a given market.
The classification and compensation system should be simple and strategic, include clear job descriptions and career paths, provide for internal pay fairness across similar types of jobs and experience levels, and be competitive within relevant markets. If it’s working, it contributes to our ability to attract and retain talented, dedicated employees who can deliver the level of service City constituents deserve. For some time, the City’s approach to this challenge was piecemeal and individual, rather than strategic and citywide.
Today we are sharing the City’s 2017-18 Classification and Compensation study, which uses comparative data to tell us exactly where we stand and gives us the tools we need to address fairness, bring employees into line with market value for their positions, and establish a long-term strategy that contributes to our goal to be the most family-friendly, user-friendly, and eco-friendly City in the country.
This is another component of our ongoing program to modernize and professionalize City government. It goes hand-in-hand with the best-practice management approaches you’ve seen consistently from all parts of this administration—and will continue to see. Whether it’s the new leadership team we built, the McHard Report follow-up, the Corrective Action Plan, the Independent Verification & Validation, the Internal Audit Plan, or the mid-year Budget Review, in an effort to take a realistic, honest, and transparent look at how the City of Santa Fe operates. Then we’ll use the information we get to make tough decisions.
A classification and compensation study has been attempted before. In 13 years, the City has completed two classification and compensation studies; however, neither of the studies were implemented.
The previous administration commissioned this study to remedy a lack of useful data comparing our city compensation to our competitors in the market and the lack of an independent assessment of the City’s existing classification and compensation framework. In October 2017, the City engaged Springsted, Inc. to conduct the study after a competitive RFP process.
The consultant met with staff, City leadership, and union leaders about the study. Employees were invited to complete a Position Analysis Questionnaire (PAQ) process to evaluate existing job classifications. A salary and benefits survey of the City and the local market competition was conducted to inform pay structures. The City was compared against Albuquerque, Colorado Springs, Denver, Farmington, Las Cruces, Los Alamos County, the State of New Mexico, Phoenix, Rio Rancho, and Santa Fe County.
1. The City has far too many classifications. Classifications matter because they drive compensation, help ensure pay fairness, and create simple, clear career paths. They group similar jobs together, ensuring that new employees are paid fairly for similar work that requires similar backgrounds, education, and expertise. Because there has not been a strategic, system-wide approach to classification, rather an individual, piecemeal approach, the City’s job classifications have ballooned to more than 475. Jobs requiring comparable qualifications with equivalent responsibilities are not always compensated at similar levels. This report recommends reorganizing the classifications to reduce the number from over 475 to 330. This is a major step forward to rationalize, professionalize, and streamline our human resources system.
2. City pay is competitive with the market overall, although some positions lag behind. On average, City pay ranges are 1% lower than comparable markets. Because being below market levels is considered a risk for attracting and retaining employees, we also took the average of only those positions that are below the proposed market value. On average, positions below market value are 11% lower than comparable markets. Bringing just the group of employees that are below market value into the recommended minimums for their positions would cost the $1,527,551—or about 0.45% of the City’s annual budget. The breakdown of positions and their pay compared to comparable markets is included in this packet. The chart on this page shows a breakdown of the areas into which that $1.5 million would be allocated.
3. Pay ranges (the difference between the minimum and the maximum pay for each position) are too different across different jobs. The average market pay range spread—or the difference between the minimum and the maximum pay for any given positions—should be about 50%. At the City that pay range spread ranges from a low of 18% to a high of 86%. The report recommends the average of 50%.
Next week, staff will present the report and recommendations as an information-only agenda item at the December 12th City Council meeting. To implement, amend, or adjust the recommendations will require the Governing Body to consider:
Allocation of the needed funding,
A vote in favor of the reclassification plan, and
Votes in favor of re-negotiated union contracts for the many City employees represented by one of the three unions.