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HomeMy WebLinkAboutAgenda - Mail Packet - 08/13/2024 - Council Compensation Policy Committee Meeting Materials – August 15, 2024Human Resources Department 215 N. Mason St, 2nd Floor PO Box 580, Fort Collins, CO 80522 970-221-6535 humanresources@fcgov.com MEMORANDUM Date: August 8, 2024 To: Mayor and City Councilmembers From: Teresa Roche, Human Resources Executive CC: Kelly DiMartino, City Manager Subject: Materials for August 15, 2024, Council Compensation Policy Committee Meeting I hope all are well. Attached to this memo are: • The agenda for the August 15, 2024, 4:00 pm to 5:00 pm Zoom meeting for the Council Compensation Policy Committee meeting. • The draft minutes from the April 18, 2024, Compensation Policy Committee meeting. • The 2025 Talent Investment Metrics and Processes If you have any questions, please let me know. TR Human Resources 215 N. Mason Street Fort Collins, CO 80522 970.221.6535 AGENDA Compensation Policy Committee August 15, 2024, 4:00 p.m. MDT Zoom Meeting +1 720 928 9299 Call In Meeting ID: 924 6972 2781 https://fcgov.zoom.us/j/92469722781 This information is available in Spanish or other language at no cost to a person who would like this information translated to or communicated in Spanish or other language. Please call 416-4254 or email titlesix@fcgov.com to make a request for information in other languages. Esta información está disponible en español u otro idioma, sin costo para la persona que le gustaría esta información traducida o comunicada en español u otro idioma. Favor llame al 416-4254 o envíe un correo electrónico a titlesix@fcgov.com para solicitar información en otros idiomas. Auxiliary aids and services are available for persons with disabilities. TTY: Please use 711 to call 970.416.4254. Committee Members: Councilmember Kelly Ohlson, District 5 Councilmember Julie Pignataro, District 2 Councilmember Melanie Potyondy, District 4 City Staff Members: Teresa Roche, Human Resources Executive Aaron Guin, Sr. Assistant City Attorney Kelley Vodden, Director, Compensation, Benefits and Wellbeing Jennifer Zwiefka, Senior Compensation Analyst Gretchen Schiager, Executive Administrative Assistant •Call Meeting to Order •Approval of Minutes from April 18, 2024 •Employee Compensation Presentation and Discussion •Direct Report Annual Evaluation Process Discussion •Adjournment Next Scheduled Meeting: TBD There are three or more members of the City Council that will likely attend this meeting. Formal action may be taken by the Committee at this meeting, and the discussion of public business will occur. Therefore, the meeting is open to the public. Compensation Policy Committee April 18, 2024, 4:00 – 5:00 p.m. Meeting Minutes Members in attendance: Councilmember Kelly Ohlson; Councilmember Julie Pignataro; Councilmember Melanie Potyondy Staff in attendance: Teresa Roche, Human Resources Executive; Christine Arnott, Acting Administrative Support; Jennifer Zwiefka, Compensation Analyst; Jenny Lopez-Filkins, Deputy City Attorney (as attendee); Rachel Barrett, Senior Compensation Analyst (as attendee) The Compensation Policy Committee meeting was held on April 18, virtually through a Zoom webinar. Agenda • Call Meeting to Order • Discuss the Purpose of the Committee • Elect a Chairperson • Outline Potential Topics for Discussion and Calendar • Adjournment Teresa Roche called the meeting to order at 4:01 p.m. Discuss the Purpose of the Committee Ms. Roche reviewed the PowerPoint presentation sent to Councilmembers ahead of time, sharing the purpose of this meeting and the purpose of the committee. Councilmember Pignataro asked if the committee could decide whether they should continue in an ad hoc fashion, conduct regular meetings, or dissolve the committee. This led to a discussion that also included questions about FAMLI and City employee benefits. Councilmember Ohlson expressed interest in learning more about the process for determining the budget for City employee compensation. Ms. Roche suggested July or August would make sense for the next meeting to have a presentation on the mechanics of employee compensation and to discuss any items related to the annual reviews of Council’s direct reports. It was recommended that the Committee meet as needed, and current plans are to have one additional meeting this year unless something changes. Elect a Chairperson Councilmember Ohlson nominated Councilmember Pignataro as chair. Councilmember Potyondy seconded the nomination. Councilmember Pignataro was unanimously elected Chairperson. Outline Potential Topics for Discussion and Calendar Virtual meetings on Thursdays at 4:00 pm were identified as the preference for future meetings. The next meeting will likely be in July or August, depending on calendars, with the primary topics of employee compensation and direct report annual reviews. The meeting was adjourned at 4:38 p.m. Next Meeting: To be scheduled in July or August. Headline Copy Goes Here August 2024 Rachel Barrett Jennifer Zwiefka Rebecca Morrison Kelley Vodden HR Compensation Team 2025 Talent Investment Metrics and Processes Headline Copy Goes HereCompensation Timeline 2 TopicDeliverable Timeline Council: CBU Pay Plan ApprovalJanuary Council: Annual Pay ReportFebruary ELT: Economic Indicators & Talent UpdateJuly ELT: Range Movements & Annual Pay Planning September Council: Evaluation of Council Appointed Positions & Survey Results October Council: Approval of Council Appointed Positions Salary Council: Pay Plan Review & Approval November Council: CBU Pay Plan ReviewDecember Headline Copy Goes HereAgenda 3 Merit Increase Data Review • Economic Indicators • Recommendations Pay Structure and Ranges • Benchmarking Headline Copy Goes Here 4 Process and Considerations • Review market data and sources • Solicit local government for projections • Consider additional economic indicators • Assess internal compensation data such as median salary, range penetration and HOT spots Compensation Philosophy The City’s compensation philosophy is to provide externally competitive pay in both the public and private sectors and delivered within a sustainable financial model. Merit Increase Data Review Headline Copy Goes HereBOTTOMLINE 5 Recommendation for 2025/2026 •2025 - 4.0% merit •2026 – 3.0% merit Budget and Administration The amount of money available for distribution is determined on a yearly basis through market analysis and a process of recommendations and approvals involving Human Resources, the Financial Services, the Executive Leadership Team, and the City Council. The distribution of pay increases is at the discretion of the Executive Leadership Team and subject to policy guidelines. Headline Copy Goes HereBOTTOMLINE 6 2025 Forecast202420232022Economic Indicator 2.5%3.3%4.8%8.0%Inflation (CPI) - National 3.3%2.6%4.9%8.0%Inflation (CPI) - Denver-Aurora-Lakewood 3.0%4.2%4.7%4.9%Employment Cost Index (ECI) - National 3.6%4.4%5.1%6.2%Employment Cost Index (ECI) - Regional 3.9%3.5%3.6%3.6%Unemployment - National 3.5%3.4%2.9%3.0%Unemployment - Colorado NA3.0%2.1%2.7%Unemployment - Fort Collins 3.9%5.0%5.7%4.8%Municipality Wage % Change Headline Copy Goes HereMarket Review Resources 7 Data Sources used for Recommendations: • Bureau of Labor Statistics • Colorado Secretary of State Quarterly Business & Economic Indicators • Colorado Legislative Council Economic & Revenue Forecast • Employers Council Economic Perspective Report • PayScale Salary Budget Survey • PayScale Annual Compensation Best Practices Report • Local Government projections Additional Context Considered: • Housing • Childcare • Living Wage & Median Family Income • Property Taxes • Internal Compensation Insights Headline Copy Goes HereConsumer Price Index (CPI) +3.3% Nationally, Stabilizing Trend 8 BLS CPI: How much cost of goods are going up- Inflation Indicator -NATIONAL Consumer Price Index (CPI) Increased 3.3% Nationally Headline Copy Goes Here 9 Consumer Price Index (CPI) Lower in CO Region +2.6% BLS CPI-U: How much cost of goods are going up- Inflation Indicator -REGIONAL Consumer Price Index (CPI) Increased 2.6% in Denver-Aurora-Lakewood, CO Headline Copy Goes Here 10 Employment Cost Index (ECI) Continues to Increase Nationally +4.2% BLS ECI: Measures the change in hourly labor cost to employers -NATIONAL Wages and salaries cost for state and local government workers increased 5.0% &wages and salaries cost for ALL industries increased 4.2% for the 12-month period ending in March 2024. Headline Copy Goes Here 11 Employment Cost Index (ECI) Higher in CO Region +4.4% BLS ECI: Measures the change in hourly labor cost to employers -REGIONAL States in Mountain Region include AZ, CO, ID, MT, NV, NM, UT, and WY Wages and salaries cost for ALL industries in the MOUNTAIN region increased 4.4% for the 12-month period ending in March 2024. Headline Copy Goes Here 12 Unemployment Increase 4.0% BLS Unemployment gives us context into job seekers and the market for sourcing candidates -NATIONAL National – 4.0% May 2024 National – 3.6% May 2023 Headline Copy Goes Here 13 Unemployment is Lower in CO 3.4% and Fort Collins 3.0% BLS Unemployment gives us context into job seekers and the market for sourcing candidates -REGIONAL Fort Collins – 3.0% April 2024 Fort Collins – 2.4% May 2023 Colorado – 3.4% April 2024 Colorado – 2.8% May 2023 Colorado Fort Collins Headline Copy Goes Here2025 Original 3.5% Increase Assumption is Lower than Local Market Projected Average 14 Local Government surveyed for 2024 pay increases: •Adams County •Arapahoe County •Arvada •Aurora •Boulder County •City of Boulder •Broomfield •Commerce City •Denver •Englewood •Golden •Greeley •Jefferson County •Lakewood •Larimer County •Littleton •Longmont •Loveland •Northglenn •Thornton •Weld County •Westminster •Wheat Ridge •State of Colorado Average 2023 5.72% Average 2024 5.02% Projected Average 2025* 3.9% *2025 projections are “Best Guess” estimates. Local Governments have not finalized their increases yet. 2025202420232022Fort Collins 4.0%4.5%5.75%4.0%Total Increase Headline Copy Goes HereEconomic Indicators and Merit Increases - Key Takeaways 15 • It is recommended that we increase to 4% merit. • Local municipalities average projected increase higher than our budgeted 3.5%. • Wage costs (ECI) for government employers is increasing at a higher rate than other industries. • Inflation is stabilizing. • Unemployment rates are increasing. Headline Copy Goes Here Pay Structures and Ranges 16 Headline Copy Goes Here 17 City Pay Structures Salary Progression Employee Placement Market Pricing Methodology Description Pay Structure Annual pay increases Job evaluation/regrades In-range adjustments Distributed throughout the pay range based on guidelines* Benchmark jobs matched to surveys and grouped by Job Function Pay Ranges by Job Function and Level Open Pay Ranges Step increases based on attainment of step-specific criteria (certifications, licensures) Annual market adjustments** At specific step levels based on qualifications Benchmark jobs matched to surveys; non- benchmarked jobs anchored to a benchmark job Progressive Pay Steps for each Job Step Plan Step increases based on attainment of step-specific criteria Annual market adjustments*** At specific step levels based on qualifications Defined in the Collective Bargaining Agreement; currently includes 12 benchmark organizations, greater of 4th place or City merit budget Progressive Pay Steps for each Job Collective Bargaining Unit * Guidelines include qualifications, external market, internal equity, job complexity, and performance ** If supported by the market analysis *** As defined in the Collective Bargaining Agreement Headline Copy Goes HereOpen Pay Range Determination 18 Processes o Job Description Review •Duties • Education • Experience o Gather Market Data • Market Pricing • Benchmarking o Establish Pay Range • Midpoint Matching • Salary Spread Headline Copy Goes HereWhere We Look for Market Pricing Information 19 Employee Pay Data Surveys • Employers Council Surveys •Regional Data; Public & Private Industries • Willis Towers Watson General Industry Survey •National Data; Mostly Private Industries • Payfactors Peer Survey Data •National Data; Public & Private Industries Economic Indicator Data Sources • Bureau of Labor Statistics • CO Secretary of State Business & Economic Indicators • CO Legislative Council Economic & Revenue Forecast • Employers Council Economic Perspective Report • PayScale Salary Budget Survey • PayScale Annual Compensation Best Practices Report • Local Government projections Headline Copy Goes Here87% of our Jobs are Benchmarked 20 Jobs and Matches • A total of 530 jobs exist within our Job Architecture • Of the 530 jobs, we were able to benchmark (match)464 jobs (87%) Process and Considerations • Validate market data and matches • Perform regression analysis • Distribution of employee salaries • Compression (relationships between career groupings) Headline Copy Goes Here DECNOVOCTSEPTAUGJULJUNMAYAPRMARFEBJANTODAYTODAY BUDGET Seller & Offer Consultation BART Personnel BFO Kickoff Pay Plan: Council approval Develop EE/ER Benefits costs Project Work: Policy updates, job architecture and structure etc. Economic Indicators Analysis & Recommendations: Review of National & Regional data Open Enrollment Reporting: Annual Talent Report for Council Prepare Benefits PEPM assumption COMPENSATION BENEFITS Recalc Availability Enter Personnel Changes Final Approved FTE Reconciliation BFO Council Review Pay Planning & Simply Merit: system configuration, manager communication/ training/ system support, pay planning audit, final data export. Survey: Council Appointed data Pay Planning: Employe letters sent Performance Evaluation: Council Appointed positions Update Pay Plan with new ranges Open Book: Publish Employee Salary data Market Analysis: Pay Range and Structure review CBU Survey: Market Analysis and Pay Planning ELT Pay Planning: recommend range movement Job Evaluation: Develop and add approved BFO FTE in JDE and Payfactors Survey Participation:Review & Update Benchmarking Benefit Providers’ Reviews: Marathon Health, UMR, Delta Dental, VSP, HUB Open Enrollment Benefit Survey BFO Process Yr Non-BFO Year Benefits Annual Deliverables Comp Annual Deliverables Comp Present to ELT & Council ELT/BLT Talent Update: FTE/ Off-Cycle Spend/ Merit & Econ Ind. ELT/BLT Talent Update FTE & Ongoing Offer Audit Pay Planning: CBU Pay Planning: JDE Upload from SM export *Note: Ongoing daily requests not reflected FTE Reconciliation: Audit existing FTE FTE Reconciliation: Audit existing FTE Headline Copy Goes Here Thank you!