Understanding Salary Compression: Causes, Mitigation, and Findings, Study Guides, Projects, Research of Acting

Download Understanding Salary Compression: Causes, Mitigation, and Findings and more Study Guides, Projects, Research Acting in PDF only on Docsity!

SALARY

COMPRESSION ISSUE

Orah L. Reed, Director of Human Resources

Tamara Munson, Interim CFO & Acting Co-County Manager

Salary Compression

What is NOT

Salary

Compression?

 Comparison of salaries to regional counterparts or market analysis benchmarking  Pay Inversion  Employees with longer years of service may make more than their new supervisors  Non-exempt employees who are eligible to earn overtime may make more than their exempt supervisors

How is

Compression

Mitigated?

 Hiring new employees at an appropriate rate in the County pay plan  Reclassifying position when job analysis and market data suggests its necessary

 Annual salary increases should reflect COLA and Merit  Periodic review/correction of specific areas of suspected salary compression  Continued focus on Career Track program to allow employees with advanced skills and longevity to have salary separation from newer, less experienced employees  Utilize a reference or target point to calculate salary increases

Findings

Findings

25%

75%

Non-Public Safety Positions

Compression Exists No Compression Exists

Findings

37%

63%

Fire Department Positions

Compression Exists No Compression Exists

Findings

22%

78%

Sheriff’s Department Positions

Compression Exists No Compression Exists

Key Terms

 Midpoint: Key element in salary administration. It is often used as a reference point in salary administration decisions as a point or “target”. The midpoint usually is the reference used because it typically is set to equal the market average or median.

 Compa-ratio: A statistic that expresses the relationship between base salary and the midpoint.  Most organizations strive to have the overall workforce paid at or around a compa-ratio of 100%.  Individual compa-ratios vary according to how long the individual has been in the job, previous work experience, and job performance.  A mature, long-service workforce will tend to have a higher compa- ratio than a younger group of employees with a shorter service record.

Compa-ratio

Average Years of Service

Compa-ratio Prior to Analysis

Compa-ratio After Analysis Non-Public Safety 11.56 .95 1.

Police 6.35 .86. Fire 8.91 .87. Sheriff 10.63 .93. E911 5.15 .79. Animal Control 2.40 .80. Overall 9.81 .91.

Examples

Years of Service

Grade Minimum Midpoint Maximum Percent Current Target Proposed Cost

A 5 18 NPS $40,857 $53,114 $65,371 10% $43,000 $46,168 $46,168 $3, B 5 18 NPS $40,857 $53,114 $65,371 10% $48,000 $46,168 $48,000 $ C 15 18 PS $44,891 $58,356 $71,823 15% $63,178 $62,398 $63,178 $ D 15 18 PS $44,891 $58,356 $71,823 15% $59,880 $62,398 $62,398 $2,

Cost to Bring

Pay into

Alignment

Classification Cost

Non-Public Safety $1,045,

Police $471,

Fire $620,

Sheriff’s Office $365,

E-911 & Animal Control $193,

Total Cost $2,696,

Conclusions &

Recommended

Actions

Conclusion  Salary compression is inevitable and unavoidable in every organization, but can be mitigated with continued thorough analysis of salary actions Recommended Actions

 Approve proposed salary adjustments to create alignment  For future salary increases, use the midpoint as the control point to equalize salary increase amounts

 Adjust pay ranges annually to maintain parity with changes in the market and increase employee salaries in conjunction with annual pay range adjustments  Consistently fund Salary Increases for Career Track Promotions

 Issue an RFP to conduct a comprehensive Classification and Compensation Study as part of FY 2023 budget process