Human Resources Department Receives Update On Employee Compensation Study, Votes Unanimously To Approve New Compensation Program

The Human Resources Committee met 10/26/2022. During that meeting they received an overview of the employee compensation study Baker Tilly had conducted and voted to approve the non-represented (non-union) employee compensation program.

I’ve prepared a transcript of the full discussion for your downloading pleasure.

Human Resources Director Jay Ratchman told the committee that the purpose of the study had been to make sure that Appleton was market competitive with fair and equitable pay practices that were in compliance with state and federal law.

Director Ratchman was very pleased with the work Baker Tilly had done. They reviewed the city’s current policies, practices, job descriptions, and payrates for non-represented and seasonal employees. Each employee was asked to fill out a Position Analysis Questionaire which was an analysis of their job. That questionnaire then went to the employee’s supervisor who provided additional comments before it was submitted to Baker Tilly.

Bake Tilly took all of that information and then went out to the market and conducted a market assessment. They compared it to data from 24 different counties and municipalities. They also collected some additional data for the city’s specialized positions, notably in transit and utilities. They also cross-referenced private sector information, but that was a little more difficult because the city was not private sector. Director Ratchman said that the most comparable data was going to be fromt municipal government or county agencies.

Baker Tilly took all of that information and put together a draft of a compensation plan that went before the Compensation Review committee. The committee asked a lot of questions and provided additional information back to Baker Tilly which was used to put together a final compensation plan.

The Compensation Review Committee was able to take the plan and use it to help make changes to the city’s policies and pay practices.

Once the compensation plan and changes to the city’s policies were approved, they would move onto implementation which would consist of a variety of things. Notably, they were going to write individual letters for each employee outlining the results of the compensation study as well as outlining their specific positions. The letter would explain whether they were exempt or non-exempt and what their compensation for 2023 would be. Director Ratchman made sure to note that their compensation would be dependent on what was approved through the budgeting process.

Director Ratchman told the committee that one of the things that would really change in the salary administration policy was how they paid their employees. Currently, they 100% pay for performance. An employee completes an annual performance evaluation as does their supervisor, which results in a score that is put into a spreadsheet. Based on the money available, that score will be used to calculate what an employee’s salary increase will be. Although it was a good system, it was very complicated and the HR Department had been told through the years that employees did not understand how raises were determined.

They wanted to move to a simpler, although still merit-based, approach in which all employees who meet or exceed expectations would get the budgeted merit increase. Director Ratchman mentioned that the city had actually be doing this for the past 2 years. Former HR Director Sandy Matz had brought froward a recommendation to deviate from the city’s current policy two year ago, and then last year current HR Director Ratchman had brought forward a similar recommendation for a 2 ½% across-the-board pay raise.

Director Ratchman told the committee, “When you do pay for performance, and you start doing it based on percentages, if you’re doing large increases (so 6% or whatever) that can be meaningful, but when you’re doing probably what’s more in line of like 2, 2 1/2, it gets complicated, and it does create some equity issues within the pay plan of certain people moving at a rate that’s going to be faster than someone else who’s not necessarily outperforming them. Plus, some of our positions just don’t lend to exceeding expectations. So, think of like some of our labor positions you, you go in and you accomplish the job, you do a good job and but there isn’t the ability to say I’ll take on an extra project so that I can exceed expectations. So, and we’ve heard through the years that this is what employees and supervisors were are wanting—something that’s a little bit simpler to understand.”

Director Ratchman said they learned a couple different things from the compensation study.

• Overall, the city’s pay for non-represented employees was competitive; however there were pockets and positions that had fallen out of the market. For a lot of their non-union positions, while the maximum pay rate did not need to be increased, the minimum starting rates needed to go up.
• The seasonal pay plan needed significant updates. The pay rates were decreased from 8 to 5; the minimum rate moved up from $8 to $11, and the maximum increased from $16.25 to $22. Although this impacted the Parks and Recreation budget, they did have the funds for it.

In answer to a question from Alderperson Maiyoua Thao (District 7), Director Ratchman said that Baker Tilly was going to train the Human Resources staff on how to review positions. The city would also go back to Baker Tilly every three to four years to ask them to do a reassessment of the pay program; however that would not be a full-blown compensation study and would be a fraction of the cost of a full compensation study. A full compensation study should be conducted every 8-10 years.

Alderperson Sheri Hartzheim (District 13) mentioned that the current 2023 budget included a 5% across-the-board pay increase for employees. She was concerned about what would happen if they approved the compensation study recommendations but then ended up changing the pay increase in the budget.

Director Ratchman did not think that would result in a problem, and he viewed the pay raise and the changes proposed in the compensation study as two different issues. The compensation study was focused on the structure of the compensation program and the pay policies. The budget itself, on the other hand, determined how much employees were paid and what percentage of a pay raise employees would receive.

He said that the only issue they could run into is that there were employees that were still under the minimum pay rate. If the 5% pay raise currently in the budget was approved, they would still need to spend an additional $17,500 to bring those employees up to the minimum. If the 5% pay raise was not approved, they would need to spend more than $17,500 to bring them up to minimum. The Council would also have the option to approve an exception and not bring those employees to the minimum; although he wouldn’t recommend that because doing that would affect retention.

The committee ended up voting 4-0 to recommend for approval the non-represented employee compensation program.

View full meeting details and video here: https://cityofappleton.legistar.com/MeetingDetail.aspx?ID=1007226&GUID=FB747BAD-065F-46C2-8A7E-A0A8A7FBCE8D