Human Resources recently completed the Compensation and Classification Study started in October. A Compensation and Classification Study reviews an organization’s jobs to determine the proper grouping of jobs into job categories, and the associated compensation for each job category or grade. The result of the City’s study is a baseline pay structure that will help the City be fair and competitive in the job market.
Classification refers to the grouping of jobs that perform similar types of work based on duties and responsibilities into groups or grades. The City had not done a full-scale market analysis since 2009. In August of last year, the City contracted with Dallas-based Waters Consulting Group to perform a complete Compensation and Classification Study.
“We recognized that we had fallen behind the market in many areas,” says Valerie Francois, Director of Human Resources. “Our goal was to create pay structures that make sense for the jobs we have. We also wanted a system that reflects a true pay philosophy – of being fair and competitive.”
During the study, Waters Consulting Group surveyed other municipal governments in Texas that are regarded as direct competitors for the City.
“We looked at organizations that we frequently lose employees to or that are competing for the same talent,” says Christopher Lane, Human Resources Generalist. “We also looked at cities that are similar to Round Rock in terms of growth and economics.”
The study did not look at state agencies or the private sector because employees who leave rarely enter the private sector.
“Most of the employees who leave stay in municipal government,” says Chris. “We lose very few people to the private sector.”
Employees also participated in the study by completing job description questionnaires and attending focus group meetings and information meetings.
The consulting group reviewed the information and created a pay structure and job titles. They then recommended placement for the jobs within the structure. The City’s department directors reviewed this analysis and confirmed the job placement and titles. The new pay classification structure was put into place in April.
“We’ve had good participation,” says Valerie. “We’ve completed the study and implemented the adjustments in about seven months, which is very fast for a process like this. We moved quickly because the system we had wasn’t working. We wanted to get a structure in place so we can move forward.”
The new classification structure attempts to simplify the City’s compensation system. Many job titles were eliminated while pay ranges were widened.
“We had a lot of systems in place that did not reflect the work being performed,” says Valerie. “We found jobs with multiple levels — like I and II – that were in the same pay grade. If two jobs are in the same pay grade, they are the same job. So we have collapsed many of those multiple level jobs into just one or two level jobs.”
Most of the pay ranges became wider in the classification. Some pay grades decreased. The City also increased its minimum pay range to $11 an hour, which meant increases for some of the lowest paid workers.
More than 600 employees were affected by the classification changes from tweaks to job title wording to assist with better reporting and database management. However, some positions had true title changes to better reflect the work being done.
“We believe the new classification system gives the City a clean pay structure to work with that will make it easier to compare ourselves in the market to other cities,” says Valerie. “It will also be easier for employees to see the opportunities they have in the City. It may not be in their current job but they can see what is available in other areas and choose to switch fields.”
With the new structure in place, compensation – the actual salary paid to the individual currently in the position – was adjusted in April for those employees whose salaries were lower than the minimum of the pay range for the job.
“We believe with this new structure, we’ll be able to hire the best talent we can,” says Chris.
While the new pay classification system is largely in place, job descriptions still need to be finalized for all jobs. Then the City’s new performance management system needs to be implemented.
“We are going to document our compensation practices for managers and supervisors as we set up our performance review process for fiscal year 2015,” says Valerie. “We want to recognize high-performing employees.”
Another issue Human Resources is reviewing is “pay compression,” a term used to describe a situation where an experienced employee who has been with the City for many years has almost the same salary as new employees with less experience.
“Pay compression is a bigger problem than we anticipated,” says Chris. “We recognize the problem and we are still working on it but nothing has been decided yet.”
Human Resource will also be conducting annual reviews of the market to keep the City competitive.
“The goal of any good compensation system is to help an organization recruit, retain, motivate and reward its employees,” says Chris. “We believe this new classification structure is a good start to meeting that goal.”