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HomeMy WebLinkAbout1353 - MINUTES - City Commission MINUTES DANIA BEACH CITY COMMISSION WORKSHOP MEETING AUGUST 14, 2002 1. CALL TO ORDER: Mayor Chunn called the meeting to order at 7:00 p.m. 2. ROLL CALL: Present: Mayor: Robert H. Chunn, Jr. Vice-Mayor: Pat Flury Commissioners: John Bertino C.K. McElyea Bob Mikes City Attorney: Tom Ansbro City Manager: Ivan Pato City Clerk: Charlene Johnson 3. DISCUSSION OF THE PAY & CLASSIFICATION STUDY AND PAY FOR PERFORMANCE PROGRAM: *ity Manager Pato explained that prior to his being hired as City Manager, the City Commission had directed staff to conduct a Pay & Classification Study to determine where the City stood with regards to competitive pay scales and information on a Pay for Performance Program. He clarified that Sheryl Chapman, previous Administrative Services Director, had retained the services of a consulting firm to begin the study and that Mary McDonald, Administrative Services Director, took over the project when she started six months ago and that she is now prepared to present the results of the study. Mary McDonald, Administrative Services Director, conducted a power point presentation outlining the study results (see attached). POINTS OF INTEREST: PROJECT GOALS REQUESTED BY COMMISSION- METHODOOGY- LABOR MARKET COMPETITORS Surveyed- 15 cities and BSO DEFINITIONS: Benchmarks: Ms. McDonald explained that Benchmark positions are positions easily identifiable in other markets and are representative of what is going on in the market and are selected because of their presence in the market. Ms. McDonald stressed the importance of conducting salary surveys annually to keep salaries updated. Job Descriptions: Overview of job's essential functions, not meant to be all encompassing. Ms. McDonald pointed out that ADA requires the City to list certain things in job descriptions for legal protections and threats of discrimination. Internal Compression: Inequity within a pay system that creates below market compensation for MINUTES 1 AUGUST 14, 2002 WORKSHOP MEETING employees within the first few years of hire. Ms. McDonald advised that employees have been hired at low vets, however, they move up quickly with the step system. Inequities are created within the pay system when ositions start out with very low compensation in the first year. Salary Range Mid-Point or Control Point: Position within the pay range that represents full proficiency. Ms. McDonald advised that in the report some salary recommendations did not bring some positions to the mid-point because tenure is taken into consideration. It is unlikely that a first hire would be able to operate at a fully proficient level as they would not have the institutional knowledge unique to Dania Beach or any other organization. Therefore, the mid-range was predicated upon employees who are employed at least five years. WEAKNESSES OF THE CURRENT SYSTEM: Ms. McDonald advised that the Study found that many salaries were not at market level and she was of the opinion that the current system provides no ability to encourage and .reward achievement and results. The system gives no incentive for an employee to work above and beyond on the job, unless its inherent to an employee's nature. The system creates an impediment to the City's efforts to attract and retain a quality workforce, to develop staff and provide internal promotional opportunities, and does not allow flexibility needed to compete for talent in the 21st Century. Director McDonald explained that when employees are hired they receive a 5% automatic Step increase on their Anniversary date for the first five years and also receive the union negotiated COLA increase annually. In the 6th year of employment, the employee enters the Longevity Plan. Ms. McDonald clarified that Longevity is not an increase nor is it added to the employee's base salary. Longevity is a lump sum payment starting at 1.5% of salary that progresses up to 10% after 15 years, which reoccurs annually. Commissioner Bertino advised that a benchmark system has to be quantitative in its concept or else its useless. He was of the opinion that setting benchmarks with both the private and public sector would present a mpletely incongruent set of circumstances. He pointed out that the private and public sectors have never en on par for anything because each sector has its obvious advantages. Commissioner Bertino stated that in the public sector there aren't that many people who are laid off and this is not true of the private sector because they run on a profit mode. The public sector pays less than the private sector but provides a more secure work place and a better benefit package with health insurance and pensions. The private sectors hire people at higher salaries but does not provide benefits. Commissioner Bertino asked Ms. McDonald whether or not benchmarking of a private sector job could be applied across the lines of a public sector job knowing the differences and natures between the two work sectors. Ms. McDonald advised that the proposal for Pay for Performance is not unique in the public sector as the public sector is shifting to Pay for Performance and she listed the cities she contacted. Ms. McDonald also noted that none of the cities surveyed with regard to the Pay for Performance Program had encountered increased litigation as a result of the program. Vice-Mayor Flury clarified with Ms. McDonald that the salaries were compared against cities and not the private sector. However, the private and public sectors were used in regards to established policy for the Pay for Performance Program. Commissioner Mikes advised that the private sector has changed a lot over the years and most corporations do not provide the benefits that the public sector provides. The private sector is ruthless about the way they fire employees and the public sector provides a Civil Service process and makes it difficult to fire employees. Commissioner Mikes expressed his concern with lawsuits with the Pay for Performance Program based on the current events with the City of Fort Lauderdale. He expressed concern for legal costs associated with having to involve the City Attorney to help manage the program. Ms. McDonald was of the opinion that when Performance Management is handled correctly, litigation is not a typical response. wommissioner Bertino pointed out that the Town of Davie went into a Pay for Performance Program a few ars ago and they are now trying to get out of it because of problems they have encountered. Commissioner MINUTES 2 AUGUST 14, 2002 WORKSHOP MEETING l Bertino mentioned that Dania Beach's workforce is smaller and employees have always been cross-trained in bs. He thought it might be difficult to compare Dania Beach employees with similar jobs at other cities. Ms. cDonald stated that the consulting firm used information provided by each employee to describe their jobs and the posting mechanism was an internet tool that showed job descriptions to ensure apples to apples comparisons. ENTITLEMENT PROGRAMS VS. PAY FOR PERFORMANCE PROGRAMS: Ms. McDonald advised that the Entitlement Program currently used by the City is a compensation tool used to reward individual loyalty and focus on internal equity to make sure everyone is moved through the Pay System at the same pace. The Pay for Performance System has a different philosophy, which rewards productivity and focuses on outcomes and moves away from internal equity that has no performance measurement. Commissioner Mikes asked whether the Pay for Performance System makes it easier to terminate an employee over the current Entitlement System and could not understand how a salary reduction under the Pay for Performance Program would deal any better with a deficient employee who cannot do their job. Ms. McDonald advised that termination should be the ultimate decision if an employee is not performing and that Pay for Performance allows a performance measurement to identify.weaknesses and gives employees an opportunity to improve or they would be out. Ms. McDonald advised that the Pay for Performance also provides documentation to defend the decision for termination. FACTS AND FICTION: Ms. McDonald advised that the Pay for Performance Program does work in other cities and that she is not aware of increased employment litigation resulting from the implementation of performance measurement Wong the cities surveyed. She did agree to check with the Town of Davie as requested by Commissioner rtino. Ms. McDonald explained that the performance evaluation system is based on objective job based criteria supported through documentation and/or tangible results. An appeals process is incorporated into the program. The prevalent avenue for appeal in cities surveyed supports a 2-step appeal beginning with the Department Head and ending with Human Resource Director. An employee has every opportunity to understand how he/she is going to be evaluated and the criteria selected. The process is objective and job based and is not subjective. An appeal process is also provided if the employee does not agree with their Evaluation: Ms. McDonald advised that the appeal process could also be customized to what the City Commission feels is best. Director McDonald clarified that every position has the opportunity for an exceptional rating and that it is up to the supervisor who really knows and understands the criteria of the job to include specific performance bases to the evaluation process. Ms. McDonald agreed that the City should look internally for people to move up in the organization. In regards to whether the program implementation is moving too fast, Director McDonald advised that the program took 6 months of research and design to develop and that it is not unique or untried. There would be improvement as the program progresses, however, there has to be a starting point. PROCESS: The process includes both mid-year and end of year evaluations (anniversary date) and objective job based evaluation criteria with a two-way communication (employee-supervisor) with Department Head oversight. The process includes an avenue for appeal, 4 performance rating scales (a 5th rating scale may be considered), and includes a 0-10% salary performance. Ms. McDonald advised that employees must be allowed to include �put. identify training options and be involved in where they want their career to be, and present comments on eir own development areas and strengths. MINUTES 3 AUGUST 14, 2002 WORKSHOP MEETING pommissioner Mikes thought that the City would have less of a chance of litigation with a smaller Merit ercentage. Ms. McDonald explained that a Merit Matrix was included in the package presented to the City Commission, which would be used to determine the Merit increase for the employee. The philosophy behind the method is to accelerate range penetration to midpoint/control point,and slow it down once employees have reached market salary level. Commissioner Mikes mentioned that a supervisor will be a strong influence in the merit increases provided to employees and that there are scenarios where an employee may have a supervisor who just doesn't like them. Ms. McDonald advised that documentation has to support the recommended increases and the corresponding increase must specifically relate to the overall rating for consistently in the program. PURPOSE: Director McDonald advised that the purpose of the program is to create a performance based allocation of compensation dollars and to provide a mechanism that promotes and rewards results oriented action, productivity and high performance standards. She felt that the program would provide an opportunity to recognize people who are doing a good job by giving them written feed back on their performance and linking their salary and increases to their performance. COSTS OF IMPLEMENTATION: Commissioner Bertino questioned how the City would budget for the increases based on his opinion that 95- 97% of employees are excellent workers and they could all deserve a 10% raise. Director McDonald did not believe that the City would realistically budget 10% for each employee and that generally speaking employee performance ranges will fall under a statistical "bell curve", salary increases/percentages would be tied to tings. Director McDonald advised that Longevity would be one of the entitlement programs that would be iminated as part of the Pay for Performance Program. Vice-Mayor Flury stated that there is no organization who has 95% exceptional people and in every organization there are employees who want to do a good job and go home and those that want to do exceptional work. Vice-Mayor Flury asked Ms. McDonald of the percentage of employees who are promoted each year. Ms. McDonald was not aware of any promotional report. Vice-Mayor Flury advised that the 10% is used as that is the amount that some people are already getting with longevity. The cost of the Pay for Performance Program would not involve new money and would, most likely, cost no more than 1-2% of total payroll to get more motivated employees in lieu of the automatic 1-10% longevity for just showing up. Vice- Mayor Flury was of the opinion that increases would be greater for those employees in their 6-8 year if they perform better and make a higher rating than they would receive with the longevity plan. Director McDonald advised that because longevity is just a bonus check, under the new plan, the existing longevity would be incorporated into the employee's salary base and would not be awarded any longer. Ms. McDonald advised that the increase potential would be greater because all COLA and other percentage increases would based on a higher base salary. Commissioner Bertino pointed out that many good employees stayed with the City for many years because they understood that longevity was a benefit. It doesn't seem right to now change the rules and remove Longevity after so many years. Director McDonald advised that the potential for the increases provided currently with longevity would still be there as performance would now be linked to the employee's increase and as long as people continue to do a good job they should receive the increase. Commissioner Bertino pointed out that the costs would be greater on the City because everybody could get a 0% raise when before they could only get the 10% raise if they had longevity for staying a number of years. With the Pay for Performance Program, employees in the first or second years would have the potential for MINUTES 4 AUGUST 14, 2002 WORKSHOP MEETING being granted a 10% when before they would have to serve the years before longevity is granted. QOSTS: Patty Varney, Finance Director, explained that she has had 20 years experience working for three different cities and that it has been her experience that those cities only budgeted a 2.5 to 3.5% maximum for yearly Merit increases. In addition, they never budgeted for the 5% bonuses granted by the City Manager for those employees who go above and beyond their job duties. Ms. Varney advised that the City can normally find the money to cover the costs for the additional employee increases because of vacancy factors and new employees with lower salaries and someone who leaves without pay or family leave. She advised that the money normally evens out as there are exceptional employees and those that are not, and normally 100% of employees in the workforce are not receiving 10% Merit increases. Commissioner Bertino advised that the Broward County School Board had some 14,000 employees and that they too ran into problems when they implemented a Merit Pay System and that they did away with the pay system. He mentioned that there were discrepancies with what the employee thought they deserved and what the supervisor thought they deserved, which, in turn, caused people to perform at a minimum level. Ms. Varney advised that the Evaluation Form is very important and at Miami Shores they received assistance from FAU, which used the Weighted Average Performance System.. Director Varney advised that the salary adjustments are going to cost the City around $100,000 or 3.04% of overall budget to adopt the Pay for Performance Plan and that the fringe benefits (FICA, Medicare, and Pension) would cost an additional $36,980. Workers Compensation and Health Insurance is not included. Director Varney advised that it may be difficult to determine the first year cost of implementation of the plan, however, the Finance Department budgeted a full 5% in the 02/03 budget for the Merit program. She clarified for Vice-Mayor Flury that the 12% includes the 5% plus for salary increases, 4% COLA, and the 3.04% for the Pay Plan Adjustments. Dice-Mayor Flury advised that many employees have lobbied Commissioners against the program, however, she felt that the Pay for Performance Program provides a tremendous benefit for the average to above average employee to gain in salary. Commissioner Bertino clarified that Longevity is being rolled into the salary base. Director Varney stated that the longevity will be rolled into the salary base and would be eliminated in the future, however, very good employees have the potential to receive 14% on top of the base salary with the 4% COLA and 10% Merit pay. City Manager Pato mentioned that he has been attending employee meetings and that he sent out a memo to encourage employees to come to his office to express their concerns and that only two employees came to his office. He stated that many steps have been taken to increase the level of understanding and that he wanted to make sure that the City Commission received all of the facts to make the right decision. Mr. Pato stated that the Longevity is being added to the base salary and that employees would not be receiving a lump sum check at the end of the year and that Longevity would not be granted to new employees. Director McDonald advised that longevity will be paid out this year as it began in October of last year and that once the Pay for Performance Program is implemented, the Longevity would be included in the base salary. All increases in the future would be based on Performance. Commissioner Bertino clarified that employees who have reached 10% longevity would not be losing, however, employees would not necessarily be getting what they would have normally received under the Longevity Plan. It was noted that an employee with a salary of $35,000 plus a $5,000 longevity check would now have a base salary of$40,000 and that any increases would be based on the new $40,000 base and that the $40,000 would increase as raises are earned. Alkirector McDonald reviewed the Management Guide, Employee Self-Assessment Form, Performance aluation Form, and presented examples of category rating levels that would be used with the Weighted MINUTES 5 AUGUST 14, 2002 WORKSHOP MEETING Average Performance System. Ms. McDonald advised that Supervisors would choose the goals and Weight verages and that the most Weight would be the most critical parts of the job. Commissioner Mikes confirmed ith Ms. McDonald that the same criteria has to be consistent for each job and must be job related and cannot be different for each person and that the criteria could be rotated from year to year. Commissioner Bertino pointed out that there may be employees with the same title but they may have very different job duties, which may require one to travel outside the building while one remains at a desk all day without any break. Vice-Mayor Flury stated that there would be standard job consistencies in each classification and that the positions would only differ in some of the lower competency factors. Commissioner Mikes questioned how training would be taken into consideration over an employee in the same classification who does the same job but does not take the initiative of educational incentives. Ms. McDonald advised that production would be most important and that initiative would also be considered, however, until each department has established the individual evaluations it would be difficult to answer the question. Ms. McDonald advised that if the employee disagreed with the Supervisor, the Department Head would review the criteria and make sure everything was consistent. Commissioner Mikes advised that there is always the potential for the Supervisor to favor an employee and select criteria favorable to that employee. Ms. McDonald advised that training is critical and that managers cannot selectively choose criteria. Director McDonald advised that should the City Commission agree to change to the Pay for Performance Program, staff could begin the Performance Management Training in September to show Managers/Supervisors how to use the tools and to help employees become comfortable. At the end of September, the Step System would be phased out. Commissioner Bertino advised that the 5% Step raise is paid on the employee's Anniversary date and he farified that the pay increases under the new plan would most likely be around 5%. Patty Varney, Finance irector, stated that there are other operating scenarios that happen during the year that could be used to pay the increases and she never experienced 97% of the employees receiving 10% raises and that there would be employees who receive 0%. Commissioner McElyea clarified that Dania Beach employees have been cross trained and he expected the City would have a higher percentage of increases being granted to most of the employees and that the City cannot be compared to the School Board with 14,000 employees. Vice-Mayor Flury advised that employee's review dates are spread out over a 12 month period of time and the cost would probably be around 5%. In the second year, the City would have a better way of budgeting for raises. City Manager Pato stated that if the City has 97% excellent employees then the City Commission would want to implement a program that would provide raises for productivity, quality work, and promotional opportunities. Commissioner Bertino suggested implementing the program on a mock trial basis to give employees an idea on how they would be evaluated. Commissioner Mikes was dissatisfied that City Manager Pato took steps towards implementation of the Pay for Performance Program in spite of criticisms and concern for litigation exposure with Program and need for the City to retain employment flexibility. He was not pleased that a 12% salary increase was being proposed in the 02/03 budget when both the General Employees and Police & Fire Pension Plans require large contributions this year and 1/3 of the City's properties may be lost due the airport expansion. Commissioner Mikes stated that the study results should have been brought before the City Commission before being included in the udget based on the program involving policy decision. MINUTES 6 AUGUST 14, 2002 WORKSHOP MEETING City Manager Pato advised that should the City Commission want to conduct a test of the program non-union Wployees could only be included. City Manager Pato mentioned that he put a budget together without a finance Director this year and that he never intended to make the program policy or to consider it a "done deal" before the City Commissioners had the opportunity to receive all of the information. In addition, he was displeased with having to release program records and study results to employees before he felt the program was completed. Commissioner Mikes stated that the study results should have been approved with the City Commission before steps of implementation were included at the budget workshop on July 31. Commissioner Mikes stated that altering the City's long-time employee program would be an important policy change and he was not aware that the current employee program or past processes were so wrong. He mentioned that he had heard that Administration was going to cut back on medical benefits for employees next and pointed out that the first priority is to provide medical and pension benefits for families. Vice-Mayor Flury advised that the program would cost 3% not 12% and that she is not aware of anyone trying to cut back employee medical benefits, however, she mentioned her recent comment on the need for better case management. Director McDonald advised that there was no discussion about cutting back benefits, the discussions were about asking employees to contribute more to health plan premiums, which is not an unusual employment practice. Mayor Chunn allowed discussion from the audience. William Johnson, President of AFSCME General Employees Union, advised that the program involves an article of the General Employees' Union Contract and that negotiations are ongoing at this time. The Union is evaluating the program and there may be a point when the union members will not agree with the program. Currently, no decisions can be made until the program has been clearly evaluated. Mr. Johnson clarified that stated his personal opinion that the program would be a good opportunity for employees to make more money, orwever, he did not intend for the statement to be misconstrued as being the Union's position. Helen Hargadon asked whether parts of the program could be implemented or whether its an all or nothing situation. City Manager Pato advised that research shows that a combination of the two programs is the best way to go and there is a need to adjust salaries to bring them up to competitive market level, which could be accomplished as a single part of the program. Director McDonald thought that the salary adjustments would corrupt the Step Plan Program and that the Step Plan Program would have to be redesigned. Commissioner Bertino supported making the adjustments without implementing the Pay for Performance portion. Sergio Pellecer , President of the Fire Union, asked whether it would be an unfair labor practice if a margin of 1% to 10% salary increase was set during labor negotiations and the City didn't budget for the worst case scenario. Vice-Mayor Flury stated that there is no requirement to budget for worse case scenarios and that the only requirement is to budget based on rational thinking. Shantal Gagnon presented information about her involvement in the community and Chairing on a Personnel Committee for a large United Way Program. Ms. Gagnon questioned whether or not the Pay for Performance Program would apply the Fire employees and suggested researching demographics of managers and staff to safeguard against personal prejudices. Ms. Gagnon thought there was a need to conduct better training and educational programs about the Pay for Performance Program and suggested that surveys be conducted with the employees to determine a proper response to the program. City Manager Pato advised that the Pay for Performance Program has not been applied to the Fire Department. Commissioner Bertino advised that the unions have to approve the plan and asked that staff look into the possibility of phasing in the Pay Plan with new employees and finding out if existing employees could have the 16tion of joining the new plan or not. He mentioned that Dania Policemen were given the option of remaining in e City's Pension Plan or changing to the BSO Plan when BSO took over police services in the City in 1988. MINUTES 7 AUGUST 14, 2002 WORKSHOP MEETING Michelle Spatafora expressed concern that the program is being pushed on the employees and felt that there as a definite need for additional information to be provided. She questioned whether the process would create bad vibes in the department when an employee would have to go to the Personnel Director should they be dissatisfied with the evaluation from the Department Head. Ms. Spatafora asked whether the employees would be allowed to provide input on the standards that would be provided in the evaluations at the time management is trained. Ms. McDonald advised that it is a two-way communication process and that there would be an agreement and consensus on what the employees should expect from the program. Commissioner Bertino agreed that the employees should have input and that the Civil Service Board should also be involved. Kurt Ely, Chair of the Civil Service Board, advised that the board took the time over the past year to update the Civil Service Board Rules and that the job was accomplished, however, during the transition with the Personnel Director, the minutes of the last Civil Service Board meeting and the marked up rules were lost. The Board now has to go back and do the work again. Mr. Ely was of the opinion that the Civil Service Board could review the study results for content to be sure that things were reasonably done, however, the board would have to rely upon staff to determine that job descriptions and pay ranges are fair. Mr. Ely asked for direction on what the role of the Civil Service Board should be in the Pay for Performance process as the Charter and the Civil Service Rules need clarification. Vice-Mayor Flury thought that the Civil Service Board should provide a recommendation to the City Commission on the program. City Attorney Ansbro advised that the principal function of the board is to serve in an appellate capacity when people appeal and also an advisory capacity. Mr. Ely thought that the Civil Service Rules should be revised before.dealing with the Pay for Performance Program. City Attorney Ansbro agreed to assist the Civil Service Board. commissioner Mikes was not sure that the program would be good for all employee groups and that there was need for extensive time to go back and forth between the Union and Civil Service Board. Commissioner Mikes stated that the City Manager has five City Commissioners, not one, to deal with and that the City Manager should come to the entire City Commission as a body to determine how to act on priorities. Chuck Cook mentioned that Pay for Performance Programs are part of a nationwide trend in governmental organizations. He stressed the importance of realizing the impact on employees when a major change in the compensation program is being considered and that the new system would need to be clearly defined in detail and provided in writing. Mr. Cook was of the opinion that employees work very hard at the City and that Dania Beach runs a lean operation. The employees opposing the program do so out of fear of the unknown and he pointed out that happy employees are more productive to any organization. Mr. Cook advised that the successful implementation of a Pay for Performance Program would involve a blend of clear guidelines, proper training of supervisors and employees who will be expected to complete self-evaluation forms, and involve negotiated agreements for the benefit of all parties to construe the program as a good one. Mr. Cook stressed the importance of including a measure of compassion in the process and to be cognizant of looking out for the taxpayers to conduct the business of the City in the most efficient manner possible. He mentioned that there are only 32 working days between now and October 1 and recommended gradually phasing in the program over the next year. City Manager Pato stated that staff is not saying that October 1 is the implementation date. Vice-Mayor Flury commended Mary McDonald for her presentation and suggested that Ms. McDonald provide presentations on a weekly basis to help employees understand the program. The City Commission could meet at a later date and the program could be started in the middle of the year. She stated that it will cost 3% this ear and that she did not want to see the program scrapped. MINUTES 8 AUGUST 14, 2002 WORKSHOP MEETING Commissioner Mikes stated his desire to speak with elected officials from other cities who work with the Wployee unions and such to obtain feed back on the program and he pointed out that there are many ways to lement the program. He questioned who would be evaluating the supervisors and department heads in the process and stressed the importance of the program being clearly understood before implementation. He wasn't sure that pay was the only way to improve the performance of underachieving employees and he thought the program was being pushed through this year. Commissioner Bertino thought that it would be inappropriate to implement the program the 02/03 fiscal year and that the next year should be used to conduct educational workshops with the employees. Shantal Gagnon asked whether the program could be implemented in the middle of the year. Ms. Varney advised that a mid-year implementation could be accomplished as long as funding is provided and she cautioned that inequities might be encountered depending upon an employee's anniversary date falls. The City Commission generally agreed to take the next year to educate the employees and to consider moving towards implementation in the 03/04 fiscal year. This meeting adjourned at 9:40 p.m. Rob rt H. Chunn, Jr., Mayor Attest: h rlene John o ity Clerk Approved: August 27, 2002 MINUTES 9 AUGUST 14, 2002 WORKSHOP MEETING