HomeMy Public PortalAbout13) 7J Adoption of Reso 13-4923 Pay for PerformanceAGENDA
ITEM 7.J.
DATE: June 4, 2013
ADMINISTRATIVE SERVICES DEPARTMENT
TO: The Honorable City Council
MEMORANDUM
FROM: Jose E. Pulido, City Manager
By: Tracey L. Hause, Administrative Services Director
SUBJECT: ADOPTION OF RESOLUTION NO. 13-4923 ADOPTING A PAY FOR
PERFORMANCE BONUS PLAN
RECOMMENDATION:
The City Council is requested to adopt Resolution No. 13-4923 (Attachment W'), adopting
a Pay for Performance Bonus Plan.
BACKGROUND:
1. During the May 8, 2010 Goal Setting and Strategic Planning discussion, the City
Council directed City Manager Pulido to proceed with changing the city organization
from status quo to a high performance organization.
2. On June 19, 2012, the City Council adopted the Fiscal Year (FY) 2012-13 City
Budget, which included an appropriation for pay for performance bonuses.
3. On January 1, 2013, the staff administratively implemented revised evaluation
process for all City staff, which includes a process for pay for performance bonuses.
4. On April 24 and April 29, 2013, staff met with the City Council Budget Ad Hoc
Committee, (i.e., Mayor Sternquist and Councilmember Vizcarra) to review the
draft Plans and the Pay for Performance Bonus Plan and they recommended that
the City Council adopt Plans for all City employees. Further they recommended the
City Council adopt the Pay for Performance Bonus Plan for employees in the City's
personnel system (i.e., regular employees). Pay for Performance Bonuses for at -
will employees are stipulated by employment agreements.
ANALYSIS:
With increasing public scrutiny over the past few years about how public employees are
recognized and rewarded, cities are making changes and have established new norms
City Council
June 4, 2013
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and best practices for compensation or their employees. Cities have moved from a
traditional step -based merit system to one that is based on performance and tied to
goals through strategic leadership planning. Some of the new norms and best practices
include:
• Emphasis on total compensation;
• Flexible job bands and broader pay ranges with defined criteria regarding
placement with a range based on skill and competency;
• More job market driven;
• Greater emphasis on results and less on longevity;
• Flatter pay structures -fewer pay levels and fewer job classifications; and
• Pay for performance model tied to evaluation tools.
With the reorganization, merging Finance, Personnel and Information Technology into a
new Administrative Services Department approved by the City Council as part of the FY
2011-12 City Budget, the Administrative Services Department has been addressing
inconsistencies with the current practices related to personnel matters and has
recommended up-to-date best practices. Staff has approached this project in three
phases:
• The First Phase was to complete a thorough review and revision of the current
Personnel Policies to ensure consistency with the City's Charter and Municipal
Code and make sure they are not in conflict with Federal and State law and in
accordance with personnel best practices;
• The Second Phase was to administratively revise the current employee
performance evaluation process; and
• The Third Phase was to complete a review of all current job classifications
(Classification Plan) and compensation (Compensation Plan) and request that
the City Council to consider a Pay for Performance Bonus Plan for regular
employees.
This is the final report of three reports implementing this third phase. The Classification
Plan was addressed in the first report and the Compensation Plan was address in the
second report. This report will address Pay for Performance Bonus Plan.
The City of Temple City seeks to be a leader in service — recognized by its citizens and its
stakeholders as an innovative organization that achieves exceptional results in serving its
community.
It is recognized that it is the employees of the City whose creativity and work
City Council
June 4, 2013
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accomplishments produce the exceptional results we strive to achieve. The City
acknowledges that people achieve such accomplishments only when they are
challenged, supported and enabled to perform at their very best and when their very best
is recognized and rewarded as such. As a result a Pay for Performance Plan is
recommended.
The City's compensation programs will be based on:
• Positioning salary grade and maximums competitively with the labor market;
• Placing all City jobs in salary grades based on a combination of completive
market pricing data and the objective evaluation of factors reflecting each job's
relative contribution to the success of the City;
• Institutionalizing the concept that salary ranges present an opportunity to earn a
higher salary, not a guarantee of annual increases predicated on simply "coming
to work and doing one's job";
• Awarding merit increases on the basis of work results actually achieved against
performance targets that are equitably established, fully communicated and
consistent with the City's high performance expectations; and
• Emphasizing each employee's and each manager's accountability for
performance results. Thus, employees have the opportunity, and the individual
accountability, to influence the pay received by the level of performance they
achieve. Managers are provided policies and compensation tools that establish
accountability to set high performance expectations and reward employees in
accordance with those expectations.
Recommendations for Pay for Performance bonuses for up to 5% of base pay will come
from the manager or supervisor to the Department Head through the annual evaluation
process, which has now changed from the employee anniversary date to July 1 through
June 30. The Administrative Services Director will review and consider the
recommendation from the Department Head and advice the City Manager, whom will
have the final authority for approving or denying the recommended performance bonus.
CONCLUSION:
In order to have the ability to recognize exceptional results in serving the City and its
community, the proposed Pay for Performance Bonus Plan is recommended, allowing for
recognition and reward for exceptional employee performance.
City Council
June 4, 2013
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FISCAL IMPACT:
Funds have been appropriated in the Proposed FY 2013-14 City Budget for the Pay for
Performance Bonus Plan.
A. Resolution No. 13-4923, adopting a Pay for Performance Bonus Plan
ATTACHMENT A
RESOLUTION NO. 13-4923
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMPLE
CITY, CALIFORNIA ADOPTING A PAY FOR PERFORMANCE BONUS
PLAN
WHEREAS, Section 802 of the City Charter states: "The city council, by resolution, shall from
time to time establish the salaries and/or other forms of compensation for each officer or employee of the
city";
WHEREAS, at its May 8, 2010 Goal Setting and Strategic Planning discussion, the City Council
directed the City Manager to proceed with changing the city organization from status quo to a high
performance organization;
WHEREAS, The City of Temple City seeks to be a leader in service - recognized by its citizens
and its stakeholders as an innovative organization that achieves exceptional results in serving its
community;
WHEREAS, becoming a high performance and innovative organization requires highly motivated,
talented and challenged employees that strive to achieve a level of exceptional performance; and
WHEREAS, the adoption of a Pay for Performance Bonus Plan will help incentivize and better
reward employee excellence and will further the strategic goals of the City articulated by the City Council.
THE CITY COUNCIL OF THE CITY OF TEMPLE CITY DOES HEREBY RESOLVE, DETERMINE
AND ORDER AS FOLLOWS:
SECTION 1. The City Council hereby adopts the Pay for Performance Bonus Plan (Exhibit 1).
SECTION 2. The City Clerk shall certify to the adoption of this Resolution.
PASSED, APPROVED AND ADOPTED on this 4th day of June, 2013.
I LTA F-IT&I11
ATTEST: APPROVED AS TO FORM:
City Clerk City Attorney
City of Temple City
Pay for Performance Bonus Plan
June 2013
Introduction
EXHIBIT 1
Attracting, motivating and retaining people with a high degree of commitment and
excellent skills must be among the City's top priorities. While compensation alone cannot
generate or sustain high levels of performance, properly designed and administered,
reward systems can produce the individual and organizational behaviors most likely to
lead to success. Research and experience have proven that there is a strong link
between an organization's compensation practices and its long-term success.
Successful organizations have much in common, including:
• A clear, well -define mission and vision;
• An high performance value system shared by all;
• A long-term strategic plan for accomplishing the organization's mission; and
• A compensation philosophy and compensation system designed to encourage,
recognize and reward performance and results that contribute to the achievement
of the organization's mission and strategic goals.
The City's Compensation Philosophy
The City of Temple City seeks to be a leader in service — recognized by its citizens and its
stakeholders as an innovative organization that achieves exceptional results in serving its
community.
It is recognized that it is the employees of the City whose creativity and accomplishments
produce the exceptional results we strive to achieve. The City acknowledges that people
achieve such accomplishments only when they are challenged, supported and enabled to
perform at their very best and when their very best is recognized and rewarded.
The City's compensation programs and policies are designed to achieve the following
objectives:
Attract, retain and motivate people with a high degree of commitment and
excellent skills for City employment;
Compensate people equitably for the value of the work they perform and the
contributions their jobs make to achieve the City's goals and long-term objectives;
Recognize people for the results they achieve and the behaviors that demonstrate
consistent with the City's high performance value system. With exceptional results
for the City's citizens and stakeholders will come exceptional rewards for those
who accomplish them.
Pay for Performance Plan
Page 2
Specifically, the City's compensation programs will be based on:
• Positioning salary grade and maximums competitively with the labor market;
• Placing all City jobs in salary grades based on a combination of completive market
pricing data and the objective evaluation of factors reflecting each job's relative
contribution to the success of the City;
• Institutionalizing the concept that salary ranges present an opportunity to earn a
higher salary, not a guarantee of annual increases predicated on simply "coming to
work and doing one's job';
• Awarding merit increases on the basis of work results actually achieved against
performance targets that are equitably established, fully communicated and
consistent with the City's high expectations.
• Emphasizing each employee's and each manager's accountability for performance
results. Thus, employees have the opportunity, and the individual accountability,
to influence the pay receive by the level of performance they achieve. Managers
are provided policies and compensation tools and are delegated the accountability
for using the policies and tools to set high performance expectations and reward
employees in accordance with those expectations.
The City appreciates and values long-term service from good employees and will
recognize and reward such service through other programs. However, the City's
compensation philosophy is anchored on performance, not longevity.
Compensation Policies
• The Pay for Performance Bonus Plan applies to all full-time employees;
• All full-time employees are to receive an annual performance review during the
month of July. Compensation adjustments are to be considered in conjunction
with the employee's annual performance review. Employees rated "Exceeds Job
Standards" are eligible for adjustments to base pay and lump sum pay for
performance bonus in accordance with this policy;
Pay for Performance Plan
Page 3
• All full-time employees will receive an annual performance review. Based on
criteria outlined in the evaluation form, a rating will be determined. The following
reflects the percentage increases associated with each rating category:
Ratina Cateaory
Meeting Job Standards
Exceeds Job Standards
Exceptional Rating
Increase
0% (no Increase)
Merit Increase 4%
Merit Increase 4% and lump sum
Pay for Performance Bonus 0% to
5% of base pay
• Lump sum Pay for Performance Bonus Pay requires the Department Head's
recommendation and City Manager Approval;
• Pay for performance bonuses are predicated on that the City Council includes an
appropriation for the program in the annual City Budget.
• All payments under the plan, whether in the form of salary increases or lump sum
payments will be included as reportable compensation for purposes of CalPERS.
Other than as specifically provided, lump sum payments shall not be included as
compensation for purposes of disability benefits, vacation or holiday pay, or any
other pay related City provided fringe benefit.