HomeMy Public PortalAbout01 2016 Town of Fraser Compensation Methodology Report and 2016 Town of Fraser Benefits Summary
Prepared by Mountain States Employers Council, Inc. 1
Town of Fraser
Compensation Project
Methodology Report
November 2016
COMPENSATION
CONSULTING
SERVICES
PREPARED BY:
Candy Siderius, CCP, SPHR
Manager
303.223.5409
csiderius@msec.org
Prepared by Mountain States Employers Council, Inc. 2
Introduction
The Town of Fraser (Town) asked Mountain States Employers Council, Inc.’s (MSEC)
consultants to develop a compensation structure which entails conducting a salary survey
market analysis, developing salary ranges based on the data collected, and comparing
current rates of employee pay with the identified labor market. This report presents the
methodology we follow when designing and reviewing compensation systems. Highlights of
this process are included below.
Develop Strategic Approach
Working with the Town Manager, we examined the mission and values of the
organization and how the total compensation system should align with the Town’s short-
and long-term objectives. We developed a compensation philosophy statement to
establish the plan principles and guide development of the structure as follows:
The Town of Fraser recognizes that employees are our principal competitive advantage. We
believe in attracting and retaining a diverse and professional workforce that is engaged and
committed to our values, goals, and objectives. Our culture emphasizes innovation,
creativity, open communication, quality management, and work-life balance.
We expect employees to demonstrate capable, caring and professional behavior,
understand community concerns, and create results. This means taking personal
responsibility for achieving objectives and applying problem-solving and exceptional
customer service skills to further our mission.
We offer a total compensation package of base pay, comprehensive benefits, and
development opportunities as compared to other employers in our industry and community.
Compare Positions to Salary Surveys
A market analysis reviews the organization’s job compared to similar jobs in the labor
market and then assesses pay rates by examining survey data. It begins with matching
job skills, functions, and qualifications to survey job descriptions. To identify the most
relevant match between the Town’s position and the survey job description, we consider
factors such as the degree of knowledge/skills, job family progression, span of control,
reporting relationships, scope of decision-making authority, types of decisions made,
impact on the organization of such decisions, and autonomy. While exact comparisons
may not always occur, we took care to assure that a significant degree of comparability
existed before using the survey data for the job match. We strive for a 70 to 80 percent
match between the incumbent’s job responsibilities and the duties listed in the surveys.
We also solicited input and feedback from the Town Manager and Finance Director
regarding the quality of the survey job match.
Prepared by Mountain States Employers Council, Inc. 3
Identify Appropriate Salary Surveys and Data Lines
MSEC’s consultants use well-established salary surveys as the sources for market
data. The specific surveys and the data lines used in this analysis are as follows:
o MSEC 2016 Colorado Benchmark Compensation Survey - Total Responses
379 jobs; 429 participants; 40,089 reported employee pay rates
o MSEC 2016 Public Employers Compensation Survey – Total Responses 442
jobs; 156 participants; 40,980 reported employee pay rates
o MSEC 2015 Country Club Compensation Survey – Total Responses
61 jobs; 16 participants; 2,068 reported employee pay rates
After we obtained a final job match, we collected the salary information. We considered
using only data from Resort areas and the Western slope but, in many cases, there was
insufficient data reported.
We also considered the number of incumbent pay rates reported in the sample. We
made an effort to use data with 30 rates or more whenever possible in order to have a
more statistically accurate average.
Adjust Salary Survey Data
Since the effective dates of the salary survey data varied by survey, MSEC aged the
information and brought it forward to a common date of January 1, 2017. We used an
adjustment factor that represents the annual percent of salary movement for state and
local government workers.
The U.S. Department of Labor, Bureau of Labor Statistics, compiles and publishes the
Employment Cost Index (ECI) every quarter. The ECI reflects the percentage change
in employer costs for employee compensation. The current ECI rate is 2.0 percent for
government workers. We prorated this factor based on the period from each survey’s
information collection date to January 1, 2017.
Develop Salary Grades and Range Structures
Our initial step in developing a salary range structure included establishment of salary
grade groupings based on the market data. Jobs were then reviewed from an internal
perspective and clustered together according to similar skill, effort, and responsibility, as
well as the survey market data.
For each grade, we developed a salary range which includes a minimum, midpoint, and
maximum pay scale for the jobs assigned to that grade. Calculation of the midpoints for
each salary range is typically based on the aggregate of the survey weighted averages.
Prepared by Mountain States Employers Council, Inc. 4
Review Cost to Implement
The proposed structure compares employee pay rates to the salary ranges. The cost to
increase current pay rates of employees who are below the minimum of the proposed
salary range will cost approximately $1,410. We also discussed the importance of
guidelines for increasing employee pay rates in order to have consistent pay practices.
Summary
Compensation is a fluid and dynamic part of human resources. We recommend that every
organization establish a clearly defined total compensation strategy and philosophy which
will guide the design and direction of the plan.
While salary data is a tool for helping set pay practices, operational excellence is usually
driven by many variables. Balancing a variety of factors, including performance and
organizational goals, along with market analysis are part of the salary decision process.
We appreciate the opportunity to support your efforts in maintaining a competitive salary
structure. Please let us know if you have any questions or concerns about this project.
A R EPORT
Town of Fraser
Benefit Programs Review
November 2016
COMPENSATION
CONSULTING
SERVICES
PREPARED BY:
Candy Siderius, Manager
Cyndie Meisner, Consultant
303.223-5409
csiderius@msec.org, clmeisner@msec.org
Prepared by Mountain States Employers Council, Inc. 1
11/11/2016
Introduction
Employee benefits serve as an integral component of any employer’s total compensation
program. Organizations continue to face enormous challenges with changing legislation,
escalating benefits costs, legal and administrative complexity, and employee entitlement
mentality.
As part of conducting a total compensation study, the Town of Fraser (TOF) asked
Mountain States Employers Council, Inc.’s (MSEC) consultants to analyze the paid time off,
health/medical benefits, and retirement benefits in order to provide feedback on how
competitive the programs are with the external market place.
Data Sources
We obtained information on your paid time off plans and current benefit programs. MSEC’s
consultants compared this data with records reported in the following surveys:
MSEC 2016 Health and Welfare Survey
MSEC 2014 Colorado Paid Time Off Policies Survey
MSEC 2015 Miscellaneous Benefits Survey
We selected the following data breakouts based on the premise that your main comparison
group is likely to fall within this sample:
MSEC Government Organizations
MSEC Western Slope Organizations
MSEC Organizations with 1-49 Employees
Please note that the sample size for each survey varies. The average size for employers
ranged from 26 to 179 in the three surveys. This information is shown on Attachment A,
an Excel spreadsheet report that details the review comparison.
Benefits Cost Comparisons
Please note that it is difficult to accurately correlate the cost of various employer-provided
benefit programs due to the large number of variables involved, such as:
Level of benefit offered
Cost of benefit
Perceived value of benefit
Group demographics
Size of employer
Industry type
Utilization / claims experience.
Prepared by Mountain States Employers Council, Inc. 2
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For example, an organization’s life insurance program may cost more than that of another
employer of the same size. This does not mean that one program is more competitive.
Employee demographics and the history of claims may be influencing the higher cost. A
health plan may have higher premium costs due to location, specific plan design, and size
of organization. Our analysis and comparability rankings are based on the data point
alignment we could identify, along with our experience in analyzing market trends.
Level/Mix of Benefits
Highlights of the Benefits Program Review include:
PAY FOR TIME NOT WORKED
Holiday Pay
TOF ranks less than comparable to all survey groups with respect to the total number of
holiday hours granted per year. With respect to specific holidays, you exceed the
western slope and 1-49 employee survey groups by granting Martin Luther King’s Day
and President’s Day as paid holidays.
Paid Time Off (PTO)
TOF joins the majority of employers in the comparator groups that cover vacations, sick
leave and personal time in your PTO plan. You exceed the market by also including
bereavement leave in your PTO plan. TOF ranks less than comparable to survey
group’s averages for the amount of vacation accrued during the first year of service.
For PTO accrual, TOF ranks less than comparable to the market average for the
amount of PTO accrued during the first year of service. At remaining service levels,
your PTO accrual amounts vary across survey groups:
Years of Service Government Western Slope 1-49 EEs
1-3 years Less Than Comparable Less Than Comparable Exceeds
4-6 years Less Than Comparable Less Than Comparable Exceeds
7-9 years Exceeds Comparable Exceeds
10+ years Comparable Less Than Comparable Exceeds
The amount of PTO you grant is more comparable to the averages reported by the
government survey group and is at, or below, amounts granted in the western slope
survey group. Your PTO accrual rates are at, or above, averages reported by the 1-49
employee group.
TOF’s carry over and accumulation limits rank less than comparable to survey
averages. You exceed the survey groups by allowing your employees to convert
unused, accrued PTO beyond the maximum, to your Personal Sick Leave Bank. TOF
ranks comparable to the survey groups by allowing employees to cash out their PTO at
termination.
Prepared by Mountain States Employers Council, Inc. 3
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Personal Sick Leave Bank (PSLB)
TOF exceeds the survey groups by offering additional paid time off for long-term illness
or disability beyond three days, and allowing PSLB time to be cashed out at a ratio of 4
to 1 or at termination.
Temporary Disability Leave
TOF ranks less than comparable to the government and 1-49 employee survey group,
and comparable to the western slope survey group, by granting a temporary disability
leave of absence of sixty (60) days. You join the majority of employers in the survey
groups by providing this leave as unpaid, unless PTO is used. You rank less than
comparable by not continuing insurance benefits while an employee is on the leave.
You rank comparable to the western slope and 1-49 employee survey groups by not
allowing continuation of company benefits while on temporary disability leave. In
contrast, the government survey group reports continuing to vacation and sick leave
benefit accruals while their employees are on leave.
Jury Duty
TOF ranks less than comparable to the survey groups with respect to jury duty leave by
paying regular wages for the first three days and nothing thereafter. The majority of
employers in the survey groups report paying regular wages for the duration of jury
service.
INSURANCE PLANS
Health Coverage
TOF joins the majority of employers surveyed, by offering health coverage through a
Preferred Provider Organization (PPO). You rank slightly less than comparable by
requiring a longer service requirement for eligibility than the employers in the survey
groups.
TOF combines their health and dental premiums. For the purposes of this analysis, we
have broken out the rates to compare with separate health and dental survey data.
With respect to your monthly PPO health premium costs, TOF ranks less than
comparable to the survey groups by paying, on average, higher monthly premiums for
your health coverage. You exceed the market by paying 100 percent of the single
(employee only) premium and requiring your employees, on average, to contribute a
lower portion of the monthly premium cost for dependent coverage than reported
averages.
TOF exceeds the survey groups with respect to your in- and out-of-network single and
family deductible levels. Your PPO single and family, in and out-of-network out-of-
pocket maximum levels, also exceeds the survey group’s averages.
TOF ranks comparable to the government and western slope survey group with respect
to office copays. You rank less than comparable to the 1-49 employee group where the
Prepared by Mountain States Employers Council, Inc. 4
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majority of employers in that survey group report copays lower than $30. Your
emergency room coinsurance ranks less than comparable to survey group averages.
In terms of copays for prescription and mail order prescriptions, your generic (Tier 1)
copays rank less than comparable to the survey group, but your preferred brand (Tier 2)
and non-preferred brand (Tier 3) prescription copay rank comparable to survey
averages. You rank comparable to the survey groups by providing chiropractic care as
a part of your health plan.
Pre-tax Flexible Benefits
TOF ranks comparable with respect to the maximum limits for Section 125 and Section
129 plans.
Vision Plan
TOF ranks less than comparable to the survey groups by not offering a vision care plan
separate from the group health plan.
Dental Coverage
TOF joins the majority of employers surveyed by offering dental coverage through a
Preferred Provider Organization (PPO). You rank less than comparable to the
government and 1-49 employee survey groups by requiring a slightly longer service
requirement for eligibility than reported averages.
After breaking out the combined monthly premiums for health and dental premiums, on
average, TOF’s monthly dental premium costs rank less than comparable to survey
averages. You exceed the market by paying 100 percent of the dental single
(employee only) premium and requiring your employees, on average, to contribute a
lower portion of the monthly premium cost for dependent coverage than reported
averages.
Your overall dental plan maximum benefit ranks comparable to the survey groups and
your lifetime maximum for orthodontia exceeds reported averages.
Life Insurance
TOF ranks less than comparable to the survey groups by providing $20,000 as the
value of life insurance. Your maximum basic life benefit level ranks less than
comparable to reported averages.
Short-term Disability (STD), Long-term Disability (LTD) and Employee Assistance
Program (EAP)
TOF does not currently offer STD, LTD or an EAP. Survey data has been provided, for
information purposes, on what employers in the survey groups offer for those benefits.
Prepared by Mountain States Employers Council, Inc. 5
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RETIREMENT
401(a) Defined Contribution Plan
TOF ranks comparable to the government survey groups by providing a 401(a) defined
contribution plan. Your service requirement for eligibility ranks less than comparable to
the survey groups. TOF ranks less than comparable to other organizations by matching
employee contributions at 4% compared to reported averages of 5-6%. You join the
majority of employers in the survey groups by using graded vesting for employer
contributions.
457(b) Tax Deferred Compensation Plan
TOF ranks comparable to the government survey group by providing a 457(b) tax
deferred compensation plan. You join the majority of employers who provide a 457(b)
tax deferred compensation plan by allowing immediate eligibility and by not providing
employer contributions to the plan.
MISCELLANEOUS
Clothing Allowance
TOF exceeds the survey groups with respect to providing a clothing allowance by
paying a higher portion of the uniform cost than employers in the survey group.
Cell Phones
TOF exceeds the survey groups by providing a stipend/reimbursement for business use
of personal cell phone.
Grand Pass
TOF exceeds the comparator groups by offering transferrable passes for sporting
activities in the area. Only a small percentage of employers in the survey groups report
providing discounts for other company’s products/services and/or complimentary or
discounted theatre/athletic tickets.
Summary
After reviewing the current levels of TOF’s benefit programs, we conclude that:
The level and mix of TOF’s benefits is, on average, competitive. In some areas, TOF’s
benefits were more generous than those employers we compared against. In other
areas, we found TOF’s benefits to be slightly less generous. We also noted where the
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specific aspect of a plan, or its associated costs, might be less than reflected in the
survey groups.
Paid time off programs are, on average, at market. The total amount of paid holiday
hours you provide is close to the same level as levels reported by the western slope
and 1-49 employers, but less than averages reported by government employers. Your
PTO levels are in line with government employer averages, but slightly less than
western slope averages and slightly higher than averages reported by the 1-49
employee group of employers. You provide an added paid time off benefit by allowing
employees to convert their unused PTO to your PSLB. Although TOF does not provide
short-term or long-term disability benefits (STD and LTD), by offering a temporary
disability leave, this can provide coverage for any gap in pay that could result from a
long-term illness or disability.
Comparing TOF’s health and dental monthly premium rates separately, your health care
premium costs are higher than COBRA rates reported by the comparator groups. Your
dental premium costs are also higher than COBRA rates reported by the survey groups.
You compare above market by paying 100 percent of the single (employee only)
premium for your health and dental PPO premiums. This is a generous benefit as more
employers require employees to share an average of 16% of the single premium cost.
Your life insurance value is lower than the market in terms of value provided and
maximum limit. As noted earlier, TOF doesn’t offer STD or LTD benefits which the
majority of employers do provide.
Most employers provide a savings/retirement plan, with the type varying by
private/public/non-profit sector. The 401(a) defined contribution plan and 457(b) tax
deferred plan are comparable to what other public employers offer. Your 401(a)
employer match, of up to 4%, is slightly below reported averages. However, you rank
higher than most employers by offering more two savings/retirement plan options.
TOF offers other benefits that many employers do not and this could be viewed as
exceeding the market. These include providing cell phones and the Grand Pass.
We do recommend that TOF consider offering an Employee Assistance Program (EAP).
When analyzing benefits programs, we find there is significant diversity in what
employers offer to employees. In addition, the amount of expense passed on to
employees varies greatly. We look for glaring gaps or extraordinary generosity rather
than how individual benefit expenses might be configured and distributed. Therefore,
while we designate a single item as being comparable, exceeding, or less than the
comparator groups, we suggest looking for areas where the organization falls well
above or below others and adjusting accordingly. In some instances this may involve
an additional benefit or change; in others it may mean revising the cost sharing model
used. Ultimately, it is critical to understand employee needs as well as preferences and
how programs can be reviewed considering all of these factors.
We appreciate the opportunity to support your efforts in maintaining competitive benefit
programs. Please let us know if you have any questions or concerns about this project.
Prepared by Mountain States Employers Council, Inc. 7
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Town of Fraser Benefits Analysis Short Summary
Benefits that EXCEED survey averages in Green
Benefits that are LESS THAN COMPARABLE to survey averages in Red
Holiday
Annual Amount
16 hours less than the government survey group average
7 hours less than the western slope survey group average
8 hours less than the 1-49 employee survey group average
Martin Luther King Day
Only 36% of the employers in the western slope and 1-49 employee
survey groups granted as a paid holiday in 2016
President’s Day
Only 48% of the employers in the western slope survey group
granted as a paid holiday in 2016
Paid Time Off (PTO)
Annual Amount
During 1st year of service - 4 hours less than survey group average
During 1-3 years of service
o 2 days less than government survey group average
o 2 days less than western slope survey group average
o 2 days more than 1-49 employee survey group average
During 4-6 years of service
o 1 day less than government survey group average
o 3 days less than western slope survey group average
o 2 days more than 1-49 employee survey group average
During 7-9 years of service
o 1.5 days more than government survey group average
o 4.5 days more than 1-49 employee survey group average
During 10+ years of service
o 4 days less than western slope survey group average
o 3 days more than 1-49 employee survey group average
Maximum Accumulation - 31 days less than survey group average
Personal Sick Leave Bank (PSLB) – Majority do not provide an extended sick leave
plan
Temporary Disability Leave
Maximum Duration (60 days) – 30 days less than government and 1-49
employee survey group average
Prepared by Mountain States Employers Council, Inc. 8
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Jury Duty (Regular Pay for 1st 3 days; nothing thereafter) – Majority pay regular
wages for length of service with no maximum
Health Coverage
PREFERRED PROVIDER ORGANIZATION (PPO)
Service Requirement for Eligibility (1st Day of month following 30 days of
employment) – Majority provide eligibility the 1st day of the month following
employment
PPO Monthly Premium Cost
Single (Employee Only) – $160 higher than survey group average
Employee + Spouse – $276 higher than survey group average
Employee + Child(ren) – $288 higher than survey group average
Family – $136 higher than survey group average
Employee Contribution toward Monthly Premium Cost
Single (Employee Only) 100% Organization Paid – Only 28% of
employers in survey group pay 100% of the premium
Employee + Spouse
o $67 lower than western slope and 1-49 employee survey group’s
average
o $79 higher than government survey group average
Employee + Child(ren)
o $40 lower than western slope and 1-49 employee survey group’s
average
o $117 higher than government survey group average
o Family – $100 to $126 lower than governments and 1-49
employees group averages
In-Network Deductible
Single – $613 lower than survey group average
Family – $1,050 lower than survey group average
Out-of-Network Deductible
Single – $1,686 lower than survey group average
Family – $3,550 lower than survey group average
In-Network Out-of-Pocket Expense
Single – $406 lower than survey group average
Family – $1,243 lower than survey group average
Out-of-Network Out-of-Pocket Expense
Single – $1,566 lower than survey group average
Family – $4,416 lower than survey group average
Prepared by Mountain States Employers Council, Inc. 9
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Copays
Office ($30) – Majority of 1-49 employee survey group reports office
copays lower than $30
Emergency Room (20% coinsurance) – Majority have copays rather than
coinsurance
Prescription Copays
Generic (Tier 1) – $7 higher than survey group average
Preferred (Tier 2) – $3 higher than survey group average
Mail Order Prescription Copays
Generic (Tier 1) – $8 higher than survey group average
Dental Coverage
Service Requirement for Eligibility (1st Day of month following 30 days of
employment) – Majority provide eligibility the 1st day of the month following
employment
Dental Monthly Premium Cost
Single (Employee Only) Coverage - $5 higher than survey group COBRA
average
Employee + Spouse – $11 higher than survey group COBRA average
Employee + Child(ren) – $14 higher than survey group COBRA average
Family – $15 higher than survey group COBRA average
Employee Contribution toward Monthly Premium Cost
Single (Employee Only) 100% Organization Paid – Only 26% of
employers in survey group pay 100% of the premium
Employee + Spouse – $15 lower than survey group average
Employee + Child(ren) – $16 lower than survey group average
Family – $18 lower than survey group average
Orthodontia Lifetime Maximum - $522 higher than survey group average
Life Insurance
Maximum ($20,000) – Reported average of $194,914
401(a) Tax Deferred Plan
Service Requirement Eligibility (1 year) – Majority allow immediate eligibility
Employer Matching (4%) – 1% lower than survey group average
Clothing Allowance – Approximately $143 lower than survey group average
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Cell Phones – An average of 37% of the employers in your survey group report
providing a similar benefit
Grand Pass – Fewer than 30% of the employers in your survey group report offering a
similar benefit