Loading...
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 11/11/2016 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 11/11/2016  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 11/11/2016 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 11/11/2016 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 Prepared by Mountain States Employers Council, Inc. 6 11/11/2016 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 11/11/2016 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 11/11/2016 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 11/11/2016  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 Prepared by Mountain States Employers Council, Inc. 10 11/11/2016 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