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November 26, 2007
Merit Play
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| Image: City of Chico management employee eligibility
and pay increases for "merit pay" over the last 5 years. Includes benefit increases assoicated with merit pay.
I've been asking a lot of questions about merit pay received by city management lately. I have a number of opinions on "merit pay". But today I want to just cover what I've learned and maybe tomorrow discuss what I think about it. The topic of merit pay for city management has come up at recent Finance Committee meetings. I think it is important to discuss how it came up, because that should color the overall discussion of merit pay and its merit. The City Management group offered to freeze its own merit pay for one year to help with the budget. This was described as a $200K savings, but the actual savings to the General Fund would be much less than that (about 1/3 of it). Still the upper management at the city deserve credit for volunteering for a temporary pay reduction. When merit pay was mentioned I had never heard of it. Who gets it? What do they get it for? How much is it? These are some the questions I had. So I asked for a brief summary of merit pay from the Finance Department and they sent it over rather quickly (see pdf file here). Who gets merit pay? City management and public safety management are eligible for merit pay. That includes department heads like the General Services Director and Police Chief. In 2001 about 55% of city management were eligible for merit pay (27 of 49 employees). In 2006 95% of city management received merit pay (58 of 61 employees). Virtually all city management that are eligible for merit pay receive merit pay. Most eligible employees that didn't receive the extra reward did qualify for it, but were already maxed out in pay. What do they get it for? This is a difficult question to answer. The city management employee plans are not, to my knowledge, open to the public. I received a summary of the merit pay program and how it is awarded from Jennifer Hennessy, the Finance Director. It is shown below. "Only the Management & Public Safety Management groups are part of the merit pay program. Each July, all eligible management employees receive a raise between 0% - 5%, based on the individual Achievement Plan for each employee. Each mgmt employee develops an Achievement Plan with their manager at the beginning of each fiscal year. The plan includes a % weighting for each of the 4 parts of the plan: Operations (which is our day-to-day responsibilities); Special Projects; Leadership; and Interdepartmental Leadership. Each of the 4 areas contain specific goals & objectives for the coming fiscal year. At the end of the year, the supervisors/Department Heads assign a point value (0%-5%) for each section. The point values are assigned based off of a list of criteria that defines "5%" behavior ranging down to 0% behavior. This point value is multiplied by the % assigned to the section, creating a weighted overall average score. The point of all of this is that we are not "awarded" for just doing our day-to-day jobs. The Special Projects section is a large component for most managers. Special Projects are defined as scope-limited, process improvement/efficiency measure types of projects, to achieve the "better, faster, smarter" concept." I haven't seen the Achievement Plans of other management, but Finance Director Hennessy did send me a list of 4 projects associated with her Achievement Plan. - Develop 10-year Financial Plans for both the General Fund and the Redevelopment Agency. - Implement the acceptance of credit card payments at the City's customer service counters. - Develop and publish a 10-Year Capital Improvement Program - Implement efficiencies in the Business License process by converting from an annual renewal cycle to a renewal based on the License's anniversary date. But beyond Hennessy's openness, I don't think the public can get a summary of what we receive in return for merit pay. How much do they get? As mentioned above management employees can receive 0-5% of base pay as a merit raise. Nobody receives 0%, unless they've already reached a pay maximum. The total amount spent on merit pay by the City of Chico has increased significantly in the last 5 years. So has the percentage awarded to each employee that receives it. In 2001 employees received an average of 2% for a total of $91,538. In 2006 management employees received an average of 3.6% for a total of $307,125. That's an 80% increase in the percentage received (2% to 3.6%) and a 340% increase in the total cost ($91K to $307K) over 5 years. The number of people receiving merit pay has increased by about 120% from 2001 to 2006 (26 to 57). Summary: The city management staff has increased by about 20% since 2001, from 49 to 61. The number of employees that receive merit pay bonuses has more than doubled in the last five years. The total amount of pay has more than tripled in the last 5 years. Determining exactly what employee's activities earn merit pay is not transparent. But only the "benefits" derived from merit pay are attributable to the General Fund. This is roughly 29% for city management and 55% for public safety management. In 2006 the impact of merit pay on the General Fund was $89,066. |
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CI Challenge: Can you guess what it is? Winner: Steve Boutotte, sorry if I mangled the last name, see comments below for the answer. |
Posted by Lon at November 26, 2007 07:40 AM
Comments
It's the label on merit cigarettes, but I think I need a charette to discuss it, then pay someone to tell me what it is, then have an EIR, then get sued,only to have to bullet proof it, to finally say yep it's the merit cigarettes label.
Posted by: Steve B. at November 26, 2007 07:59 AM
CI Challenge: logo from merit brand of portable personal toxic smog generators.
http://www.cigarettesexpress.com/MeritL.jpg
No... I don't smoke, and never have...
As a point of reference to readers, you might want to also link to the listing of the various job classifications (published each year with the budget). That shows the hi-low range for each job classification.
Then describe when and how folks move toward the upper limit both with Cost-Of-Living increases around the first of year, and then potentially with the merit increase mid year.
Of course, then there are periodic adjustments to the pay brackets themselves... Yes, they have moved up over time.
Posted by: Mark Sorensen at November 26, 2007 09:12 AM
Mark,
You make a good point regarding the increase in pay brackets from 2001 to 2006. Since the merit pay is a percentage of regular pay there should be a number of factors contributing to the increase in total merit pay (plus benefits) from 2001-2006.
They would be...
1. Increases in regular pay rates during that time frame.
2. Increases in benefits during that time frame.
3. The increase in the number of management empolyees that can receive merit pay (from 55% in 2001 to 95% in 2006).
4. The average percentage awarded (2% in 2001 to 3.6% in 2006).
I asked for data since 2001 since that is considered the beginning of the "structural deficit" as presented by city staff. But it is important to note that the merit pay does not significantly impact the General Fund (structural deficit), since management pay comes from other funds. Only the increase in benefits associated with merit pay are drawn from the General Fund.
But there are a couple of issues that are not related to pay scales that contribute to an increased cost in merit pay. They are numbers 3 and 4 above.
More people are eligible for merit pay, and those people are receiving higher raises since the structural deficit began taking shape.
Lon
Posted by: Lon at November 26, 2007 09:38 AM
Merit cigarettes? I thought it was the logo for Perot's "Giant Sucking Sound".
Posted by: Anthony at November 26, 2007 11:08 AM