BOARD OF SUPERVISORS BUSINESS MEETING ACTION ITEM

Transcription

1 BOARD OF SUPERVISORS BUSINESS MEETING ACTION ITEM Date of Meeting: September 20, 2017 # 12l SUBJECT: ELECTION DISTRICT: STAFF CONTACT: FINANCE/GOVERNMENT OPERATIONS AND ECONOMIC DEVELOPMENT COMMITTEE REPORT: Phase One of the Classification and Compensation Study: Findings and Recommendations Countywide Jeanette Green, Human Resources Tim Hemstreet, County Administrator PURPOSE: To share the findings and recommendations of Phase One of the Classification and Compensation Study (Phase One). RECOMMENDATIONS: Finance/Government Operations and Economic Development Committee (FGOEDC): At its September 12, 2017 meeting the FGOEDC voted (3-2: Randall and Saines opposed) to recommend the Board of Supervisors define the County s competitive market to include the following jurisdictions: City of Alexandria and the counties of Arlington, Fairfax, and Prince William in Virginia. The FGOEDC voted (3-2: Randall and Saines opposed) to recommend the Board of Supervisors adopt a new compensation philosophy that places the County at a range of 95% to 105% of the average mid-point of the identified competitive market. The FGOEDC voted (5-0) to recommend the Board of Supervisors direct staff to procure a vendor to conduct Phase Two of the Classification and Compensation Study, to include the deliverables outlined in the September 12, 2017 FGOEDC Action Item as Staff Recommendations #4, #5, #6, #7 and #8. Staff: Staff concurs with the FGOEDC recommendation. BACKGROUND: In 2016 staff provided the Board with an issue paper detailing numerous concerns related to the County s classification and compensation system. At its May 19, 2016 Business Meeting, the Board approved (8-0-1; Randall absent) the recommendation of the FGOEDC to authorize staff to move forward with Phase One of a classification and compensation study. The scope of Phase One was to review, analyze, and develop findings and recommendations on the County s compensation philosophy and competitive market, as well as the County s policies

2 Item 12l FGOEDC Report: Phase One of the Classification and Compensation Study: Findings and Recommendations Board of Supervisors Business Meeting September 20, 2017 Page 2 and procedures related to job classification and employee compensation. Staff subsequently initiated a Request for Proposals procurement process, and on October 11, 2016 staff awarded a contract to perform Phase One to Evergreen Solutions, LLC (Evergreen). Evergreen is a human resources consulting firm with expertise in providing classification and compensation consulting services to public sector organizations and local governments nationwide. Evergreen delivered a final report to the County in August 2017 detailing 21 findings and associated recommendations. Attachment 1 to this item provides an overview of Evergreen s findings and recommendations. Attachment 2 to this item is the more detailed final report. Evergreen s 21 findings and associated recommendations are grouped in three categories: Compensation Philosophy, Classification System and Compensation System. Evergreen recommends that the County update its current compensation philosophy by moving to a more competitive target market position and expanding its competitive market. Evergreen also recommends that the County proceed with the second phase of the classification and compensation study (Phase Two). Evergreen recommends that Phase Two include a benchmark market analysis of all County jobs and the development of a brand new classification and compensation system based on that analysis. Evergreen further recommends that the County make a number of policy and procedural changes to its classification and compensation practices to better maintain the County s target market position and to bring the County s policies in better alignment with best practices. Overall staff concurs with Evergreen s recommendations. ISSUES: In order for staff to commence Phase Two, Board approval to procure a vendor and Board direction on the scope and deliverables for Phase Two is required. Board direction on the County s compensation philosophy is also needed, as the compensation philosophy will provide the framework for the work to be conducted in Phase Two. Should the Board decide not to move forward with Phase Two, staff only needs direction from the Board on the County s compensation philosophy going forward. Should the Board choose to revise the compensation philosophy without proceeding with Phase Two, staff will return to the Board with recommendations on how to implement the changes to the compensation philosophy and information with regard to the potential fiscal impact of such changes. This Issues section is organized to address the compensation philosophy recommendations and the recommendation to move forward with Phase Two separately. Issue #1 provides an overview of findings related to the County s compensation philosophy and details FGOEDC recommendations to the Board on changes to the compensation philosophy. Issue #2 provides an overview of findings related to the County s classification and compensation system and outlines FGOEDC recommendations to the Board, to include a recommendation to proceed with Phase Two and recommendations on the scope and deliverables for Phase Two. Issue #1: Compensation Philosophy The FGOEDC recommends the Board 1) define the County s competitive market to include the following jurisdictions: City of Alexandria and the counties of Arlington, Fairfax, and Prince William in Virginia and 2) adopt a new compensation philosophy that places the

3 Item 12l FGOEDC Report: Phase One of the Classification and Compensation Study: Findings and Recommendations Board of Supervisors Business Meeting September 20, 2017 Page 3 County at a range of 95% to 105% of the average mid-point of the identified competitive market. The Board approved compensation philosophy for the County is to deliver average pay at 95% of the competitive market. The competitive market is defined as including Arlington, Fairfax, and Prince William counties and the City of Alexandria. The scope of Evergreen s study included conducting a comprehensive review and evaluation of the County s current compensation philosophy and competitive market, and making recommendations to retain or modify the compensation philosophy and/or competitive market. The County s compensation philosophy has not been updated since it was implemented in Evergreen found that each of the County s four comparator jurisdictions, as well as other relevant competitors in the regional market, had a compensation philosophy similar to Loudoun s that included a target market position and a list of formal market comparators. Unlike Loudoun, none of the comparators had failed to update their compensation philosophy since its inception and most had developed their compensation philosophy in recent years or reviewed it annually for necessary updates. A summary of the current compensation philosophies of the County s current market competitors is detailed below in Table 1. Table 1. Compensation Philosophy of Current Market Comparators Jurisdiction Size Target Market Position Market Comparators Loudoun 3,488* 95% of the midpoint City of Alexandria; Arlington, Fairfax, and Prince William counties. Alexandria 2,300 Within 5% of the midpoint (+/-5%) Arlington, Fairfax, Prince William, Montgomery, and Prince George s counties (considering adding Loudoun as a comparator). Arlington 3,500 Midpoint of the market City of Alexandria; Fairfax and Prince William counties. Fairfax 11,696 Midpoint of the market City of Alexandria, District of Columbia; Arlington, Fairfax, Loudoun, Prince William, Montgomery, and Prince George s counties. Prince William * As of August 29, ,908 Within 5% of the midpoint (+/- 5%) City of Alexandria; Arlington, Fairfax, and Loudoun counties.

4 Item 12l FGOEDC Report: Phase One of the Classification and Compensation Study: Findings and Recommendations Board of Supervisors Business Meeting September 20, 2017 Page 4 Evergreen found that the County s current compensation philosophy fails to be market competitive. While the County has set its target market position at 95% of the midpoint of its competitive market, all four of the County s formal market comparators have either set their target market positions at 100% of the midpoint or have a flexible target range of 95% to 105% of the midpoint. Moreover, two of the County s current market comparators include significantly larger jurisdictions to the east of Loudoun County within their comparator groups, such as Montgomery County, Prince George s County, and the District of Columbia. As a result, the midpoint of their respective comparator groups would likely be higher than the midpoint of the County s current comparator group. In order to ensure that the County s compensation philosophy enables the organization to compete in the regional market for high quality candidates and retain top talent, Evergreen recommends that the County set its target for average compensation at 5% above the average market mid-point and expand its current competitive market to include the Maryland counties of Montgomery, Frederick, and Prince George s. Evergreen advises that this approach will bring the County s compensation philosophy in better alignment with the compensation philosophy of its peers and significantly improve the County s ability to successfully compete for top talent within the region. In determining the appropriate competitive market for the County, it is important to consider where the County is currently attracting talent from and with whom the County competes for that talent. Currently, Loudoun County Government s greatest source of labor is the labor force within the population of Loudoun County. As detailed in Table 2 below, 49.5% of the County government s 3,488 regular full-time and part-time employees reside in Loudoun County. Table 2. Top Places of Residency for Regular Full-Time and Part-Time County Employees #1 Loudoun County 49.8% #2 West Virginia 13.2% #3 Maryland 8.2% #4 Frederick County/City of Winchester 7.6% #5 Fairfax County/Fairfax City 6.2% Loudoun County s population provides a highly desirable, local talent pool that is well suited for County employment. 64.4% of the County s population age 25 and over have obtained an associate s degree or higher. 1 Loudoun County s residents work in a variety of industries with skills that are directly transferable to County employment. Further, Loudoun County s population is highly diverse in terms of demographics, which in turn creates a diverse talent pool for County positions. As such, the County should continue its efforts to attract, recruit and retain Loudoun County residents for County positions. Loudoun County Government s greatest competition for the local talent pool are employers to the east of Loudoun County. As detailed in Table 3 below, the majority of working residents of Loudoun County are commuting to employer s east of Loudoun County, with the highest percentage (35.7%) working in Fairfax County, VA. 1 Source: U.S. Census Bureau 2015 American Community Survey 1-Year Estimates.

5 Item 12l FGOEDC Report: Phase One of the Classification and Compensation Study: Findings and Recommendations Board of Supervisors Business Meeting September 20, 2017 Page 5 Table 3. Residents of Loudoun County - Place of Work (Primary Job) Share Fairfax County, VA 35.7% Loudoun County, VA 29.9% Washington, D.C. 5.9% Arlington County, VA 4.6% Montgomery County, MD 3.5% Prince William County, VA 2.9% Alexandria City, VA 1.9% Other 15.6% Employers to the east include other local jurisdictions as well as private sector employers who tend to offer significantly higher salaries for high demand positions. Based on the foregoing, staff concurs with Evergreen s recommendations to focus primarily on jurisdictions to the east of Loudoun County in establishing the competitive market and to expand the comparator group to include the Maryland counties of Montgomery, Frederick, and Prince George s. Other key factors that the staff took into consideration in supporting this recommendation include: 1) 25.5% of the County s firefighters currently reside in Maryland, making Maryland the largest source of County firefighters; 2) 2/3 of the County s current workforce reside in Loudoun County, in counties to the east of Loudoun County, or in Maryland; and 3) Approximately 40% of the County s workforce serve in white-collar, professional-level job classifications, which are often the most difficult to recruit for positions. After Loudoun County, Fairfax County is the second highest county of residency for employees within these job classifications. 4) Many of the local government jurisdictions to the west of Loudoun, including Clarke and Frederick counties in Virginia and Jefferson County in West Virginia, are small organizations that lack the number, variety and complexity of jobs to serve as effective market comparators to the County. For example, in Evergreen s survey, Clarke County only reported 32 fulltime employees. It is important to note that Fredrick County, Virginia and the state of West Virginia also serve as an important source of labor for County positions, particularly for technical and trades and uniformed public safety positions. Expanding the competitive market and increasing the target market position as recommended will also enhance the County s ability to continue to attract, recruit and retain talent from this region as well. At the September 12, 2017 meeting, the FGOEDC voted to recommend that the Board define the County s competitive market to include the following jurisdictions: City of Alexandria and the counties of Arlington, Fairfax, and Prince William in Virginia and 2) adopt a new compensation philosophy that places the County at a range of 95% to 105% of the average mid-point of the identified competitive market. Staff concurs with the FGOEDC s recommendation. Should the Board adopt a target market range for its compensation philosophy, staff advises that a detailed policy outlining specific criteria for how the range will be applied will be needed upon

6 Item 12l FGOEDC Report: Phase One of the Classification and Compensation Study: Findings and Recommendations Board of Supervisors Business Meeting September 20, 2017 Page 6 implementation. Further, in the Fiscal Impact Section of this item staff outlines the need for additional staffing in the Department of Human Resources (DHR) to administer any new compensation and classification system approved by the Board. Setting the target market position as a range will increase the work required from DHR to administer and maintain the system and thereby heightens the need for the additional staffing. ALTERNATIVES- Issue #1: Should the Board not wish to adopt the proposed changes to the County s compensation philosophy as recommended by the FGOEDC, it may: OR OR 1. Adopt the proposed changes to the compensation philosophy to deliver average pay at 5% above the average mid-point of the identified competitive market only.. 2. Adopt the proposed changes to the compensation philosophy to add additional jurisdictions to those considered in the County s competitive market only. 3. Not make any changes to the current compensation philosophy at this time. Issue #2: Classification and Compensation System The FGOEDC recommends the Board of Supervisors direct staff to procure a vendor to conduct Phase Two of the Classification and Compensation Study, to include the deliverables outlined in this Action Item as Recommendations #4, #5, #6, #7 and #8 below. A comprehensive benchmark market analysis of all County jobs. (Recommendation #4) The development of a new, market competitive pay plan to include an open range pay plan for the general workforce and a grade and step pay plan for Public Safety positions and recommendations for any additional pay incentives and supplements. (Recommendation #5) The development of a new comprehensive classification system that allows for more levels and specificity within and across each job group, to include the development of standardized job descriptions.(recommendation #6) An analysis of pay compression within the County and the development of recommendations to the Board for addressing pay compression once a new pay plan is implemented. (Recommendation #7)

7 Item 12l FGOEDC Report: Phase One of the Classification and Compensation Study: Findings and Recommendations Board of Supervisors Business Meeting September 20, 2017 Page 7 Recommended revisions for the Board s approval to Chapter 5 of the Human Resources Handbook. (Recommendation #8) Evergreen made a number of findings and recommendations with regard to the County s classification and compensation system: Compensation System Due to the County s current compensation philosophy, the current pay plan is intended to deliver average pay at 95% of the identified competitive market. As detailed in Issue #1 above, Evergreen found that the County s current compensation philosophy is not market competitive. To increase the competitiveness of the County s pay plan, Evergreen recommends that the County conduct a comprehensive benchmark market analysis of all County jobs and develop a new County pay plan utilizing the proposed new target market position and an expanded comparator market as recommended by Evergreen. The current pay ranges were developed utilizing an open range structure. An open range salary structure is a salary range with a minimum and maximum value, with no defined incremental steps in between. An employee's salary can be at any point between the range minimum and maximum. Employees progress through open ranges via merit increases and/or cost of living adjustments (COLAs). Each level within the County s nine broad band classifications is associated with a distinct open pay range; there are currently 36 formal ranges. While Evergreen found the open range structure to be appropriate for the County s general workforce, Evergreen noted that many of the County s comparators have a hybrid pay plan. This means that their general workforce employees are on an open range plan and their public safety employees are typically on a grade and step plan. Due to the hybrid approach adopted by the County s comparators, Evergreen found that the County s current public safety pay schedule does not resemble its peers. A grade and step plan is designed to move employees through the pay scales in predictable, measured increments (steps). Employees may progress from step to step through merit increases and/or based on tenure. As such, one of the benefits of a grade and step plan include the ability for employees to better predict future pay as they advance in tenure in their position. The ability to predict future pay is a strong recruitment tool for uniformed public safety employees who are more likely than general workforce employees to remain in position with one employer for the course of their public safety career. The County s current open range public safety pay schedule does not afford prospective candidates this predictability and may therefore impede the County s competitiveness in recruiting within this occupational area. Therefore, Evergreen recommends restructuring the County s pay plan to a hybrid system that utilizes open ranges for the general workforce and a grade and step plan for uniformed public safety positions. Evergreen found that the County possesses moderate to high levels of salary compression within job families. Pay compression occurs when there is only a small difference in pay between

8 Item 12l FGOEDC Report: Phase One of the Classification and Compensation Study: Findings and Recommendations Board of Supervisors Business Meeting September 20, 2017 Page 8 employees regardless of their skills, experience, longevity or level of responsibility. Pay compression is typically the result of the market-rate for a given job outpacing the pay raises historically given by the organization. Therefore, new employees can only be recruited by offering them as much or more than senior professionals. One example of pay compression within Loudoun County is within the Specialist I pay-band. Evergreen found that 57% of employees within this pay-band were at a salary in the first quartile of the pay-band ($34,206-$41,604), despite an average tenure of 10.7 years. Evergreen attributed the County s issues with compression to the lack of consistently funded pay increases, and noted that compression can lead to morale issues amongst the most tenured staff members. Compression was found to be a key concern of the employees surveyed in Evergreen s perceptional assessment. Evergreen advises that while many of its recommendations are designed to enhance the competitive position of the County within the regional market and the quality of the County s pay practices, the recommended adjustments will likely further exacerbate issues with employee pay compression. Evergreen recommends that once the County implements new, market competitive pay ranges, the County should develop a plan to analyze and address pay compression issues throughout the workforce. Evergreen delivered a number of findings related to the County s policies and procedures and pay practices governing salary determinations, pay increases, pay equity and other pay practices. Evergreen found that the County s current pay policies and practices are insufficient to support, and in some cases actually hinder, its ability to effectively attain and maintain its stated target market position. To address this, Evergreen s recommendations include, but are not limited to: developing a practice of routinely monitoring the system for compression and market competiveness and making adjustments accordingly; changing the methodology for developing salary offers; developing and implementing procedures to ensure equitable pay in accordance with all applicable laws; expanding the County s pay incentives and supplements to keep pace with market peers; improving the linkage between the County s recruitment and compensation strategies, including identifying the labor segments from which the County wishes to recruit and retain; creating the flexibility to adjust the County s market position for high demand or critical positions; and utilizing COLAs (subject to Board approval) in addition to merit pay to ensure the continued competitiveness of the County s pay plan. Many of the above-detailed recommendations would require the Board to approve revisions to Chapter 5 of the Human Resources Handbook, Classification and Pay. In terms of resources, Evergreen found that the County s Department of Human Resources (DHR) is not appropriately staffed to effectively implement and administer many of the new pay practices they are recommending. Evergreen estimates that to effectively implement and perform many of these

9 Item 12l FGOEDC Report: Phase One of the Classification and Compensation Study: Findings and Recommendations Board of Supervisors Business Meeting September 20, 2017 Page 9 functions, DHR would require three (3) additional employees trained in the administration of compensation programs. Classification System Currently, the County operates under a broadband classification system and pay plan implemented by the Board in The County s current broadband system includes three separate pay structures (General Workforce, Uniformed Fire and Rescue, and Uniformed Sheriff s Office) comprising a total of nine broadband job classifications. The nine broadband classifications are: Advisors and Managers (A) Executive (E) General Support and Services (G) Program and Administrative Services (P) Specialists (S) Technical and Trades (T) Uniformed Fire and Rescue (F) Uniformed Sheriff s Office (U and O) These classifications are very general in nature and are designed to identify and define the job family. Each of the nine broadband classifications is divided into various levels reflecting increasing degrees of job complexity and education and/or experience requirements (e.g. Specialist I, II, III and IV). Under the current system the County does not utilize traditional, standardized job descriptions; instead, each employee s supervisor is tasked with drafting an individualized performance plan that defines the broad job components and specific performance expectations or duties of the employee s position. Evergreen s findings indicate that the County s current classification system no longer captures the complexity of work performed by County employees. Evergreen recommends that the County develop new classifications that allow for more specificity in the description of work and additional levels within and across job groups. Evergreen also found that the County s current practice of classifying jobs based on individualized performance plans has led to positions being improperly classified within the existing structure due to the general lack of specificity and consistency in creating these plans. Evergreen recommends that the County develop standardized job descriptions as part of the new classification system. Evergreen also found that the County s current methodology for classifying positions was not sufficiently formalized and transparent and suggested the County develop a more structured and transparent methodology that utilizes quantitative and qualitative tools.

10 ALTERNATIVES- Issue #2: In the alternative, the Board may: OR OR OR OR Item 12l FGOEDC Report: Phase One of the Classification and Compensation Study: Findings and Recommendations Board of Supervisors Business Meeting September 20, 2017 Page Direct staff to procure a vendor to conduct Phase Two and limit the scope and deliverable to a comprehensive benchmark market analysis of all County jobs as outlined in this Action Item as Recommendation #4 only. 2. Direct staff to procure a vendor to conduct Phase Two and limit the scope and deliverables to a comprehensive benchmark market analysis, a redesigned pay plan, and recommended revisions to Chapter 5 of the Human Resources Handbook, as outlined in this Action Item as Recommendations #4, #5, and #8 only. 3. Direct staff to procure a vendor to conduct Phase Two and limit the scope and deliverables to a comprehensive benchmark market analysis, a redesigned pay plan and classification system, and recommended revisions to Chapter 5 of the Human Resources Handbook, as outlined in this Action Item as Recommendations #4, #5, #6 and #8 only. 4. Direct staff to procure a vendor to conduct Phase Two and limit the scope and deliverables to an analysis of pay compression within the County and the development of recommendations to the Board for addressing pay compression, as outlined in this Action Item as Recommendations #7 only. 5. Not pursue Phase Two of the Classification and Compensation Study. FISCAL IMPACT: Staff has identified four key areas of fiscal impact related to the approval of the recommendations outlined in this item: 1. Cost Associated with Conducting Phase Two Staff is unable to provide an exact cost for conducting Phase Two of the Classification and Compensation Study. However, staff estimates the cost of Phase Two, to include the scope and deliverables outlined in Staff Recommendations #4 through #8, to be approximately $500,000. There are sufficient funds appropriated as part of the FY 2018 Adopted Budget for this study

11 Item 12l FGOEDC Report: Phase One of the Classification and Compensation Study: Findings and Recommendations Board of Supervisors Business Meeting September 20, 2017 Page Cost Associated with Moving Average Pay to the New Market Target Position and Addressing Compression As detailed in Issue #1- Compensation Philosophy, Evergreen found that the County s current compensation philosophy is not market competitive. To address this issue staff concurs with Evergreen s recommendation that the County adopt a new compensation philosophy that places the County at 5% above the average midpoint of the identified competitive market and expand its current comparator group to include Frederick, Montgomery, and Prince George s counties in Maryland in addition to the County s current identified comparators. As detailed under Issue #2-Classification and Compensation System, staff concurs with Evergreen s recommendation that after adopting a new compensation philosophy, the County conduct a comprehensive benchmark market analysis within the scope of Phase Two. The goal of the market analysis would be to determine the fiscal impact of moving average pay in the County to the new target market position and options for phasing in the associated costs over a defined period of time. Evergreen advises that the County should expect a significant fiscal impact to be associated with raising average pay to meet the proposed new target market. A major contributing factor to the significant cost estimate is that Evergreen found that during the most recent economic downturn the County failed to sustain its current stated market position (95%) and as a result the County is now significantly behind even the current target. Evergreen could not determine precisely how far behind the current market position the County is without a comprehensive benchmarking market study. However, Evergreen conducted a comparison of market comparator to County increases for fiscal years 2008 through The results are detailed in Table 4: Table 4. Comparison of Peers to County Increases: FY 2008-FY 2017 Fiscal Year Peer Average Increase Loudoun County Increase Difference FY % 2.50% -0.31% FY % 3.00% 0.48% FY % 3.00% -0.43% FY % 2.00% -1.56% FY % 7.00% 3.13% FY % 3.00% 0.12% FY % 0.00% -3.43% FY % 0.00% -1.00% FY % 3.00% -2.26% FY % 2.50% -3.63% TOTAL 34.89% 26.00% -8.89% Based on data detailed in Table 4, the County appears to have lost its desired competitive market position (95%) during the identified time period. Assuming that the County was at its desired market

12 Item 12l FGOEDC Report: Phase One of the Classification and Compensation Study: Findings and Recommendations Board of Supervisors Business Meeting September 20, 2017 Page 12 position in 2008, the County has fallen almost nine percentage points behind its peers. However, Evergreen cautions that this estimate is a best case scenario as it is probable that the County had already fallen behind its peers by As detailed in Issue #2 Classification and Compensation Structure, Evergreen found that the County possesses moderate to high levels of salary compression within job families. Evergreen indicated that while many of its recommendations are designed to enhance the competitive position of the County within the regional market and the quality of the County s pay practices, many of the adjustments it is recommending will likely further exacerbate issues with employee pay compression. Staff s Phase Two recommendations include an analysis of pay compression within the County and the development of recommendations to the Board for addressing pay compression once market competitive pay ranges have been implemented. Based on these limited available data, both Evergreen and staff estimate the fiscal impact of raising average pay to meet the new proposed target to be anywhere from $18 million to $24 million, with the most probable estimate being approximately $22 million if the County is within the 8 percent figure of its current comparator market. Should the market analysis of a new comparator market show that the County is further behind, these cost estimates could increase. These figures also include the estimated cost of addressing pay compression. It is important to note that given the significant fiscal impact, staff recommends phasing in the cost over a period of three fiscal years, beginning in FY As such, staff would include the first of such requests for funds to deliver an initial market pay adjustment to County employees as part of the FY 2019 Proposed Budget, in addition to funding for the County s annual merit increase. 3. Cost of Additional Staffing As detailed in Issue #2 Classification and Compensation Structure, Evergreen found that the DHR is not appropriately staffed to effectively implement and administer many of the new pay practices recommended by Evergreen. Evergreen estimates that to effectively perform many of these functions, DHR would require three additional employees (3.00 FTEs) trained in the administration of compensation and classification programs. Should the Board authorize staff to move forward with Phase Two, DHR would assess staffing impacts and submit resource requests as appropriate through the annual budget process in future fiscal years.

13 Item 12l FGOEDC Report: Phase One of the Classification and Compensation Study: Findings and Recommendations Board of Supervisors Business Meeting September 20, 2017 Page 13 DRAFT MOTIONS- Issue #1 (Compensation Philosophy/Competitive Market): OR 1. I move the recommendation of the Finance/Government Operations and Economic Development Committee that the Board of Supervisors define the County s competitive market to include the following jurisdictions: City of Alexandria and the counties of Arlington, Fairfax, and Prince William in Virginia. 2. I move an alternate motion. DRAFT MOTIONS- Issue #1 (Compensation Philosophy/Average Market Mid-point): OR 1. I move the recommendation of the Finance/Government Operations and Economic Development Committee that the Board of Supervisors adopt a new compensation philosophy that places the County at a range of 95% to 105% of the average mid-point of the identified competitive market. 2. I move an alternate motion. DRAFT MOTIONS- Issue #2 (Classification and Compensation System): OR 1. I move the recommendation of the Finance/Government Operations and Economic Development Committee that the Board of Supervisors direct staff to procure a vendor to conduct Phase Two of the Classification and Compensation Study, to include the following deliverables: a comprehensive benchmark market analysis of all County jobs; the development of a new, market competitive pay plan to include an open range pay plan for the general workforce and a grade and step pay plan for Public Safety positions and recommendations for any additional pay incentives and supplements; development of a new comprehensive classification system that allows for more levels and specificity within and across each job group, to include the development of standardized job descriptions; an analysis of pay compression within the County and the development of recommendations to the Board for addressing pay compression once a new pay plan is implemented; and recommended revisions for the Board s approval to Chapter 5 of the Human Resources Handbook. 2. I move an alternate motion.

14 Item 12l FGOEDC Report: Phase One of the Classification and Compensation Study: Findings and Recommendations Board of Supervisors Business Meeting September 20, 2017 Page 14 ATTACHMENTS: 1. Overview of Evergreen s Findings and Recommendations. 2. Final Report 3. Timeline for Phase Two

15 Findings and Recommendations The results of the assessments provided the basis for assembling findings and the associated recommendations. A total of 21 findings were identified as well as 21 recommendations. The findings and recommendations were organized into the three core elements of the study: compensation philosophy, classification system, and compensation system. Element # Findings Recommendations 1 Loudoun County s current, stated compensation philosophy fails to be market responsive to local competitors. Compensation Philosophy Classification System 2 Loudoun County has been unable to sustain its stated market philosophy during the economic downturn. 3 Loudoun County has not identified the labor market segment it desires to recruit and retain. 4 Loudoun County does not differentiate its market position based on role in the community. 5 Loudoun County utilizes public data exclusively in assessing market placement. 6 Loudoun County employs a broadband classification system that affords considerable flexibility, but no longer captures the complexity of work. 7 Loudoun County utilizes a whole job methodology for determining job classification that does not perform as well in more complex organizations. 8 Loudoun County possesses insufficient specificity and alignment in job descriptions. 9 Loudoun County utilizes insufficient detail in leveling between job categories. 10 Loudoun County utilizes a classification system that has encouraged internal development and promotion. 11 Loudoun County possesses a high level of classification level internal equity challenges. Adopt a new compensation philosophy that places Loudoun County at 5 percent above the market average for general employees. Commit to sustaining the desired market placement by monitoring, funding, and implementing market adjustments. Improve the linkage between the recruitment market and the compensation philosophy by aligning the peer strategies (i.e., Fire and Sheriff). Utilize market adjustments for moving specific occupational groups vis-à-vis their peers (high demand, Fire, and Sheriff). Leverage private sector data when determining critical classifications and the corresponding adjustments. Adopt a comprehensive classification system that allows for more levels and specificity within and across each job group. Adopt a hybrid job evaluation methodology that combines quantitative and qualitative tools. Develop class descriptions that include more specific tasks, duties, and requirements for each classification. Ensure that the levels within each job category or group matches the actual levels of work performed. Ensure that the new classification system emphasizes internal advancement through professional development. [could be same as move to hybrid class plan] Attachment 1

16 Element # Findings Recommendations 12 Loudoun County possesses insufficient human resources staffing to support a more comprehensive classification system. Hire three team members dedicated to administering the compensation and classification program. Compensation System 13 Loudoun County relies too heavily on market adjustments to address a non-market responsive pay plan. 14 Loudoun County possesses moderate to high levels of compression in job families. 15 Loudoun County possesses well documented polices for pay range movement, but incumbent distribution does not match peer outcomes. 16 Loudoun County possesses policy flexibility in hiring rate, but not the outcomes present in some peers. 17 Loudoun County falls behind peers in incentives and supplements for some jobs. 18 Loudoun County has become a training ground for its peers due to lack of competitiveness of actual wages. 19 Loudoun County possesses a public safety pay schedule that does not resemble its peers and limits is competitiveness in recruiting. 20 Loudoun County utilizes a salary determination system that is labor intensive and time consuming. 21 Loudoun County has not consistently put into place policies to equalize pay. Implement market responsive pay ranges and reserve market adjustments for true market exceptions. Address compression once market responsive pay ranges are put into place and monitor compression on an annual basis and adjust, accordingly. Adopt a range movement approach that incorporates market adjustments as well as merit. Adopt a market responsive hiring rate policy that allows Loudoun County to hire candidates with the desired level of experience and expertise. Develop and implement an incentive plan that covers all relevant classifications. Ensure that the market position is maintained and reviewed on an annual basis. Implement a step and grade plan for firefighters, Sheriff s deputies, and other first responders. Adopt a salary determination approach that is effective, yet streamlined to increase transparency and efficiency. Develop and implement a pay equity program.

17 Compensation and Classification Planning Study for Loudoun County, VA FINAL REPORT August 22, 2017 Attachment 2

18 EVERGREEN SOLUTIONS, LLC 0 Chapter 1 - Introduction The leadership of Loudoun County, Virginia (the County ) in keeping with its commitment to attracting and retaining the staff necessary to provide high quality services to its citizens determined that its current compensation and classification system and structures needed to be updated to better reflect best practices. Based on its desire to effectively manage the associated change, the County divided the effort of transitioning its compensation and classification system into two, distinct phases. The first phase sought to evaluate the strengths and weaknesses of the County s current systems, identify prevailing or best practices among regional peers, and recommend the type of system to be implemented in the second phase. The second phase, projected to occur in the time period will actually operationalize the recommendations from the first phase by conducting job analysis, collecting peer salary data, developing new policies and procedures, and implementing the new structure. Evergreen Solutions, LLC ( Evergreen Solutions ) was retained by the County in fall of 2016 to assist with completing the first phase by evaluating the County s compensation philosophy, competitive market, total compensation program, classification system, performance plan system, and associated classification and compensation policies and procedures. The specific tasks included: Conduct a comprehensive review and evaluation of Loudoun County s current compensation philosophy and competitive market. Make recommendations to retain, modify and/or change the compensation philosophy and/or competitive market. Conduct a comprehensive review and evaluation of policies governing Loudoun County s current total compensation program (pay and benefits offerings). Benchmark the elements of the County s total compensation program against its current competitive market and other potential competitor jurisdictions. Make recommendations to retain, modify and/or change elements of the total compensation program. Conduct a comprehensive review and evaluation of policies governing Loudoun County s current position classification system. Benchmark the County s system against its competitive market and other potential competitor jurisdictions. Make recommendations to retain, modify and/or change the current system. Conduct a comprehensive review and evaluation of Loudoun County s performance plan system. Benchmark the County s system against the job description systems of its competitive market and other potential competitor jurisdictions. Make recommendations to retain, modify and/or change the current system. Evergreen Solutions, LLC Page 1-1

19 Chapter 1 Introduction Provide recommendations for modifying classification and compensation policies and procedures. 1.1 STUDY METHODOLOGY Evergreen Solutions utilized a four element methodology to address the County s needs (see Exhibit 1-1). EXHIBIT 1-1 SUMMARY OF PHASE 1 METHODOLOGY Kickoff Assessment Findings and Recommendations Report Project Planning Work Plan Document Request Assessment Criteria Technical Background Leadership Interviews Element Review Peer Surrvey Perceptional Focus Groups Employee Survey Findings Recommendations Action Plans Draft Report Final Report Presentations Kick-off The kick-off allowed members of the study team from the County and Evergreen Solutions to discuss different aspects of the study, agree to the study timeline, and establish project management protocols. During the meeting, information about the County s compensation and classification structures and philosophies was shared and the work plan for the study was finalized. The meeting also provided an opportunity for Evergreen Solutions to explain the types of data needed to begin the study. Over several weeks, County staff provided the requested data to Evergreen Solutions as well as clarified any issues identified in the initial document review. Finally, an assessment criteria or factors for comparison were agreed to that would guide the comparisons made during the study process. Assessment The assessment element captured the internal and external data necessary to determine how the County functions currently and how peers are addressing their compensation and classification needs. Two sub-elements were considered: technical and perceptional. The technical sub-elements included leadership interviews, comparison to best practice programs through a peer survey, and performance measures. The perceptional sub-element reached out to County employees through a short opinion survey and structured, focus groups. The Evergreen Solutions, LLC Page 1-2

20 Chapter 1 Introduction survey received 2,258 responses and possessed a good representation on gender, race, level, and department. Eleven focus groups occurred over a two day period at different locations around the County and more than 270 employees attended. Findings and Recommendations The results of the assessments provided the basis for assembling findings and the associated recommendations. A total of 21 findings were identified as well as 21 recommendations. The findings and recommendations were organized into the three core elements of the study: compensation philosophy, classification system, and compensation system. Element # Findings Recommendations 1 Loudoun County s current, stated compensation philosophy fails to be market responsive to local competitors. Compensation Philosophy Classification System 2 Loudoun County has been unable to sustain its stated market philosophy during the economic downturn. 3 Loudoun County has not identified the labor market segment it desires to recruit and retain. 4 Loudoun County does not differentiate its market position based on role in the community. 5 Loudoun County utilizes public data exclusively in assessing market placement. 6 Loudoun County employs a broadband classification system that affords considerable flexibility, but no longer captures the complexity of work. 7 Loudoun County utilizes a whole job methodology for determining job classification that does not perform as well in more complex organizations. 8 Loudoun County possesses insufficient specificity and alignment in job descriptions. 9 Loudoun County utilizes insufficient detail in leveling between job categories. 10 Loudoun County utilizes a classification system that has encouraged internal development and promotion. 11 Loudoun County possesses a high level of classification level internal equity challenges. Adopt a new compensation philosophy that places Loudoun County at 5 percent above the market average for general employees. Commit to sustaining the desired market placement by monitoring, funding, and implementing market adjustments. Improve the linkage between the recruitment market and the compensation philosophy by aligning the peer strategies (i.e., Fire and Sheriff). Utilize market adjustments for moving specific occupational groups vis-à-vis their peers (high demand, Fire, and Sheriff). Leverage private sector data when determining critical classifications and the corresponding adjustments. Adopt a comprehensive classification system that allows for more levels and specificity within and across each job group. Adopt a hybrid job evaluation methodology that combines quantitative and qualitative tools. Develop class descriptions that include more specific tasks, duties, and requirements for each classification. Ensure that the levels within each job category or group matches the actual levels of work performed. Ensure that the new classification system emphasizes internal advancement through professional development. [could be same as move to hybrid class plan] Evergreen Solutions, LLC Page 1-3

21 Chapter 1 Introduction Element # Findings Recommendations 12 Loudoun County possesses insufficient human resources staffing to support a more comprehensive classification system. Hire three team members dedicated to administering the compensation and classification program. Compensation System Report 13 Loudoun County relies too heavily on market adjustments to address a non-market responsive pay plan. 14 Loudoun County possesses moderate to high levels of compression in job families. 15 Loudoun County possesses well documented polices for pay range movement, but incumbent distribution does not match peer outcomes. 16 Loudoun County possesses policy flexibility in hiring rate, but not the outcomes present in some peers. 17 Loudoun County falls behind peers in incentives and supplements for some jobs. 18 Loudoun County has become a training ground for its peers due to lack of competitiveness of actual wages. 19 Loudoun County possesses a public safety pay schedule that does not resemble its peers and limits is competitiveness in recruiting. 20 Loudoun County utilizes a salary determination system that is labor intensive and time consuming. 21 Loudoun County has not consistently put into place policies to equalize pay. Implement market responsive pay ranges and reserve market adjustments for true market exceptions. Address compression once market responsive pay ranges are put into place and monitor compression on an annual basis and adjust, accordingly. Adopt a range movement approach that incorporates market adjustments as well as merit. Adopt a market responsive hiring rate policy that allows Loudoun County to hire candidates with the desired level of experience and expertise. Develop and implement an incentive plan that covers all relevant classifications. Ensure that the market position is maintained and reviewed on an annual basis. Implement a step and grade plan for firefighters, Sheriff s deputies, and other first responders. Adopt a salary determination approach that is effective, yet streamlined to increase transparency and efficiency. Develop and implement a pay equity program. The reporting element included the creation of draft and this, final report as well as a series of presentations to employees, leadership, and the Board of Supervisors. 1.2 REPORT ORGANIZATION This report includes the following additional chapters: Chapter 2 Technical Assessment Chapter 3 - Perceptional Assessment Chapter 4 Findings and Recommendations Evergreen Solutions, LLC Page 1-4

22 EVERGREEN SOLUTIONS, LLC Chapter 2 - Technical Assessment This Assessment component of the Phase 1 Compensation and Classification study includes technical and perceptional components. This chapter summarizes the results of the Technical Assessment which is made up of the background summary, leadership concerns, element review, and peer survey results. The background section summarizes the current organizational structure, compensation philosophy, classification system, compensation system, workforce tenure and placement, and compression. Leadership concerns are summarized at a high level based on documents assembled before initiation of the study as well as conversations with senior leaders. The element review provides a comprehensive inventory of the major programs and initiatives utilized by the County to attract and retain high quality employees from a total rewards standpoint. Finally, the chapter concludes with a summary of the common practices of peer organizations. 2.1 BACKGROUND County Structure The County employs approximately 3,404 regular employees and hundreds of temporary and seasonal employees in more than twenty-five (25) different departments and offices grouped into five major areas: General Government Administration; Public Safety and Judicial Administration; Health and Welfare; Parks, Recreation and Culture; and Community Development. The five major areas operate as 30 individual departments (Exhibit 2-1). The departments vary in size from four incumbents in Extension Services to 684 in the Sheriff s Office. The largest departments which make up more than 60 percent of the staff include the Sheriff s Office, Fire and Rescue, Parks and Recreation, and MHSADS. Compensation Philosophy The County s compensation philosophy was adopted by the Loudoun County Board of Supervisors and has been in place since It is understood that the geographic location, resources, and workforce characteristics of the County led to the goal of delivering average pay at 95 percent of the competitive market. The competitive market or comparator group was defined as including four local peers: City of Alexandria and the counties of Arlington, Fairfax, and Prince William. Evergreen Solutions, LLC Page 2-1

23 Chapter 2 Technical Assessment EXHIBIT 2-1 COUNTY DEPARTMENTS AND EMPLOYEE COUNT Department Count Percentage ANIMAL SERVICES % CLERK CIRCUIT COURT % CNTY ADMINISTRATION % CNTY BUILD & DEVLOP % COMMISSIONER REVENUE % COMMONWEALTH ATTY % COMMUNITY CORRECTNS % COUNTY ATTORNEY % COURTS CIRC & DIST % ECONOMIC DEVELOPMENT % EXTENSION SERVICES % FAMILY SERVICES % FINANCE & PROCUREMENT % FIRE & RESCUE SERV % GENERAL REGISTRAR % GENERAL SERVICES % HEALTH SERVICES % HUMAN RESOURCES % INFORMATION TECHNOLOGY % JUVENILE COURT SVCS % LIBRARY SERVICES % LOUDOUN SOIL & WATER % MANAGEMENT & BUDGET % MAPPING/GEOGRAPH INFO % MHSADS % PARKS AND RECREATION % PLANNING & ZONING % SHERIFFS OFFICE % TRANS & CAPITAL INFR % TREASURERS OFFICE % Total 3, % Classification System The County utilizes a broad banded classification system, which was implemented in The classification system consists of ten (10) broad career paths: Uniformed Fire and Rescue (F), Uniformed Sheriff s Deputies (U), Master Deputy (M), Uniformed Sheriff s Officers (O), General Support & Services (G), Technical and Trades (T), Program and Administrative Services (P), Specialists (S), Advisors and Managers (A), and Executives and Department Heads (E). Each broad career path consists of levels or job classifications. Each job classification is associated with a specific pay band or range and possesses a classification specification. Evergreen Solutions, LLC Page 2-2

24 Chapter 2 Technical Assessment A summary of employee count by career path appears in Exhibit 2-2. As expected, the most utilized career band is S or Specialists. EXHIBIT 2-2 EMPLOYEE COUNT BY CAREER PATH Grade Count Percentage A % E % F % G % M % O % P % S % T % U % Total 3, % Within each career path, the classification structure possesses multiple levels. The counts for each level appear in Exhibit 2-3 below. The Uniformed Fire and Rescue (F) and Uniformed Sheriff s Deputies (U) career paths include the most levels. EXHIBIT 2-3 NUMBER OF LEVELS BY CAREER PATH A E F G M O P S T U Evergreen Solutions, LLC Page 2-3

25 Chapter 2 Technical Assessment Exhibit 2-4 captures the employee count and percentage per level. Only one level exceeds the 10 percent of the workforce market, S3 or the third level of Specialists. EXHIBIT 2-4 EMPLOYEE COUNT BY CAREER PATH LEVEL Level Count Percentage A % A % A % A % E % E % E % F % F % F % F % F % F % F % G % G % G % M % M % M % O % O % O % P % P % P % P % S % S % S % S % T % T % T % T % U % U % U % U % U % U % U % UC % Total % Evergreen Solutions, LLC Page 2-4

26 Chapter 2 Technical Assessment Along with the career path designation, the County possesses approximately 81 class titles and 1,115 working titles for further work differentiation. Exhibit 2-5 summarizes the classifications, number of associated employees, and percentage of total workforce. As would be expected, public safety, program managers, child care workers, and program specialist classifications make up the largest, classification groups. EXHIBIT 2-5 EMPLOYEE COUNT BY CLASSIFICATION Classification Employees Percentage ACCOUNTANT % ACCOUNTS ASSISTANT % ADMIN SUPPORT ASST % ADMINISTRATIVE ASST % ADMINISTRATIVE COORDINATOR % ADMINISTRATIVE MGR % ANALYST % ANIMAL CONTROL OFCR % APPOINTED OFFICIAL % APPRAISER % ASSESSOR % ASSISTANT DIRECTOR % ASST COUNTY ADMIN % ASST TO THE CTY ADMIN % ATTORNEY % BUYER % CARTOGRAPHIC TECH % CASE MANAGER % CHIEF DEPUTY % CHILD CARE SUPERVISOR % CHILD CARE WORKER % CIRCUIT COURT CLERK % CIRCUIT COURT SPEC % CIRCUIT COURT SUPERVISOR % CLINICIAN % COMPUTER OPERATOR % CONSTITUTIONAL OFFCR % CONTROLLER % COOK % COUNSELOR % COURIER % CROSSING GUARD % CUSTOMER SERVICES ASSISTANT % DEPUTY COUNTY ADMINR % DIRECTOR % DISPATCHER % DIVISION MANAGER % ENGINEER % EQUIP OPER/MECHANIC % FAMILY SERVICES SPECIALIST % FIRE SERVICES ASST % FIREFIGHTER/EMT % FR BATTALION CHIEF % FR CAPTAIN % FR LIEUTENANT % Evergreen Solutions, LLC Page 2-5

27 Chapter 2 Technical Assessment EXHIBIT 2-5 (Continued) EMPLOYEE COUNT BY CLASSIFICATION Classification Employees Percentage INFO/SERVICES ASST % INSPECTOR % INSTRUCTOR % LEGAL SERVICES ASSISTANT % LEGAL SERVICES ASST % LEGAL SERVICES SPEC % LIBRARIAN % LIBRARY AIDE % LIBRARY ASSISTANT % LIBRARY PAGE % MAINTENANCE TECHNICIAN % MASTER DEPUTY PROGRAM % NURSE % PLANNER % PLANS REVIEWER % PROGRAM ASSISTANT % PROGRAM MANAGER % PROGRAM SPECIALIST % PROGRAM TECHNICIAN % RESIDENTIAL COUNSLR % SERVICES ASSISTANT % SERVICES SUPERVISOR % SERVICES TECHNICIAN % SHERIFF'S DEPUTY % SHERIFF'S DEPUTY CPT % SHERIFF'S DEPUTY LT % SHERIFF'S DEPUTY LT COL % SHERIFF'S DEPUTY MAJOR % SHERIFF'S DEPUTY SGT % SYSTEMS ANALYST % TEACHER % TEAM LEADER % TEMPORARY RESTRICTED DUTY % THERAPIST % VEHICLE OPERATOR % ZONING ADMINISTRATOR % Total 3, % The County s working titles resemble classification titles utilized by other, similar sized local governments. Several important characteristics of the current working titles include: naming conventions are not always consistent across job families; job series progression is not uniform across job families; and over-classification may be present given the high number of working titles. In addition, the County does not possess detailed, descriptions for each working title. Instead of utilizing traditional job descriptions, specific jobs are described in performance plans, which define the broad job components and specific performance expectations or duties of the position. Evergreen Solutions, LLC Page 2-6

28 Chapter 2 Technical Assessment Given the classification approach utilized, when evaluating jobs, human resources employs a whole job approach in evaluating and classifying positions. Duties of the position are assessed against established classification factors as well as a comparison of the position to like positions within the organization and/or within the competitive market occurs. The classification factors include the following: experience and education required, complexity of the position, independence of action, impact of actions, supervisory responsibility, supervision received, scope of responsibility, and decision-making authority. Compensation System The compensation system was created along with and in support of the classification system. Given the simplicity of the classification system, the compensation system utilizes different pay bands for the multiple levels within each career band (Exhibit 2-6). EXHIBIT 2-6 SUMMARY OF PAY GRADES, RANGES, RANGE SPREAD, AND EMPLOYEE COUNT Grade Minimum Midpoint Maximum Range Spread Employees A1 $52,621 $76,784 $100,947 92% 122 A2 $63,316 $92,391 $121,465 92% 108 A3 $71,954 $104,995 $138,036 92% 27 A4 $81,772 $119,321 $156,870 92% 19 E2 $81,772 $119,321 $156,870 92% 1 E3 $92,927 $135,599 $178,270 92% 18 E4 $105,605 $154,099 $202,592 92% 2 F1 $41,539 $57,715 $73,891 78% 229 F2 $46,524 $64,630 $82,736 78% 93 F4 $54,358 $75,513 $96,668 78% 87 F5 $58,882 $82,444 $106,005 80% 38 F6 $68,655 $95,374 $122,093 78% 18 F7 $79,740 $110,649 $141,557 78% 6 F8 $89,628 $124,369 $159,109 78% 2 G2 $21,470 $30,758 $40,045 87% 40 G3 $24,956 $35,658 $46,359 86% 179 G4 $28,773 $41,219 $53,664 87% 50 M1 $50,704 $68,576 $86,471 71% 49 M2 $53,105 $71,826 $90,558 71% 23 M3 $58,412 $79,005 $99,607 71% 18 O1 $77,553 $104,897 $132,246 71% 10 O2 $87,165 $117,901 $148,639 71% 5 O3 $97,972 $132,519 $167,066 71% 2 P1 $24,625 $32,997 $41,369 68% 134 P2 $28,508 $38,201 $47,893 68% 205 P3 $33,001 $44,221 $55,441 68% 56 P4 $38,201 $51,189 $64,177 68% 8 S1 $34,206 $49,003 $63,799 87% 233 S2 $41,598 $59,592 $77,585 87% 327 S3 $46,304 $67,567 $88,830 92% 358 S4 $52,621 $76,784 $100,947 92% 168 T1 $24,625 $32,997 $41,369 68% 59 T2 $28,508 $38,201 $47,893 68% 148 T3 $33,001 $44,221 $55,441 68% 100 T4 $38,201 $51,189 $64,177 68% 23 U1 $41,885 $56,655 $71,424 71% 44 Evergreen Solutions, LLC Page 2-7

29 Chapter 2 Technical Assessment EXHIBIT 2-6 (Continued) SUMMARY OF PAY GRADES, RANGES, RANGE SPREAD, AND EMPLOYEE COUNT Grade Minimum Midpoint Maximum Range Spread Employees U2 $46,072 $62,318 $78,563 71% 43 U3 $50,680 $67,052 $83,423 65% 220 U6 $55,748 $76,419 $97,089 74% 25 U7 $58,403 $78,997 $99,590 71% 65 U8 $61,323 $83,895 $106,466 74% 18 U9 $67,454 $92,490 $117,525 74% 8 UC Although the County has not maintained its compensation structure, it has utilized market adjustments to improve competitiveness with the market. Beginning in the late 1980 s, the County has utilized market adjustments to address the attracting, hiring, and in some cases, retaining employees in certain specialized and/or high demand occupations. Although it is unknown at what point in time the exclusiveness of market adjustments were expanded, they represent a primary tool for compensation equity, today. Furthermore, given their widespread use (more than 450 employees), employees have become concerned by their reliance on this additional compensation since the policy still describes market adjustments as temporary and may be eliminated at any time. Specifically, the policy states the following: If there is a change in the market conditions that precipitated the market adjustment or in the duties of the position, the market adjustment may be reduced, increased or eliminated and the base salaries of employees in affected position(s) will be reduced or increased. If a market adjustment is eliminated but the job duties remain the same, the County Administrator may authorize the salary of an incumbent to remain at the same level as it was when the market adjustment was in place. If job duties do not remain the same, incumbents salaries will be reduced by the amount of the market adjustment. The use of market adjustments have led to the County possessing 154 de facto pay grades. In other words, by increasing the use of market adjustments, new ranges were formed in practice, even if not formally. Workforce Tenure and Placement Workforce tenure and placement provide insight into how long an organization retains employees and to what degree those that remain are rewarded by movement through the pay range. Just as more experience typically leads to differentials in compensation, most organizations reward employees with additional compensation for satisfactory performance, learning new skills, more experience, or a combination of factors. Given the level of competition within the region surrounding the County, tenure should vary. As expected, although the overall average tenure for County employees exceeds ten years, the distribution varies by grade. Higher level Sheriff s Office deputies and some County department heads have the highest average tenure (career path levels O1, O3, M3, and E4), while the uniformed deputies and fire personnel have the lowest (see Exhibit 2-7). Evergreen Solutions, LLC Page 2-8

30 Chapter 2 Technical Assessment EXHIBIT 2-7 CAREER PATH LEVEL AND AVERAGE EMPLOYEE TENURE Grade Count Average Tenure A A A A E E E F F F F F F F G G G M M M O O O P P P P S S S S T T T T U U U U U U U UC The other side of tenure relates to turnover. As turnover increases, average tenure decreases. Since FY12, the County has averaged approximately 10 percent turnover with a gradual increase as the economy has recovered. As shown in Exhibit 2-8, the increase in turnover rate for the County follows the increase in the national average in state and local government, according to the Bureau of Labor Statistics. Evergreen Solutions, LLC Page 2-9

31 Chapter 2 Technical Assessment EXHIBIT 2-8 COMPARISON OF LOUDOUN COUNTY SEPARATIONS TO THE AVERAGE FOR STATE AND LOCAL GOVERNMENT, FY12-FY % 18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% FY12 FY13 FY14 FY15 FY16 Loudoun County Average Based on the variation in years of service, the distribution within the career path levels should vary. Exhibit 2-9 captures the distribution of incumbents by quartile and career path level (pay grade). The career path levels with the highest concentration of first quartile incumbents include: F1, G2, G3, G4, S1, U1, and U2. When these career path levels are compared to the years of service in Exhibit 2-7, it is interesting to note that S1 is the only career path level with an average tenure of more than 10 years, yet more than 50 percent of incumbents are in the first quartile. Evergreen Solutions, LLC Page 2-10

32 Chapter 2 Technical Assessment EXHIBIT 2-9 TENURE BY QUARTILE BY CAREER PATH LEVEL Compression Compression is a common concern among and managers, alike. Compression occurs when a sufficient rank ordering or pay difference does not exist between incumbents with different levels of experience, longevity, skill, or responsibility. Although compression exists within the same classification as well as across classifications, concerns most often arise when compression exists within the same classification. One of the most common complaints relate to employees with less experience being compensated at the same level as those with more experience. Specifically, this phenomenon occurs when new hires are brought in at approximately the same pay level as employees with some tenure with the organization. In order to assess the degree of compression, a high level analysis was conducted assuming a 30 year career and a linear progression. Exhibit 2-10 captures the results of the analysis by presenting the percentage of staff per career path level that fall below the expected pay level. The share of those falling below the expected amount varies between zero and 100 percent. Clearly, the analysis reveals that some career path levels possess a lack of incumbent movement over time. The highest concentration is in the F (fire and rescue), O (Sheriff s officers), and G (support services) bands. Evergreen Solutions, LLC Page 2-11

33 Chapter 2 Technical Assessment EXHIBIT 2-10 HIGH LEVEL COMPRESSION ANALYSIS BY CAREER PATH LEVEL (INCLUDING MARKET ADJUSTMENT) UC U9 U8 U7 U6 U3 U2 U1 T4 T3 T2 T1 S4 S3 S2 S1 P4 P3 P2 P1 O3 O2 O1 M3 M2 M1 G4 G3 G2 F8 F7 F6 F5 F4 F2 F1 E4 E3 E2 A4 A3 A2 A1 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% % Leadership Concerns The growth of the County and the associated workforce complexities has created opportunities as well as challenges. As part of the leadership s desire to build on the opportunities and address the challenges, human resources staff presented a summary of concerns to the Board of Supervisors on May 19, Evergreen Solutions, LLC Page 2-12