Classification and Compensation Study Overview. Prepared for Transformation Task Force March 24, 2017

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1 Classification and Compensation Study Overview Prepared for Transformation Task Force March 24,

2 Project Scope: Jobs & Positions Impacted All MCCCD Employees, including: Regular Classified employees Skill Center employees Specially Funded employees Temporary part time (Phase II July 2018) Faculty - Market & Compensation Review Only (Phase II July 2018) 2

3 Project Scope: Timeline to Implement New classification structures: October 16, 2017 Performance based pay targeted for July 2018 Contingent upon a number of factors including Chancellor and Board Approval Policy development Training and development for leaders Predictive funding 3

4 Compensation Philosophy We are committed to a fair, consistent, flexible and competitive classification and compensation program that supports the mission and vision of MCCCD. Our classification and compensation program is designed to attract and retain high quality and diverse workforce through competitive and progressive pay practices that are externally competitive and internally equitable; and supports a fiscally responsible pay program. 4

5 Current State 1855 Job Class Titles (350 single-incumbent jobs) 9 Salary Schedules Step Based No Internal Equity Review Practice Inconsistent Policies/Application District-wide inconsistencies (e.g. classifications and pay) When COLA awarded: salary structure moves same % as employee pay (i.e. no employee salary advancement) 5

6 Study Does Not Address Workload Not intended to address workload issues Organization Not intended to address organizational structure Span of Control Not intended to redirect span of control Performance Not intended to identify the relative performance of employees 6

7 Who We Are Classification Analysis Process Consolidation of classes was undertaken where multiple current levels of classes addressed work that could not be distinguished or to address greater equity in same type/levels of work across job families and series. Level I Level II Level III New Consolidated Class The intent is to Classify Work and Pay People GALLAGHER BENEFIT SERVICES, INC. ARTHUR J. GALLAGHER & CO. BUSINESS WITHOUT BARRIERS 7 7

8 Proposed Study Outcomes Create valid, reliable classification and compensation system Designed to be fiscally responsible as stewards of public funds Externally market competitive/ internally equitable Recruiting and retaining top talent Best practices and industry standards District-wide consistency and equity 8

9 Proposed Study Outcomes (continued) Compliance Up to date and defensible plan Complies with pay equity laws Complies with Fair Labor Standards Act (FLSA) and Americans with Disabilities Act (ADA) 9

10 Proposed Study Outcomes (continued) Job title consolidation from 1855 to under 500 Based on Job Family/Job Classification - not on person doing the job Includes career paths and job families more clearly defined career paths/opportunity for movement throughout the district within and outside of job families 10

11 Proposed Study Outcomes (continued) The new systems will support the use of performance-based programs Step equals entitlement Performance based = appropriate reward for performance* Implementation of the plan will result in no salary, benefit, or leave of absence reduction of persons in filled positions 11

12 Initial Study Observations Too much overlap with job classifications Job class descriptions are narrowly written with few distinguishing characteristics Based on review, further collapsing of jobs is recommended 12

13 Initial Study Observations (continued) Minimum qualifications are weak or nonexistent on the job class description resulting in inconsistent or inappropriate job postings creating potential FLSA and ADA issues Misuse of the classification system for compensation purposes 13

14 Classification Outcomes Have collapsed job classifications for classified staff (regular, skill center and specially funded) from well over 1000 to around 250 Standardized levels and titling Fewer levels and one-off job classifications General over inflation of titles e.g. too many Directors, too few Supervisors 14

15 Working Titles Will be allowed to provide clarification only e.g. Applications Programmer Java Programmer Will not be permitted to misrepresent level e.g. Fiscal Coordinator Fiscal Director 15

16 New Classification Structure Current New JOB FAMILIES within the Classification System - Broadly-related classifications based on the field of work, used as a means of organization CLASS SERIES within the various Job Families - Closely related classifications that represent a possible career path for employees JOB CLASSES within the various Class Series - Official, standardized title that represents a specific type and level of work N/A 28 N/A * 249 (Classified Staff) * Total all job classifications: Faculty (289), Classified, Spec Funded, and Skill Center (1128), and Temporary Pt time (445) ** 1128 Classified Staff reduced to

17 Moving from Step System to Open-Range Pay Structure Support culture and business objectives Flexibility Precise and fiscally responsible Easy to explain & aligns with Industry best practice Minimizes entitlement Lays foundation for performance based pay environment 17

18 Benefits of Performance Based Pay Performance based pay offers long-term competitive advantages Drives high performance Increases recognition of high-performers Increased recognition drives increase in morale Employees feel valued by the organization, more connected to the mission when recognized and rewarded for performance Increases Accountability to tasks, mission Likelihood of achieving organizational goals through financial incentives Facilitates movement away from an entitlement culture 18

19 Examples of Potential Pay Strategies Base-Pay Increases Permanent increases to employees pay Merit Increase Pay increase based on performance, typically tied to a performance review Market Adjustment Pay increase based on a classification being significantly underpaid vs. the market In-Range Progression Discretionary increase based on any number of factors set in policy (ex: additional scope/duties that do not warrant reclassification) Internal Equity Adjustment Base pay increase used to correct an inequity between peers or between a supervisor and subordinate 19

20 Examples of Potential Pay Strategies Variable Pay Increases Short-term or one-time payments that are not permanent or part of base pay Performance Award One-time payment awarded based on performance in-lieu-of a permanent base pay increase (this strategy became very common in merit-based orgs during the Great Recession) Spot Incentive A small, one-time payment awarded on the spot to recognize an employee for some feat as determined by policy 20

21 Variable Pay Increases continued Goal-based Incentive A one-time award given typically to a team, but sometimes individually, for completing a difficult project or objective Stipend An ongoing payment, not part of base pay, that continues to be paid as long as original criteria applies (e.g. uniform allowance or shift differential) 21

22 Spot Incentive: One time/lump sum bonus. Does not apply to base. EX: Sally Smith is awarded a spot incentive in recognition of cost savings for the department in implementing a new process saving the department $15,000 annually. $500 Spot Incentive is awarded Maricopa Departments submit a spot incentive plan for approval prior to implementation of awards EE incentive shall be consistent with approved plan criteria Incentive not be included in calculation of OT Spot incentives limited to no more than $X max dollar amount ($2,000) per employee per year Plan for department should be included in the overall budget limited to X% (2%) of the departments personal services base 22

23 Goal-based Incentive: One time/lump sum bonus. Does not apply to base. EX: Mary Little is awarded a goal-based incentive recognizing the achievement of an established performance target(s) or goal(s). Awarded a $1,000 Bonus for achieving the completion of a critical department initiative ahead of schedule which resulted in significant cost savings ($30,000). Maricopa Departments submit a goal-based incentive plan for approval prior to implementation of awards Plan includes measures of success; measures and goals reviewed annually When goals achieved and incentive paid; new goals are established EE incentive shall be consistent with approved plan criteria Incentive will not be included in calculation of OT Goal-based incentives limited to no more than $X max dollar amount ($3,000) per employee per year Plan for department should be included in the overall budget limited to X% (2%) of the departments personal services base 23

24 Essential Elements of Performance Based Pay System Requires support from top management Well-defined objective performance standards Performance factors that are in an employees control Effective management and timely rewards Adequate funding Built upon foundation where base compensation that is internally fair and externally competitive 24

25 Market Review Results In general, Maricopa is considered competitive with the market On average, Maricopa is 2.2% above market 10.5% of benchmark jobs are more than 15% below market 62.4% of benchmark jobs are considered at market 27.1% of benchmark jobs are more than 15% above market 25

26 Moving Employees to New Pay Structures Green Circled (below min): 108 Employees Red Circled (above max): 662 Employees Representative of employees who are paid above the market No reduction in salary is recommended Limiting future movement until the structure catches up is best practice Maricopa will have several areas heavily impacted by this, such as admin support 26

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