SALARY NEGOTIATIONS BASED ON CLASSIFICATION OF JOB EVALUATION SYLVIA A. SEABORN Zone 7 Water Agency is a water resource management agency. We wholesale treated water to over 150,000 people in the Tri-Valley area comprised of Livermore, Pleasanton and Dublin. We also service some unincorporated areas in Eastern Alameda County. Zone 7 also owns and maintains approximately 35 miles of flood control channels and drainage facilities. Zone 7 Water Agency has a unique relationship with Alameda County. It is managed by the General Manager, who is a contract employee for the Zone 7 Board of Directors. The General Manager supervises the Zone employees, who are actually employees of Alameda County and are subject to the provisions of County policies and procedures. In 1993, the Alameda County Board of Supervisor granted the Zone 7 Board of Directors the authority to set salaries for Zone 7 employees. Zone 7 employees, however, would remain employees of Alameda County for all other purposes, for example, receive the same benefit package as other County employees and be governed under the jurisdiction of the Civil Service Rules and Regulations. When this separation occurred, all classifications in Zone 7 were 1
reclassified, and made unique to the Agency. The result of this separation is that Zone 7 employees now bargain with Alameda County for the benefits portion of their compensation package and with the Zone 7 Board of Directors for the salary portion of the compensation package to arrive at their total compensation package. Thus, Zone 7 employees are governed by two separate Memoranda of Understanding, one under Alameda County for benefits and one under Alameda County Flood Control & Water Conservation District, Zone 7 for salaries The Zone 7 Board of Directors has established a policy to compensate Zone 7 employees competitively with other agencies so that the Agency will have the ability to recruit and retain well qualified employees for all positions. The Board s policy defines competitive compensation as being within 4.5 percent of, or at, the median of the labor market. Thus, the intent of the Zone Board is to make sure that the compensation employees receive is competitive with those of other employers who are in the same business as Zone 7. For example, positions held by Zone employees are paid fairly in relation to other positions that perform the same job duties and responsibilities in agencies that are in the same industry as Zone 7. Zone 7 negotiates with four different unions, as well as with the unrepresented managers. 2
This paper will address the process Zone 7 utilizes in negotiating and implementing a competitive salary structure for its employees. It will focus on the methodology of using classification of job evaluation as the primary factor in determing the salary for its employees. At each step in the negotiating process, only information regarding that particular step is provided to the union bargaining teams, and the unrepresented managers. In other words, they receive information sequentially. Once that step is mutually agreed to, then we proceed to the next step. For example, all information regarding the selection of agencies to be included in the labor market is distributed, discussed and agreed upon, the next step in the process is to add the class and job descriptions (on the Summary Data Sheet), etc. The final data to be filled in on the Summary Data Sheet is the salary information for each agency surveyed and how it relates to Zone 7 s salaries. Zone 7 s salary plan is based on classification of job evaluation. Classification may be defined as a systematic process for grouping jobs into common titles based on similarities in duties, responsibilities, and knowledge, skill, and ability requirements. 1 The factors involved in developing the process for a pay plan consists of defining the labor market, selecting benchmark 3
classes to be surveyed, actual surveying and analyzing the data, and interpreting the findings in order to develop pay structure recommendations 2. The approach that Zone 7 uses is unique in that we actively solicit participation from all union bargaining teams and their members, and unrepresented managers and with the Board of Directors throughout each step in the process, including defining the appropriate labor market and job classification matches. The process is a mixture of both traditional and interest based bargaining. Zone 7, along with the consultants, meet with the union bargaining teams, and unrepresented managers, during each step of the process to answer questions they may have, and to provide them with hard copies of data used in the survey. There is a free flow of information across the table. This provides consistency of information, and lends itself to a better understanding of interests from both the management side and the union side. Each side is working from the same base of knowledge. A labor market is defined as a group of employers the organization expects to compete with for employees. For example, it includes employers with similar products and/or services, similar jobs, or the likelihood of employees comparing salaries with or being recruited by these organizations, geographical influences, and comparable size. As mentioned above, the 4
compensation plan is based on the classification method of job evaluation. The method of job evaluation is basically a market driven system. External wage and salary data is required to establish compensation levels for classifications in this type of system. This method does not lead directly to measures of job value, although, it does prove to be a valuable system for providing internal pay equity. For example, salaries may be adjusted based on internal relationships, if there is a pay difference between two classifications, for classes which do not yield market data and are within the same broad job family. 3 The first step in the process is the hiring of consultants to research, select and recommend ten agencies that would be in Zone 7 s labor market, that is agencies that are comparable to Zone 7 demographically. The labor market data is presented in table form and illustrates how the agencies compare with Zone 7 in the following areas: number of employees, the operating and total budget, number of treatment plants, the capacity of the plants, average product, agency type and services offered. The data is then mailed to the union bargaining teams, and the unrepresented managers, before it is brought to the table. The union bargaining teams are asked for their input in terms of satisfaction of the agencies selected, or if they are not in agreement with the selection of agencies surveyed, they may suggest other agencies as 5
alternates. However, they are asked to be specific in their responses as to the reasons why or why not they want such agencies added and/or deleted in the salary survey, in other words, what their criteria is for selecting/deleting these agencies. The negotiation process then commences for the selection of the agencies to be included in the survey. The Management negotiating team and the consultants meet with the union bargaining teams, and the unrepresented managers. The consultants provide background information as to why they selected and recommended these agencies to be included in the labor market data. If other agencies are suggested as alternates by the union negotiating team, and unrepresented managers, the consultants discuss the demographics for these agencies. They explain the reasons why these alternates would be or not be a match. Thus, Management and the union share information freely and are allowed to discuss the agencies selected at great length in order to come to an understanding of why each side wants certain agencies to be included and/or deleted from the survey. During the 1996 negotiations, the resources used to compile the list of employers included in the labor market were derived from past salary surveys from Alameda County, ACWA; and, suggestions from Zone 7 employees. This list was evaluated for comparability 6
relating to similar functions, products and/or services, and other special characteristics and influences on the labor market such as geographical proximity to Zone 7. Agencies within approximately a 30-mile radius were selected. Zone 7 is located in close proximity to several large water agencies, agencies with larger budgets and more employees than Zone 7. However, these agencies were included as part of the labor market for various reasons, i.e. these agencies not only represent major market influences, but may be considered as a source of recruitment for industry specific classifications. The Management negotiating team then meets with the Board of Directors to present the out come of this first step in the process. We present the labor market data and reasons for selecting the ten agencies, as well as presenting the bargaining unions and/or the unrepresented managers, selection/deletions of agencies and the criteria for their selection/deletion of such agencies. If the employees and the unions reasons for selecting certain agencies are not compelling enough for the Board to agree to their selection, the Board may suggest alternate agencies. If this is the case, this information is then presented to the employees and the unions. Otherwise, we use the surveyed agencies recommended by the consultants. 7
With selection of the agencies completed, the next step in the process is choosing classes and class descriptions from surveyed agencies for comparability to Zone 7 s classes and class descriptions. In order to get a true understanding of comparability, information shared with the union bargaining teams, and unrepresented managers are class descriptions and organizational charts from Zone 7, as well as those agencies that are included in the labor market surveyed. Not only do we provide information for that particular class, but also for the class above and below for those agencies included in the survey and for Zone 7, i.e., if the class is entitled Water Resources Engineer III, the job descriptions for the next level up is Supervising Water Resources Engineer, and the class for the next level below is Water Resources Engineer II. Because there are variations in organizational structure and work duty assignments, not all jobs are a good comparison with other agencies. So benchmark classes (which are well defined jobs) are used in order to get a comparison. Structured questionnaires about each classification are prepared and sent to the surveyed agencies. Follow-up phone calls are made with Human Resources and in some instances, with incumbents themselves in order to obtain accurate information. When all the data is compiled, it is summarized on the Summary Data Sheet for each class in Zone 7. 8
This Summary Data Sheet now includes the agencies in the labor market, class title and class description of comparable classes (to a particular class in Zone 7). The Summary Data sheet is mailed to the union bargaining teams, and the unrepresented managers before it is brought to the table. This second step in the negotiation process now begins for the selection of comparable classes. Identical duties and responsibilities are not always found from one organization to another because class descriptions are usually written to cover a broad range of duties and responsibilities. However, with all negotiating teams (management and labor) coming to the table with the same information, and with experts to interpret classifications issues, the hope is that it will not only educate employees but also save time and create an atmosphere of trust, while establishing a cooperatively working relationships between the two bargaining teams. Thus, the union bargaining teams, and the unrepresented managers, are free to ask the consultants questions regarding classification issues, get clarification on class titles and specific duties and responsibilities relating to a particular class/title. Also, they may even suggest changes to their own job specifications. If warranted, the suggested changes are incorporated. In addition, information regarding contacts at the agencies included in the survey are shared with 9
the bargaining unions, and the unrepresented managers, in the event they have questions, and, if they so desire, they may contact the same personnel that management contacted. Consistency in the information received by both management and the union bargaining teams and the unrepresented managers is such an important factor in this process. The Management negotiating team meets with the Board of Directors to update them on the results of this second step. We discuss the class title and descriptions and reasons for selecting these classes to be compared to those at Zone 7. We also present the concerns of the bargaining unions, and the unrepresented managers, if they are not in agreement with our selection. Again, we present their criteria for wanting to include or delete specific class titles and descriptions. The next step in the negotiation process is the third step, and that consists of filling in the blanks on the Summary Data Sheet with salary information. Added to Summary Data Sheet is the effective date of the salary, the minimum and maximum salary range, the per cent difference as compared to Zone 7, the rank of the agencies, how they compare to Zone 7, and the survey median. 10
The Summary Data Sheet with the salary information is mailed to the union bargaining teams, and the unrepresented managers. It now includes the name of the agency, the class title, effective date of salary, maximum salary range, the rate for each agency surveyed is expressed as a percentage of Zone 7 s current salary for that particular classification, the rank (data is in descending order, according to the maximum), and the class description. In addition, the Summary also illustrates the maximum median salary for the agencies surveyed, Zone 7 s salary for that particular class is listed and the median as percentage of Zone 7 s current salary. The median represents the middle value in a distribution, that is the value above and below which half of the survey values fall. Footnotes are included in the Summary Data Sheet to provide additional information as to job matches, to describe calculations, etc. The reason that we use the median is because Alameda County uses the median to calculate salaries for County employees and we are still tied to Alameda County. Thus, in order to be consistent, Zone 7 uses the median to set salaries. We are now ready for the fourth step in the negotiation process. With the salary information included the Summary Sheet, the Summary Sheet is now almost complete. The salary information is mailed to the bargaining unions, and the unrepresented managers. Again, 11
the Management negotiating team, the consultants and the union bargaining teams and the unrepresented managers meet to discuss salary calculations. The final step in the process is the salary analyses and recommendations. As mentioned above, Zone 7 Board of Directors intent is to maintain salaries at a competitive level with those agencies in the labor market. They have defined competitive level as being within 4.5 per cent of, or at, the median of survey data. The methodology that Zone 7 s utilizes is based on the classification method of job evaluation, which is a market driven system. This presents a strong case for the market survey data to be the primary factor in determining the pay level for any given classification. Thus, the recommendation was to bring the salaries to the market median, with consideration given to size of the organization, and internal relationships. The Summary data sheet now includes the salary recommendations for each classification. The salary recommendations are presented to the Board of Directors. The Summary Data Sheet with the recommendations are mailed out to the union negotiating teams and the unrepresented managers. Once the union bargaining teams and unrepresented managers have had ample time to review this information, they meet with the Management Negotiating team to discuss the salary information and parameters used in recommending the salary data 12
(i.e., internal pay equity, etc.) and, hopefully, arrive at mutual agreement. The intent is that once the labor market and the job descriptions are mutually agreed upon, and based upon the Zone s policy of paying a competitive wage within 4.5 per cent of, or at, the median, that there would be a consensus of salary range. However, if mutual agreement is not forthcoming, the union bargaining teams and the unrepresented managers have the options of presenting their case to the Board of Directors. This, in fact, occurred at out last negotiations in 1996 with one class. They felt that the median should not be used to set their salaries (because they were at the median) but that their salaries should be set at the same level of the agency that placed number one in the agencies surveyed. This particular class, however, did receive a cost of living increase, which brought them above the median. In summary, it is our expectation that by ensuring the objectivity and equability of the process that there would be less controversy when the actual salary recommendations were presented. The guiding principals are to keep the process market-based and as objective as possible, meaning no arbitrary adjustments to any particular class unless there was some compelling technical or budgetary reason to override the market survey results. If there was variation in the market, then that variation would be reflected directly in the salaries. We have 13
followed this process for several years and believe that the process is achieving its main objective and that is to reduce the adversial/controversial nature of salary negotiations, and to provide an objective methodology to determine competitive salary levels for each class, as well as to establish appropriate salaries in the agency. Sylvia A. Seaborn Human Resources Manager 6660 Owens Drive Pleasanton, CA. 94588 (510-224-7730, ext 228) April 3, 1997 14
END NOTES 1. Human Resouces & Compensation Management 2. Ibid 3. Ibid 15