Board Members present: Dorothy Anderson, Susie Smith, Jeff Osanka, Mike Dyer, and Sandra Bishop.
Others present: Randy Berggren, Will Bondioli, Tom Buckhouse, Marty Douglass, Dick Helgeson, Garry Kunkel, Roseanna McArthur, Jean Meyers, Kris Middlewood, Jim Origliosso, Dick Varner, Shirley West, and Krista Hince of the EWEB staff; Chris Cardwell, Consultant; and Kim Kunkel, Minutes Recorder.
President Anderson called the meeting to order.
COMPENSATION PLAN
Human Resource Specialist Jean Meyers said this Work Session would address
She said the Board would be asked to suggest additional direction regarding salary structure and market parameters for salary.
Referring to a series of overhead displays concerning alternative approaches for key base pay elements, copies of which were distributed to the Board, Consultant Chris Cardwell reviewed an analysis of six alternative work evaluation approaches. The analysis measured each approach in terms of
With regard to their alignment with philosophy, the alternative work evaluation approaches were rated, as follows:
Market Slotting: Poor alignment
Point Factor: Poor alignment
Role Based: Stronger alignment
Single Rate: Poor alignment
Step Rate: Poor to moderate alignment
Merit: Moderate alignment
Cost-of-Living: Poor alignment
Referring to the role-based work evaluation approach, in which market pay levels are used to establish the pay ranges for different levels of work within a "function," Mr. Cardwell explained that a single function includes multiple levels of work. He said the salary for a particular position is determined by drawing a single line between horizontal and vertical categories, which include such factors as job complexity and level of leadership and knowledge required, until reaching a single point on a "salary band."
Referring to the single rate approach, Vice President Smith suggested that an additional weakness is poor morale among employees. Mr. Cardwell responded that some organizations expect the single rate approach to improve morale due to the non-competitiveness it fosters. Ms. Meyers noted that this approach produces a high satisfaction rate among electric crafts workers because it is traditional, predictable, and situates them with their colleagues. Commissioner Osanka suggested the possibility of using the single rate approach in conjunction with another approach in order to create a counterbalance.
Referring to an overhead display, Mr. Cardwell presented a sample merit pay approach, noting that the most common merit pay structure is one in which a level of performance results in a certain percentage of pay increase, including zero.
Vice President Smith inquired as to whether there is data that shows this form of merit based pay does not yield the same result as the "step" approach, in that employees receive an automatic pay increase. She said it seems the merit pay structure may have that potential. Acknowledging that the "step" approach and the merit pay structure may result in such automatic pay increases, Mr. Cardwell said an organization can avoid the situation by building in some sort of measurement or process by which it evaluates how managers are evaluating the performance of employees. Mr. Cardwell said there are studies which show that while allocating a percentage of pay increase based on a level of performance is a fairly imperfect system, it is likely the best option if an organization utilizes a merit pay structure.
President Anderson said she was more comfortable with the Cost-of-Living Increase (COLA) than the merit based pay structure in which there is no guaranteed increase.
Mr. Cardwell presented an overview of alternative approaches, in terms of work descriptions, role evaluation, pay structure, and pay delivery, that can be used in each type of base pay systems. He then presented an overview of the following alternative approaches based on EWEB's philosophy:
Type of Pay System: Role-Based
Work Descriptions: Simplified
Market Pay Analysis: Continue Current Approach
Role Evaluation: Role Based
Pay Structure: Merit (Step Rate)
Pay Delivery: Merit (Merit-Based Step)
Vice President Smith expressed support for the suggested approach based on EWEB's philosophy, noting the following caveat: job descriptions should be simplified, but not to the extent that they fail to meet Americans With Disabilities Act (ADA) requirements. Commissioner Dyer echoed Vice President Smith's support for the above approach, noting that he liked the latitude of awarding increases of between zero and 7 percent. He suggested awarding such increases in a lump sum rather than the salary increase or combining a lump sum and increase.
Commissioner Osanka said he would like to have a "check" against managers who consistently rate employees high in performance evaluations. He suggested a system in which managers can allocate a certain number of "outstanding" ratings. Vice President Smith said she does not support instilling competition among staff. She said such competition would be destructive to the reinforcing message EWEB is attempting to send via this compensation plan.
President Anderson expressed support for the suggested approach.
Commissioner Bishop said she does not see how a merit system can be less subjective than a point system. She said she wanted more evidence that a merit system will provide assurance to employees. Mr. Cardwell responded that the point factor system places different jobs into appropriate pay ranges and has nothing to do with how employees are paid. He said developing a performance review that clarifies employees' roles in the organization will result in a less subjective evaluation process. Commissioner Bishop said the suggested approach seems too complex.
Commissioner Osanka said he shares Commissioner Bishop's discomfort with the suggested approach. He said the process is terribly bureaucratic and if the language of the plan is too bureaucratic, it will be extremely difficult to communicate to employees. Commissioner Osanka said he does not view the proposed approach as an improvement to EWEB's current compensation plan and pay structure.
Ms. Meyers clarified that staff was requesting general direction only. She said staff would conduct analyses, gather additional data, and return to the Board on January 6 with information concerning the role of incentives in the plan. She said staff will return to the Board in mid-spring to present a proposed pay delivery structure and discuss the risks and benefits of implementation.
Commissioner Bishop said she would be more comfortable if provided with examples of merit based systems currently in place in organizations. Mr. Cardwell said merit based systems are specific to the needs of each organization and such examples would not likely be applicable to EWEB. Commissioner Bishop said she might benefit from meeting with Ms. Meyer to discuss her concerns. President Anderson suggested that staff provide Commissioners Osanka and Bishop with informative articles concerning compensation.
The meeting adjourned at 7:50 p.m.