Board Members present: Susie Smith, Jeff Osanka, Mike Dyer, and Dorothy Anderson. Commissioner Bishop was excused.
Others present: Randy Berggren, Cathy Bloom, Deborrah Brewer, Tom Buckhouse, Garilyn Crowley, Sandy DeLuna, Marty Douglass, Chris Evonuk, Dick Helgeson, Garry Kunkel, Roseanna McArthur, Jean Meyers, Kris Middlewood, Mark Oberle, Jim Origliosso, Charlotte Pearce, Mat Sprecher, Alison Tarbaux, Dick Varner, Shirley West, Debra Wright, and Krista Hince of the EWEB staff; Lance Roberts, the Register-Guard; and Rick Matcovich, Chris Cardwell, Cardwell Group Consultants.
President Smith called the meeting to order.
COMPENSATION UPDATE
Compensation Project Manager Jean Meyers said the purpose of this Work Session was to
Ms. Meyers noted that Commissioner Bishop's position regarding the Compensation Project was reflected in a memorandum distributed to the Board. She said Commissioner Bishop's comments would be considered during the Board's discussion following the presentation.
Chris Cardwell, Cardwell Group Consultants, presented a brief overview of EWEB's Compensation Philosophy.
Referring to a memorandum and attachments included in the meeting agenda packet, Mr. Cardwell presented a brief overview of EWEB's Competitive Market Analysis which compares EWEB's current compensation system with the market for various pay levels. He said the analysis reveals that EWEB is very competitive at lower pay levels and becomes less competitive as pay increases. In addition, the analysis illustrates how various market position choices would stack up relative to the market at the minimum, mid-point, and maximum pay levels. Mr. Cardwell stated that in keeping with the Board's values and compensation philosophy, staff has constructed three options for competitive position for the Board's consideration:
The first is a split market position with pay for positions over $70,000 set at the 50th percentile of market and 65th percentile for those positions paid less than $70,000. The 50th percentile for the 65 or so higher paid employees is a recognition of the limits that a public entity can pay. While the 65th percentile for the remainder of the staff limits the impact on employees.
The second is a split market position with pay set at 50th percentile for those over $70,000, 60th percentile between $40,000 and $70,000, and 70th percentile for those below $40,000. This is similar to the first but attempts to provide a premium to traditionally lower paid employees which some Board members believe are undervalued in the market.
The third is a plan which would start out with a split market position similar to the first one and then migrate over time to a single market position. This would mitigate the short-term impacts on employees with a longer-term goal of having "equity" by moving to a single market position for all employees.
Rick Matcovich, a consultant with the Cardwell Group, reviewed the assumptions included in the analysis, stressing that in the initial year, cost of the current compensation plan is estimated based on a three percent general wage adjustment and step increases for approximately 20 percent of the staff who are not at top step. Mr. Matcovich said the estimated cost of the new system in the first year is based on merit increases averaging four percent given mid-year to those employees who are within the salary range.
Mr. Matcovich stated that there is little financial difference between the three market positions, and little employee impact difference. He said the significant savings projected for year one are a combination of
Vice President Osanka expressed concern that including market data from outside the Eugene/Springfield area could skew the numbers due to the likelihood that those salaries are higher on average than local salaries. He wondered whether looking at a different "regionality" for each of the five pay range groups in some way skews the numbers. Mr. Matcovich responded that the numbers are not skewed because labor costs in Eugene reflect 100 percent of the national average. Vice President Osanka suggested that if EWEB's scope of jobs is not representative of the whole scope of Eugene jobs, EWEB's scope of jobs may not reflect 100 percent of the national average. Mr. Matcovich responded that he is confident that EWEB is representative of Eugene's scope of jobs, and that the numbers reflected in the analysis are accurate.
Vice President Osanka inquired as to whether the consultants perceive as a philosophical problem the use of regional and national averages as the means by which to base the market position for the $80,000 and above pay range. Mr. Matcovich said he did not perceive a philosophical problem or conflict with EWEB's Mission because customizing the geographic/industry "reach" is important to EWEB from a labor exchange standpoint. Vice President Osanka argued that EWEB should "equalize" by basing the market position for all EWEB positions on Eugene/Lane County averages.
Commissioner Anderson stated that philosophically, she favored the second market position because she thinks that the 50th percentile for the $70,000 and over group is politically easier, and she supports helping those employees at the lower end of the pay range. She said, however, that issue raised by staff regarding potential administrative problems associated with the second market position, concern her. She said she does not want administrative problems that will result in employees feeling they are being treated unfairly.
In response to the concern raised by Commissioner Anderson, President Smith proposed the following mitigation, in the form of a fourth market position option: a bifurcated split at the 60th percentile for positions earning $40,000 or under; and 55th percentile for positions earning over $40,000. She said this option provides consistency with the goals of the compensation plan, which is intended to be competitive rather than average, and provides some accommodation for the lower-rung positions with which she continues to be concerned.
With regard to setting pay at the 55th percentile for positions earning over $40,000, President Smith said addressing the compression at the top end of the range is the opportunity to address the local community's expressed concern. In terms of mitigating the administrative-related concern, President Smith proposed an overriding exemption wherein a supervisor maintains a minimum 10 percent gap between them and an employee. To the extent that the employee "bumps up" against the supervisor, the supervisor receives an increase.
Commissioner Dyer inquired as to the cost impacts of President Smith's proposal. Mr.Cardwell responded that it would provide more saving both in the short- and long-term. Commissioner Dyer expressed support for President Smith's proposal; however, he said he was concerned about the transition aspect.
Commissioner Anderson inquired as to whether Commissioner Bishop had expressed a preference for a single number market position or a split market position. Dick Varner, Fiscal Services Supervisor and compensation project team member, responded that his impression of Commissioner Bishop's position was that she preferred a single number position; however, she might be amenable to a split market position if it was part of a transition strategy.
Mr. Matcovich explained that since one of the Board's goals was to move to a merit-based pay system and long-term achievement of that goal is based on getting employees into their defined pay ranges, EWEB must consider how it will transition from the current pay system to a new pay system. He said the three alternatives proposed are:
Hold the pay of employees who are above their market based pay ranges constant until such time as increases in the pay range catch up. This is traditionally called redlining. For those employees who are redlined, there would be no provision for merit-based pay increases.
Redline employees, but allow merit-based lump sum payments for outstanding performance. This would provide some monetary performance incentive for redlined employees.
Redline for a period of time (three years) and then reduce pay for those employees who are above their pay range into the range over an additional three years. Thus, after six years all employees would be in their defined pay ranges and eligible for merit-based pay increases.
Mr. Matcovich said there is little financial difference between the three options.
Commissioner Anderson expressed support for Option 2. Commissioner Dyer and Vice President Osanka expressed support for Option 1. With regard to Option 2, President Smith expressed interest in the amount of money that might be involved. General Manger Randy Berggren clarified that redlined employees would still qualify for incentive pay. President Smith indicated support for Option 1.
President Smith said that while she supports Option 1, she was interested in developing something that could be offered as a reward given the number of persons who will be redlined. Commissioner Anderson said that if some form of recognition was available, she would support Option 1.
The meeting adjourned at 7:30 p.m.