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WS – 8 WORK SESSION STAFF REPORT Work Session Item No. 8 Date: June 3, 2019 To: City Council From: Karissa Bartholomew, Human Resources Manager Re: Job Classification and Compensation Study Background In December 2018, the Council was made aware of the City’s issues with pay equity compliance, which is a result of discrepancies in the City’s job classification system and compensation plan. Last year’s compliance was only achieved by a pay increase to a female position. The City’s job classification system assigns each position points based on job duties and technical skills. When job points do not correspond with the expected pay, any variance creates a domino effect within the compensation plan. Currently, several positions are above or below market. Based on what we are being told by consultants and Minnesota Management & Budget that oversees pay equity, making adjustments to select positions will no longer suffice. Recommendation Staff is recommending the City perform a comprehensive classification and compensation study on all City positions in 2019 to redress internal equity issues and to ensure compliance with pay equity. Below are two options for the Council to consider. 1. Bring in a compensation consultant. The obvious advantage is that the study would demonstrate credibility, neutrality, and objectivity. A complete classification and compensation study would cost the City $30,000. However, the cost can be significantly reduced by having staff work with the consultant. Staff received a quote from Keystone Consulting to perform this study at a reduced cost of $10,500. 2. The compensation study could be performed in-house; however, the current benchmarking methodology would need to be abandoned. This would require access to the Hay job evaluation system database, which is proprietary and would cost $6,000. Unless the Council is committed to an annual fee for continued access, staff does not recommend the Hay evaluation system. Unlike Hay, Keystone uses its own job evaluation system. Once the compensation study is completed, the City has full access to Keystone’s evaluation system, which would save the City money in the long run.