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CITY COUNCIL AGENDA ITEM 3B STAFF ORIGINATOR: Sarah Cotton, City Administrator MEETING DATE: December 14, 2020 TOPIC: Consider Resolution No. 20-162, Approving the Keystone Compensation Classification System VOTE REQUIRED: 3/5 BACKGROUND In December 2018, the City Council was made aware of the City's issues with pay equity compliance and internal equity. These issues are a result of discrepancies in the City's current Hay job classification system and compensation plan. 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. In June 2019, staff recommended that the City perform a comprehensive job classification and compensation study on all positions to rectify internal equity issues and to ensure compliance with pay equity moving forward. Staff was directed to move forward with the study as proposed. In June 2020, Saado Abboud from Keystone Compensation Group, LLC attended the City Council Work Session to present the results of the compensation study and discuss potential action regarding implementation. The Compensation Study Report is attached for reference. The main objectives of the study were as follows: 1. Review and update all job descriptions, which included input from employees and supervisors confirming job responsibilities. 2. Evaluate City jobs and confirm internal equity. A new job point evaluation system was implemented. 3. Define the market for talent amongst peer groups and prepare a competitive market analysis for the City's compensation program. 4. Develop a new salary range matrix that supports internal equity and puts the City in a competitive market position. 5. Evaluate the budget impact for implementing new salary ranges. The indirect objectives were to attract and retain qualified employees and to ensure compliance with the Local Government Pay Equity Act (M.S. 471.991-471.999). Under the new Keystone Job Classification and Compensation Plan, the number of job grades will decrease from 27 to 16. Salary ranges for job grades 180 and lower have six steps to the maximum instead of zero to five, with a step progression of 2.75% instead of 4.2% to 14.9%.