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POLICY: COMPENSATION (Revised 05-24-10) SECTION 3.01 This Section of the Personnel Manual establishes policies governing compensation. The objectives of this Section are as follows: To develop and maintain a Comprehensive Policy which will attract and retain competent personnel. 2. To provide an environment in which employees will be encouraged to develop their abilities and effectiveness in performing their assigned duties. 3. To recognize the quality of job performance demonstrated by each employee. There are three Phases of the Compensation Policy: Phase I. Five-Step Compensation Plan Phase II. Annual Compensation Adjustment; and Phase III. Pay Equity Compliance PHASE I. FIVE-STEP COMPENSATION PLAN The City uses a five step compensation plan for regular, full-time and part-time employees not represented by a collective bargaining unit. The five step plan is the first phase of the overall compensation policy and shall consist of five increments with the highest step, Step 5, representing 100% of the position's maximum compensation rate. The steps shall descend from Step 5(100%) in increments of 5%, as shown below. STEP 1 STEP 1.5~` STEP 2 80% 82.5% 85% STEP 3 STEP 4 STEP 5 90% 95% 100% Progress throuq_h the Steps Generally, new employees will begin at Step 1 of the five step plan. (The City Council may however authorize a new employee to start at a step otherthan Step 1 in consideration of experience and qualifications.) Employees hired to start at Step 1 will be eligible for a half- step increase at six months of service equivalent to 82.5% of the Step 5 wage. Advancement to subsequent steps would occur on the employee's anniversary date until the employee reaches Step 5. Advancement to a subsequent step necessitates (1) a perFormance evaluation rated satisfactory or better by the employee's supervisor, (2) approval by the Department Head and City Administrator, and (3) approval by the City Council. The progression from Step 1 to Step 5 represents a span of four years. * Only new hires starting at Step 1 are eligible for the six-month half-step increase. 42