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1982-123-Repealing Resolution 1981-146 And Approving Revised Managements Performance And Compensation Plan For The Town Of Los GatosRESOLUTION NO. 1982 -123 A RESOLUTION REPEALING RESOLUTION 1981 -146 AND APPROVING REVISED MANAGEMENT PERFORMANCE AND COMPENSATION PLAN FOR THE TOWN OF LOS GATOS. BE IT RESOLVED, that Resolution No. 1981-146 ( "A Resolution Approving Proposed Management Performance and Compensation Plan for the Town of Los Gatos ") is hereby repealed; and BE IT FURTHER RESOLVED that the revised MANAGEMENT PERFORMANCE AND COMPENSATION PLAN proposed for the Town of Los Gatos (a copy of which is attached hereto) is hereby approved. PASSED AND ADOPTED by the Town Council of the Town of Los Gatos, California, at a regular meeting held this 21st day of June , 1982, by the following vote: AYES: COUNCIL MEMBERS Ruth Cannon, MarLyn J. Rasmussen and Mayor Peter V1. Siemens NOES: COUNCIL MEMBERS Thomas J. Ferrito ABSENT: COUNCIL MEMBERS Brent N. Ventura ABSTAIN: COUNCIL MEMBERS None SIGNED: / AYOR F THE TOWN OF LOS GATOS ATTEST: CLERK OF THE TOWN OF LOS GTOS Town of Los Gatos MANAGEMENT PERFORMANCE AND COMPENSATION PLAN The Town management performance and compensation plan emphasizes performance demands while at the same time providing adequate compensatory incentives. This plan is based upon the assumptions that: 1. Managers are not extended technicians but rather are individuals with the unique responsibility for analyzing and synthesizing the input of subordinates, peers, and the public in making decisions regarding the allocation of human and financial resources for which they should be held accountable; and 2. A compensation plan for management should not just provide a financial gain for employees but should also create direct benefits to the Town organization and the public it serves. The overall objective of the plan is to establish regularly utilized, prac- tical, and uniform performance measurement and related compensation procedures. It is anticipated that adoption and implementation of this plan will solidify management from a labor relations and morale standpoint and will increase productivity in response to Town Council policy decisions, administrative direction, and resident needs. The processes by which compensation will be set will permit the Town to attract and retain competent personnel and to encourage their professional development. Individual salaries and the supple- mental benefits which form the compensation package will no longer be set based upon historical precedent but upon clearly delineated, measurable standards of performance understood by all levels of management. PLAN ELEMENTS Participants Attached as Appendix A is a list of the positions designated as management. The list includes department heads, division heads, and other professional and administrative level personnel whose scope of responsibility have a major impact upon the organization and the services it provides. Salary Sound personnel practices dictate that maximum salary levels should be based on the following considerations: 1. Prevailing labor market conditions. 2. Ability of the Town to pay. 3. Local cost of living. 4. Organized employee group increases. Page 2 5. Internal organizational relationships. 6. Each position has a maximum dollar value to the community. Good management practice dictates that individual management salaries should relate the above considerations to predetermined levels of performance. The salary setting process outlined in this section and the procedures recommended for future utilization are intended to weight the above elements appropriately and apply them systematically. The Town Manager completed a survey of local municipal employers and has reviewed various internal salary relationships among Town management personnel. On the basis of this analysis, management salary levels are established for the FY 1982 -83 fiscal year as detailed in Appendix B. 1. Market salary surveys will be conducted periodically. Additionally, in non - survey years, recommendations for adjustments to levels will be offered in order to maintain the competitiveness of the Town's salary structure. 2. Funding for management salary increases will be requested by the Town Manager in the proposed operating budget. These requests will take into consideration the Town's ability to pay, prevailing wage concept, and increases provided organized employees. The sum requested will be sufficient to provide both prevailing wage maintenance adjustments and incentive increases to deserving employees. However, all funds will be allocated based upon the outcome of performance evaluations (see sample, Appendix C). 3. After adoption of the Town's operating budget, managment salary funds -- less ten percent (108) -- will be allocated to departments on the basis of the relation each department's management payroll has to total manage- ment payroll. Department heads will allocate these appropriations to subordinates based upon the results of the completed performance evaluation process described in the Evaluation element of the program. Increases will be granted to department heads by the Town Manager on the same basis. The Town Manager will review all completed performance evaluations and will have final authority to approve all salary changes for management employees. 4. The ten percent (10 %) of management salary funds not allocated to depart- ments will be reserved for use by the Town Manager. The Manager may utilize these funds and funds remaining after performance increases are allocated by department heads to recognize exemplary performance as defined in the Evaluation element. Exemplary performance increases will provided on a one -time, lump -sum basis, and shall not be considered part of an employee's base pay (see sample, Appendix C). Page 3 5. An employee's actual salary may not exceed the maximum unless an exemplary performance increase has been granted. An employee's actual salary may fall anywhere below the maximum. Supplemental Benefits Benefits should be considered part of compensation paid. As such, the benefits provided by the Town should be competitive with the market. In order to determine the position of the Town's benefit package in relation to the "competition," benefit information was requested from the agencies partici- pating in the salary survey. In addition to being competitive, a benefit program should be feasible from an administrative standpoint and should be integrated fully into the compen- sation and performance plan. The benefit package should be complementary and supportive and viewed in perspective with the Town's ability to pay, the program provided organized employees, and internal classification relationships. The full implementation of the total compensation and performance concepts outlined in this plan will require that changes be made in the methodology by which supplemental benefits are allocated. The actual dollar amount (up to the maximum specified for each grouping) granted to each individual will be supported by his /her performance evaluation. Each individual may then use his /her benefit grant to "purchase" those items which best suit his /her personal needs. A list of dollar cost items will be developed by staff and made available to employees. The list will contain a variety of benefits limited by administrative load and market availability. Appendix D lists the current benefit schedule and benefit selection guidelines. Evaluation The key element of this plan is the performance evaluation system. The effectiveness of the system is dependent upon the planning that supports it and may be measured by the quality of actual employee performance. The primary purpose of the appraisal program is to motivate each employee to work at his /her capacity. A secondary purpose is to provide a basis for recognizing personnel in accordance with their individual performance and to identify those employees whose work is not in keeping with appropriate standards. In the absence of a uniform and practical methodology for evaluating performance, the overall goals and objectives of the organization may not be translated into action plans, com- pensation adjustments may be made on the basis of intuition or haphazard observation, and employees may not be held accountable for important decisions. As conceived in this report, the Town's management appraisal program is designed as a communications process which not only permits but requires inputs and feedback from all organizational levels in establishing goals, objectives, work responsibilities and standards of performance measurement. The methods and Page 4 techniques proposed are intended to be applied uniformly in all departrments and divisions. The program is flexible enough to be adaptable to the philosophy, characteristics and operational methods of various organizational units. Adop- tion and implementation of this plan element will establish a more accurate, objective, and reliable method of measuring performance that will benefit the Town and develop the individual manager. The process of establishing performance standards begins with the adoption by the Town Council of the budget. The budget represents the resources allocated to attain certain organizational objectives. From the objectives set in the budget, the manager responsible for each organizational segment (department division, section) will develop a management plan which will indicate each segment's goals, objectives, and work program as they tie into the goals, objectives, and work programs of the next highest organizational segment. All performance targets will contain milestone dates for interim measurement purposes. It is anticipated that factors outside the individual employee's controlmay occur affecting due dates. These conditions will be discussed and, at the direction of the evaluator, dates may be modified at full point value. All contract projects completed in the assigned year will receive a numerical score depending on final completion date and alternative value of the project. The performance targets (management performance contract) for an individual will consist of his /her specific work responsibilities to be accomplished during the fiscal year. Each performance target will be accompanied by performance measurements (quantitative or qualitative). This approach assumes that extensive dialogue will occur between an individual and his /her immediate superior in the establishment of work programs. It also assumes that there will be a continuing dialogue regarding work programs throughout the term of the contract. Contracts may be changed at any time with mutual consent of the parties to the contract. Performance targets will be defined in quantifiable terms where possible. However, it is recognized that not all programs can be fully evaluated in quan- tifiable terms. It is also recognized that many programs are influenced by uncontrollable external forces. Therefore, performance contracts may include a performance target entitled "Program Evaluation" with a value not to exceed 25% of the point value assigned to the program. The point score awarded this performance target will be based on an overall program evaluation considering any factors not measured by specific performance targets, and the response of the program to uncontrollable external forces. The performance target may also be used to recognize negative performance. It should be noted that each objective and activity will be weighted by assign- ing a point value to it. Performance values are derived by multiplying point values by the percentage of results achieved. Completion of all work programs will result in the attainment of all objectives and a performance value score of 100. Incomplete accomplishment of work programs will result in a score of Page 5 less than 100. For compensation purposes, the performance score is expressed as a percentage and multiplied by the maximum percentage salary increase available to management employees. An employee must achieve a score of at least 70 points in order to be eligible for a performance increase (see example, Appendix C). An employee may have up to ten (10) points added to his /her score based upon elements not contained in the formal management performance contract. These points may be granted by a supervisor based upon items such as the development and implementation of new programs; efficient and effective operation of on- going programs; completion of special projects; or accomplishments in areas of concern, such as conservation, interdepartmental communications, improved community relations, staff development, and quality of written or oral communi- cations addressed to superiors or the Town Council. Points added in this manner must be accompanied by written documentation as to the accomplishment or achievement and the basis for establishing the relative value. An employee may become eligible for an exemplary performance award by achieving a total performance score of 100 or more. The performance of such employees will be reviewed by the Town Manager, who may grant exemplary performance increases in the manner and up to the maximum dollar amount provided as discussed previously. All other performance appraisals will also be reviewed by the Town Manager (see sample, Appendix C). Draft management contracts shall be submitted to the appropriate manager no later than July 15 of each year„ Contracts will be finalized no later than August 1 of each year. Management performance shall be formally evaluated on a quarterly basis. The Manager or superior have a continuing responsibility throughout the year to review efforts vis -a -vis work program milestones and to take actions necessary to ensure performance targets are achieved. Any modifications which result from quarterly review will be considered by higher levels of management in accord- ance with the establishment of the employee's initial goals and objectives. It is anticipated that assumptions outside the individual employee's control under which goals and objectives are established may be altered. Through periodic per- formance review sessions (which may occur throughout the year), these conditions should be discussed and performance plans modified to include additions, deletions, and date changes with mutual consent of the employee and his /her immediate supervisor. The importance of the appraisal process cannot be under- estimated. It is recognized that competent managers will regard this process as an ongoing responsibility and participate with subordinate managers on program- ming objectives, planning work programs, establishing and revising measurement standards as appropriate, and counseling and training newly appointed managers. The actual performance evaluation and allocation of compensation are the culmi- nation of the entire evaluation program. Completed evaluations will be retained as part of an employee's personnel history. CONCLUSION This report presents a management compensation and performance plan acceptable both to the Town Council and to management employees. The plan's central focus is on management accountability and performance. The plan recognizes manage- ment as a unique and important part of the organization by distinguishing this group from other employee groups based upon level of responsibility and the need to demand performance at this level in order to improve performance through- out the entire organization. Page 6 MANAGEMENT POSITIONS Assistant Town Manager Associate Civil Engineer Building Official Director of Community Programs Maintenance Superintendent Parks Maintenance Supervisor Parks Supervisor Planning Director Police Captain Police Chief Police Lieutenant* Public Works Director Public Works Maintenance Supervisor Senior Planner Superintendent of Parks and Forestry Town Librarian Urban Forestry Supervisor *To be deleted effective 10/1/82. Appendix A Page 7 Appendix B MANAGEMENT SALARY LEVELS FY 1982 -83 Classification Maximum Police Chief ......... $46,827 Public Works Director Assistant Town Manager Planning Director ......... $43,431 Police Captain Supt. of Parks and Forestry Associate Civil Engineer Building Official Director of Community Programs ......... $38,115 Senior Planner Town Librarian (Police Lieutenant) Maintenance Superintendent Parks Supervisor ......... $34,848 Park Maintenance Supervisor ......... $31,581 Public Works Maintenance Supervisor Urban Forestry Supervisor Page 8 Appendix C SAMPLE APPLICATION OF SALARY POLICIES Town Manager's Budget Request for Management Salaries - a total of 158 - Proposed Range Adjustment - total of 10% Current Employee Salary: $30,000 Current Employee Maximum Salary Level: $35,000 Proposed Employee Maximum Salary Level: $38,500 Alternate A Evaluation Points: 65 - no salary increase Alternate B Evaluation Points: 90 Salary increase based on 90% of 15% = 13.58 $30,000 x 1.135% _- $34,050 Alternate C Evaluation Points: 105 Salary increase based on 1008 of 158 = 15.08 $30,000 x 1.15% + $34,500 Exemplary Performance Award: 5% of base salary, or $1,500 Page 9 Appendix D MANAGEMENT SUPPLEMENTAL BENEFITS FY 1982 -83 Vacation Cafeteria Years of Accrual Sick Life Benefits ITEM Service (Days) Leave Insurance Allocation GROUP I Assistant Town Manager Building Official Planning Director Police Chief Public Works Director Supt. of Parks and Forestry Town Librarian GROUP II Associate Civil Engr® Director of Community Programs Maintenance Supt. Parks Maint. Supr. Parks Supervisor Police Captain Police Lieutenant Public Works. Maint. Supervisor Senior Planner Urban Forestry Supervisor 0 -4 15 days 5 -10 20 days 10+ 25 days 0 -5 15 days 6 -14 20 days 15+ 25 days x >1 r ro o s) ro r � '0 U rt m U U ro P ro m o 0 � o � N b N +J .H v 0 $3,914 per year $3,414 per year 1. All management employees must take at least ten (10) days of vacation per calendar year. (Employees are exempt from this provision until their second calendar year of employment with the Town.) 2. An employee who has a vacation balance after meeting the requirements of #1 above may request to be paid in full for up to ten (10) days` accrued vacation in any one calendar year. Annual cash -outs will be available during December of each calendar year. 3. Management employees may accrue no more than fifty (50) days of vacation. Accruals in excess of this maximum will be deducted at the end of each pay period when the maximum is exceeded. Exceptions to the accrual limit will only be granted if the Town cancels vacation(s) or the employee cancels vacation due to an emergency or disability, or to meet commitments man- dated by the Town. Such exceptions must be approved by the Town Manager. Page 10 PERSONAL LEAVE Each management employee will be eligible for a maximum of 40 hours personal leave each calendar year. Personal leave is to be taken at employee discretion. Personal leave may not be carried over from year to year, nor may it be cashed out. Beginning with the twelve -month period from 12/1/81 to 11/30/82, and annually thereafter, management employeesmay at their individual discretion cash -out accumulated sick leave as follows: Sick Leave Use Eligible for 12/1 to 11/30 Cash -Out 0 hrs 6 days at 75% value 1 -8 hrs 6 days at 2/3 value 9 -16 hr 6 days at 50% value In order to be eligible for the annual sick leave cash -out program, an employee must have a sick leave accrual balance of atleast 15 days on November 30 of the year cash -out is taken. CAR ALLOWANCE All management personnel shall receive a car allowance of $200 /month. If exceptional work circumstances warrant, the Town Manager may assign a Town vehicle to a management employee for official use only. Town vehicles so assigned may be used by employees for transportation to and from home /work; vehicles may not be used for any personal business whatsoever. ADMINISTRATIVE LEAVE Upon approval of his /her immediate superior, management employees are eligible for up to 40 hours administrative leave with pay per calendar year. This leave is not cumulative from year to year; nor may this leave be cashed out. Page 1.1 CAFETERIA BENEFIT OPTIONS FY 1982 -83 Medical Coverage Single Double Family KAISER $585 $1170 $1693 BLUE CROSS 949 1860 2341 LIFEGUARD 808 1657 2171 Dental Program TOWN SELF- INSURANCE PROGRAM ($240) Additional Life Insurance Deferred Compensation Uniform Allowance Medical Examination Local Memberships Disability Insurance ($358) Management Development TOTAL: Amount Page 12 1. For all current employees, benefit selections must be made prior to the beginning of each fiscal year. No changes to selected dollar W allocations may be made after that time. Dependent status changes may be made during the fiscal year. However, changes increase contribu- tion rates must be borne by employees through payroll deductions. No refunds or reallocations of benefit dollars may be made for reductions in dependent coverages or insurance rate changes. Insurance rate increases beyond those already incorporated in the rates listed will be borne by the Town. 2. All benefits selected from the cafeteria plan must be paid for in full from the maximum benefit provided except when the maximum is insuffi- cient to cover all insurance coverages selected. In such case, the premium amount not funded by the Town - provided benefit shall be paid through an employee deduction applied against the medical premiums. 3. Funding for Deferred Compensation may only be provided after all other benefits selected by the employee are paid for in full from the maximum benefit provided. 4. No unexpended dollar amounts associated with selected benefits may be disbursed to a terminating employee. 5. All benefit selections are subject to State and Federal rules, regulations, and laws regarding employee benfits and tax status. No guarantee is made regarding the tax- exempt status of any and all benefits presented or selected. 6. Management employees will be eligible for benefits on the first day of the month following their hire date. They will be eligible for a total benefit calculated as follows: No. of Months Left in Fiscal Year ./. 12 x Approp. Group Benefit = Total Benefit 7. In order to have claims for management development approved for payment, the courses and /or seminars taken by the employee should be approved as job - related by the department head (Town Manager, for the department head) prior to individual's enrollment. Such approval should be granted in writing and shall include a brief description of the course or seminar content andan explanation of job relatedness. After successful completion of the course or seminar, the individual employee shall submit to his /her department head a claim form detail- ing the expenses incurred up to the maximum reimbursement permitted. 8. Claims for medical examination reimbursement shall be signed by the individual employee and the department head. Requests for approval of claims for reimbursement for medical examinations shall show the total charges for medical examination up to the maximum reimbursement allowable. The claim form shall be signed by the individual employee and shall be accompanied by an invoice from the physician.