1981-146-Approving Proposed Management Performance And Compensation Plan For The Town Of Los GatosRESOLUTION NO. 1981 -146
A RESOLUTION APPROVING PROPOSED MANAGE-
MENT PERFORMANCE AND COMPENSATION PLAN
FOR THE TOWN OF LOS GATOS.
RESOLVED, that the 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 15th day of
June , 1981, by the following vote:
AYES: COUNCIL MEMBERS Ruth Cannon, Thomas J.
Ferrito, NarLyn J. Rasmussen, Brent N.
Ventura and Peter W. Siemens
NOES: COUNCIL MEMBERS None
ABSENT: COUNCIL MEMBERS =done
ABSTAIN: COUNCIL MEMBERS None
SIGNED: 'r
/S
A OR OF THE TOWN OF LOS GATOS
ATTEST:
CL OF THE TOW4 LO G S
Town of Los Gatos
MANAGEMENT PERFORMANCE AND COMPENSATION PLAN
BACKGROUND
6/9/81
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:
Managers are not extended technicians but rather are individuals with
the unique responsibility for analyzing and synthesizing the input of sub-
ordinates, peers, and the public in making decisions regarding the alloca-
tion of human and financial resources for which they should be held
accountable; and
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 consideratinns:
1. Prevailing labor market conditions.
2. Ability of the Town to pay.
3. Local cost of living.
4. Organized employee group increases.
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Internal organizational relationships.
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 has completed a survey of local municipal employers and has
reviewed various internal salary relationships among Town management per-
sonnel. On the basis of this analysis, all management salary levels are
being recommended for adjustment. Maximum levels recommended for the
FY 1981 -82 fiscal year are detailed in Appendix B.
Future maximum salary level adjustments shall be made as follows:
4arket 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, management salary funds --
less ten percent (10 %) -- 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 evalua-
tion 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
be provided on a one -time, lump -sum basis, and shall not be considered
part of an employee's base pay (see sample, Appendix C).
_ -3-
5. An e--ployee's actual salary may not exceed the maximum unless an
exespiary 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 iq relation
to the "competition," benefit information was requested from the agencies
participating 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
compensation and performance plan. The benefit package should be comple-
mentary and supportive and viewed in perspective with the Town's ability
to pay, tare program provided organized employees, and internal classifi-
cation relationships. Vacation schedules and sick leave accumulation must
be adjusted to maintain relationships with employee organizations. In
addition, cash pa},ments to management employees for unused vacation is
recommenced. This cash payment willl be made at the close of a calendar
year on the follo -,wing basis:
1. All :- anagement e -iployees must take at least ten (10) days of vaca-
tion per calendar year. An employee who takes less than ten (10)
days will have the difference between the number of days taken and
the inimum required deducted from their vacation balance. (Employees
are exe�pt from this provision until their second calendar year of
employment with the Town.)
2. An e- olcyee who has a vacation balance after meeting the requirements
of =1 above may request to be paid in full for up to five (5) days'
accr�ed vacation: in any one calendar year. Annual cash -outs will be
avai'.:able during December of each calendar year.
3. Manace: -ent er-pleyees may accrue no more than thirty (30) days of
vacation accrua effective 12/31/81. The maximum accrual will be
reduced to no -ore than twenty -five (25) days at the end of each
subsecuent calendar year. Accruals in excess of these maximums
will be deducted at the end of each calendar year. Exceptions to the
accrual limit will only be granted if the Town cancels vacation(s).
Such exceptions -ust be approved by the Town Manager.
The full i- ?lenentation of the total compensation and performance concepts
outlined in this --',.n ,rill require that changes be made in the methodology
by whic" sucplemental benefits are allocated. The actual dollar amount (up
to the - a:;i -,um speci =ied for each grouping) granted to each individual will
be supported by his performance evaluation. Each individual may then
use his/^=r benefit --rant to "purchase" those items which best suit his /her
personal reeds. A list of dollar cost items will be developed by staff and
made available to e:- ployees. The list will contain a variety of benefits
limited b_r administrative load and market availability. Appendix D lists
the current benefit schedule and benefit selection guidelines.
:4-
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 fullest 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 keening with appropriate
standards. In the absence of a uniform and practical methodology for evalu-
ating performance, the overall goals and objectives of the orgahization may
not be translated into action plans, compensation 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 techniques proposed are intended to be applied uniformly in all depart-
ments and divisions. The program is flexible enough to be adaptable to the
philosophy, characteristics and operational methods of various organizational
units. Adoption and implementation of this plan element will establish a more
accurate, objective, and reliable method of measuring performance that will
benefit the Tom 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 mangement 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 work programs will contain milestone dates for interim measurement pur-
poses. All management plans will be reviewed by the manager responsible for
integration of the plan into the next highest organizational level's program.
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 work responsibility will be accompanied by
performance measurements (quantitative or qualitative). This approach assumes
that extensive dialogue will occur between an individual and hisiher immediate
superior in the establishment of work programs. Employees will be required to
develop a draft program for review early in the fiscal year.
Attached as Appendix C is a format for management performance contracts. It
should be noted that each objective and activity will be weighted by assigning
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
-s-
less than 100. For compensation purooses, 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 commun-
ications 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).
Management performance shall be formally reviewed at mid -year and in June,
although the manager and 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 modifica-
tions which result from mid -year review will be considered by higher levels
of management in accordance 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 performance review sessions, these conditions should
be discussed and performance plans modified accordingly. The importance of the
appraisal process cannot be underestimated. It is recognized that competent
managers will regard this process as an ongoing responsibility and participate
with subordinate managers on programming objectives, planning vlork 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 culmination 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 cerformance. 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.
E
Appendix A
MANAGEMENT POSITIONS
Assistant Town Manager
Associate Civil Engineer
Building Official
Community Development Director
Director of Community Programs
General Services Director*
Maintenance Superintendent
Management Assistant
Parks Maintenance Supervisor
Parks Supervisor
Planning Director
Police Captain
Police Chief
Police Lieutenant **
Public Works Director
Public Works Maintenance Supervisor
Senior Arborist
Senior Planner
Superintendent of Parks and Forestry
Town Librarian
*
To be deleted effective 10 /1 /81.
**
To be deleted effective 1/1/82.
Appendix B
MANAGEMENT SALARY LEVELS
FY 1981 -82
Classification Maximum
Community Development Director
Police Chief ............ $43,000
Public 'Works Director
Assistant Town Manager
(General Services Director)
Planning Director ............ $39,000
Police Captain
Superintendent of Parks and Forestry
Associate Civil Engineer
Building Official
Director of Community Programs ............ $35,000
Senior Planner
Town Librarian
(Police Lieutenant)
Maintenance Superintendent
Parks Supervisor ............ $32,000
Management Assistant
Senior Arborist $29,000
Parks Maintenance Supervisor .......... "
Public Works Maintenance Supervisor
Appendix C
SAMPLE APPLICATION OF SALARY POLICIES
Town Manager's Budget Request for Management Salaries
- a total of 15% -
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
I I, -._._i_ n
Evaluation Points: 90
Salary increase based on 90% of 15% = 13.57
$30,000 x 1.135% = $34,050
Evaluation Points: 105
Salary increase based on 100% of 15% = 15.0%
S30,000 x 1.15% + $34,500
Exemplary Performance Award: 5% of base salary, or $1,500
MANAGEMENT T SUPPLEMENTAL BENEFITS Appendix D
FY 1981 -82
VACATION Cafeteria
Years of Accrual Sick Life Benefits
ITEM Service (Days) Leave Insurance Allocation*
GROUP I
Assistant Town Manager
Community Development
Director
Police Chief
Public Works Director
Supt. of Parks and
Forestry
Town Librarian
GROUP II
Associate Civil Engr.
Building Official
Director of Community
Program
Maintenance Supt.
Parks Maintenance Supr.
Parks Supervisor
Planning Director
Police Captain
Public Works Maint.
Supervisor
Senior Arborist
Senior Planner
T
0 -4
5 -10
10+
I _
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0-5
15 days
20 days
25 days
15 days
6 -14 20 days
15+ 25 days
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$3,600
per year
T
$3,100
per year
OTHER ITEMS - PERSONAL LEAVE
Each management employee will be eligible for a maximum of 24 hours aersonal 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.
OTHER ITEMS - SICK LEAVE CASH -OUT
Each management employee on 11/30/81 may, at his /her discretion, cash -out up to
sixty (60) days of accumulated sick leave at a percentage credit determined by
length of service with the Torn. Employees may cash -out at 30% value after five (5)
years of service and receive credit of one (1) additional percentage point for every
additional year of service up to a maximum of 501x. In order to be eligible for this
one -time cash -out, an employee must retain a minimum sick leave accrual of 200 hours.
Effective 12/1/81, no management employee will be eligible for the Town sick leave
cash -out program upon retirement or resignation. €
*Effective 7/1/81 for Group I; and effective 7/1/82 for Group II.;.
1
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r `s
Beginning with the twelve -month period from 12/1/81 to 11/30/82, and
annually thereafter, management employees may at their individual dis-
cretion cash -out accumulated sick leave as follows:
Sick Leave Use Eligible for
1211 to 11/30 Cash -Out
0 hrs 6 days at 75/ value
1 -8 hrs 6 days at 2/3 value
9 -16 hrs 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 at least 15 days
on November 30 of the year cash -out is taken.
OTHER ITEMS - CAR ALLOWANCE
Group I level management personnel shall receive a car allowance of
$200 /month.
Group II level management personnel shall either receive a car allowance
of $180 /month or a Town vehicle will be assigned to them for official use
only. Town vehicles so assigned may be used by employees for transporta-
tion to and from home /work; vehicles may not be used for any personal
business whatsoever.
OTHER ITEMS - EDUCATIONAL INCENTIVE PAY
Police Captain and Police Lieutenant classifications shall be eligible for
Intermediate POST Certificate pay of $43.50 /month and the Advanced POST
Certificate pay of $80.00 /month. Eligibility shall be subject to annual
review as detailed in the Educational Incentive Pay Program for sworn
police officers.
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CAFETERIA BENEFIT OPTIONS
FY 1981 -82
Medical Coveraae
KAISER (1519)
BLUE CROSS (1652)
LIFEGUARD (1722)
Dental Program
TOWN SELF - INSURANCE PROGRAM ($240)
Additional Life Insurance
Deferred Compensation
Uniform Allowance
Medical Examination
Local Memberships
Disability Insurance
Management Development
TOTAL:
Amount
For all current employees, benefit selections must be made prior
to the beginning of each fiscal year. No changes to selected
dollar ($) allocations may be made after that time. Dependent
status changes may be made during the fiscal year. However,
changes increasing contribution 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.
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 benefits and tax status.
No guarantee is made regarding the tax - exempt status of any and all
benefits presented or selected.
Management employees will be eligible for benefits on the first day
of the month following their hire date. They will be eligible for
total benefit calculated as follows:
No. of Months Left in Fiscal Year : 12 x Approp. Group
Benefit = Total Benefit.
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 and an 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.
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.