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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. -2- 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 _ I- 0-5 15 days 20 days 25 days 15 days 6 -14 20 days 15+ 25 days q a� qa N U w o� 4 i U x U F, eo i �Oo 2 W H� 0 $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 ( 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. 3 .� J C ry Z O :.J .1 V Z C �_ O :� S Z _1 Z C i�� ��� ;� s � � _ > .- +-+ i ru 'D C C � w _n O 'J C } I :n O N _ 'O C m +-, � •• u c u •- v �. u N `J T — •in u O � j i C � •� N l0 3 a � a O E •— U� 'r W U � } �' �. �,.. E m } I O � _ 'O C � �. J N L L '� � U Q �] N � � � j C � •� � i O Q '_' N ,.+ c �__ O a. C N � � � � in Q .H �-- U Q w U w --� m O } �' �. �,.. 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.