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1983-148-Repealing Resolution 1982-123 And Approving Revised Management Performance And Compensation Plan For The Town Of Los GatosRESOLUTION NO. 1983 -148 A RESOLUTION REPEALING RESOLUTION 1982 -123 AND APPROVING REVISED MANAGEMENT PERFORMANCE AND COMPENSATION PLAN FOR THE TOWN OF LOS GATOS. BE IT RESOLVED, that Resolution No. 1982 -123 ( "A Resolution Repealing Resolution 1981 -146 and Approving Revised Management Performance and Compen- sation Plan for the Town of Los Gatos ") is hereby repealed; and BE IT FURTHER RESOLVED that the revised MANAGEMENT PERFORMANCE AND COMPENSATION PLAN proposed for the Town of Los Gatos (a copy of which is attached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 1st day of August 1983, by the following vote: AYES: COUNCIL MEMBERS Joanne Benjamin, Terrence J. Daily, Thomas J. Ferrito and Mayor Brent N. Ventura NOES: COUNCIL MEMBERS None ABSENT: COUNCIL MEMBERS MarLyn J. Rasmussen. ABSTAIN: COUNCIL MEMBERS None SIGNED:_,:, ATTEST: CLERK OF THE TOWNy OF LOS GATQ Town of Los Gatos MANAGEMENT PERFORMANCE AND COMPENSATION PLAN BACKGROUND 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, practical, 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 supplemental 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. J . Internal organizational relationships. €I. 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 1983 -84 fiscal year as detailed in Appendix D. 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, management salary funds -- less ten percent (lO1o) -- will be allocated to departments on the basis of the relation each department's management payroll has to total management 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 ail salary changes for management employees. 44. The ten percent (10!) of management salary funds not allocated to departments 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. -2- 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 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 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 0 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, 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 departments and -3- 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 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 control may 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 quantifiable 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 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 less than 100. M 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 communications 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 I of each year. I vianagement 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 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 ew 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 underestimated. It is recognized that competent managers will regard this process as an ongoing responsibility and participate with subordinate managers on programming 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 culmination of the entire evaluation program. Completed evaluations will be retained as part of an employee's personnel history. SALARY ADJUSTMENTS FOR NEW HIRES Management employees hired during the fiscal year shall be eligible for salary increases on the basis of the number of months employed by the Town during the fiscal year. The employee will be eligible for 1112 of the total salary increase available for each full calendar month of employment with the Town in his/her management position. For instance, an employee hired on January I of the fiscal year would be eligible for 6/12 of the salary increase available. -5- SALARY ADJUSTMENTS FOR MANAGEMENT EMPLOYEES ON EXTENDED LEAVE. An incumbent management employee who is on extended leave from his/her position due to sickness, disability, or employee- initiated leave without pay status shall receive no salary adjustment until returning to full-time work. Salary adjustments will become effective the first of the calendar month following the employee's return to work. Performance salary adjustments shall be factored in such a way that 1/12 of the amount available for salary increase shall be deducted from the total amount available for each full calendar month that the employee is absent from the job because of unauthorized leave, suspension, sickness, disability, or employee-initiated leave without pay. Vacation or sick leave may not be used intermittently during an extended leave to interrupt a determination that an employee is absent for any full calendar month period. Vacation or sick leave may be used to assure continuation of payroll status in order to retain insurance benefits under the cafeteria benefits program. Employees who are absent from work due to a work-related disability shall not be eligible for any salary adjustment until the employee returns to the job full-time. Salary adjustments will become effective the first of the calendar month following the employee's return to work. Performance salary adjustments shall not be factored by the 1/12th rule described above for any determination of salary a7justments. LEAVE ACCRUALS Management employees shall not accrue annual, vacation, or sick leave during any period of unauthorized leave, suspension, or leave without pay. _EXEi4PLARY PERFORMANCE AWARDS As provided in the plan, these awards are discretionary on the part of the Town Manager. Awards are available only for employees scoring 100 points or more on their individual performance evaluations. Awards may be made on either a percentage or flat dollar amount basis each year so long as all awards during any one year shall be either on a percentage basis or a flat dollar amount. CONTINUATION OF BENEFITS Management employees shall continue to receive cafeteria fringe benefits so long as those employees remain on the Town payroll. 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 management 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 throughout the entire organization. I M. Appendix A MANAGEMENT POSITIONS Assistant to the Town Librarian Assistant Town Manager Associate Civil Engineer Building Official Director of Community Programs Director of Parks, Forestry, and Maintenance Services Maintenance Superintendent Parks 1-ilaintenance Supervisor Parks Supervisor Planning Director Police Captain Police Chief Police Lieutenant Public Works Maintenance Supervisor Senior Planner Town Engineer Town Librarian Rev. 8/7/83 -7- Appendix B MANAGEMENT SALARY LEVELS FY 1983-84 Classification Police Chief Director of Parks, Forestry, and Maintenance Services Town Engineer Assistant Town Manager Planning Director Police Captain Associate Civil Engineer Building Official Director of Community Programs Police Lieutenant Senior Planner Town Librarian Maintenance Superintendent Parks Supervisor Assistant to the Town Librarian Park Maintenance Supervisor Public Works Maintenance Supervisor m Maximum $49,100 $46,827 $43,518 $38,T91 $34,918 $31,644 Rev. 8/1/83 Appendix C SAMPLE APPLICATION OF SALARY POLICIES Town Manager's Budget Request for Management Salaries - a total of 101 - Proposed Range Adjustment - total of 5% Current Employee Salary: $30,000 Current Employee Maximum Salary Level: $36,000 Proposed Employee Maximum Salary Level: $36,750 Alternate A Evaluation Points: 65 - no salary increase Alternate 3 Evaluation Points: 90 Salary increase based on 901 of 10% = 91 $30,000 x 1.09% = $32,700 Alternate C Evaluation Points: 105 Salary increase based on lOOZ of 101 = 10.01 $30,000 x 1.101 + $33,000 m Appendix D MANAGEMENT SUPPLEMENTAL BENEFITS FY 1983 -84 Vacation Cafeteria Years o Accrual Sick Life Benefits ITEM Service (Days) Leave Insurance Allocation GROUP I Assistant Town Manager Building Official Director of Community Programs Planning Director 0 -4 15 days $3,999 Police Chief 5 -10 20 days per year Town Engineer 70+ 25 days x CD Director of Parks, q N Forestry, and Maintenance Services a N ° Town Librarian w N a N GROUP II q� w� Assistant to the Town a Librarian Associate Civil Engr. Maintenance Supt. 0 -5 15 days ° Parks Maint. Supr. Parks Supervisor 6 -14 20 days $3,499 Police Captain per year Public Works Maint. 15+ 25 days Supervisor Police Lieutenant Senior Planner T. 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. _l0- Rev. 8/1/83 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. SICK LEAVE CASH-OUT Beginning with the twelve-month period from 12/1/81 to 11/30/82, and annually thereafter, management employees may at their individual discretion cash-out accumulated sick leave as follows: Sick Leave Use Eligible for 1211 to 11/30 Cash-Out U hrs 6 days at 75% value 1-8 hrs 6 days at 2/3 value 9-16 hr 6 days at 50V 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. 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 department head for by the Town Manager in the case of department heads), 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. Administrative leave may be granted in recognition of extraordinary work hours by management personnel. Specific examples include unanticipated emergency situations, extraordinary Council or Commission meetings, and extensive weekend work. _11- CAFETERIA BENEFIT OPTIONS FY 1983-84 Medical Coverage Single Double KAISER $ Go $1368 BLUE CROSS 1230 2420 LIFEGUARD 870 1744 Dental Program TOWN SELF-INSURANCE PROGRAM ($240) Additional Life Insurance Deferred Compensation Uniform Allowance Medical Examination Local Memberships Disability Insurance ($346) Management Development TOTAL: -12- Family _m ly $1973 3049 2342 Amount For all current employees, benefit selections must be made prior to the beginning of each fiscal year. No changes to selected dollar ($) 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 insufficient 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 inedical premiums. 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. 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: Number of Months Left in Fiscal Year divided by 12 multiplied by Approp. Group Benefit = Total Benefit 7. In order to have claims for management development approved for payment, the courses arid/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 detailing 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. -13-