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1987-186-Approving Management Performance And Compensation Plan For The TownRESOLUTION NO. 1987 -186 RESOLUTION APPROVING MANAGEMENT PERFORMANCE AND COMPENSATION PLAN FOR THE TOWN OF LOS GATOS (FY 1987 -88) (FY 1988 -89) BE IT RESOLVED by the Town Council of the Town of Los Gatos that the Management and Compensation Plan proposed for the Town for Fiscal Years 1987 -88 and 1988 -89 (a copy of which is attached hereto) is hereby approved. PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los Gatos, California, held on the .A— day of Novi 1987 by the following vote, AYES: COUNCIL MEMBERS Joanne Benjamin, Eric D. Carlson, Thomas J. Ferrito, Robert L. Hamilton, and Mayor Brent N. Ventura NOES: COUNCIL MEMBERS ABSTAIN: COUNCIL MEMBERS None ABSENT: COUNCIL MEMBERS None SIGNED: ., ",2 MAYOR OF THE TOWN OF LOS GATOS ATTEST: CLERK OF THE TOWN UF L F S GA OS 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 provides adequate compensatory incentives. This plan is based upon the assumptions that: 1. !tanagers 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 intended that adoption and implementation of this plan will solidify management from a labor relations and morale standpoint and will facilitate increased productivity in response to Town Council policy decisions, administrative direction, and resident needs. The processes by which compensation is set will help to attract and retain competent personnel and to encourage their professional development. Individual salaries and the supplemental benefits which form the compensation package are not set based upon historical precedent but upon standards of performance understood by all levels of management. PLAN ELEMENTS Participants Attached as Appendix A is a list of the positions designated as managenent. 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. Salar 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. n. Organized employee group increases. PAGE 2 MANAGEMENT PERFORMANCE & COHPENSATION PLAN 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. At least every two years, the Town Manager's office will complete a survey of local & similar municipal employers and review various internal salary relationships among Torun management personnel. On the basis of this analysis, management salary ranges will be established for the fiscal year (see Appendix Q). See Appendix C for applicable cities. 1. Additionally, in non - survey years, recommendations for adjustments to levels may 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. 3. After adoption of the Town's operating budget, management compensation 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 all salary changes for management employees. 4. An amount equal to two percent (2%) of management compensation will be budgeted and 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. PAGE 3 MANAGEMENT PERFORMANCE fx COMPENSATION PLAN 5. All management employees have the option to assume payment of their own PERS contribution at the beginning and during the last one year of their employment with the Town. The monies previously paid to PERS by the Town to cover the employee's contribution will be added to the employee's salary. An employee who does opt for this conversion and proceeds to pay the employee's contribution shall not be forced to retire within one year nor shall the employees have the option to revert back to Torun -paid employee contribution. Supplemental Benefits Benefits should be considered part of compensation paid. As such, the benefits provided by the Town should be co mpetitive with the market. In order to determine the position of the Town's benefit package in relation to the "competition," benefit information is also included in the survey of other municipalities. 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 L 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 an evaluation is feedback between the Manager, Department Heads and other levels of the organization. Another purpose of the appraisal program is motivate each employee to work at his /her capacity and to provide a basis for recognizing personnel in accordance with their individual performance and to identify where work could be improved as it does not meet expected standards. 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 grade on the basis of intuition or haphazard observation, and employees may not be held accountable for important decisions. to In PAGE d MANAGEMENT PERFORMANCE it COMPENSATION FLAN As conceived in this report, the Town's management appraisal program is designed as a communications process which not only permits but requires input 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 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. Ali 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 and points may be modified. 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 uncontrolable 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 uncontrolable external forces. The performance target may also be used to recognize where negative performance can be improved. PAGE 5 MANAGEMENT PERFORMANCE & COMPENSATION PLAN It should be noted that each objective and activity will be weighed 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 10& Incomplete accomplishment of work programs will result in a score of less than 100. 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, inter - departmental 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. A list of special projects will be- identified annually by the Manager with the adoption of the plans for which the individual may receive points on the management contract or be considered for an exemplary performance award. For compensation purposes, the total performance score is expressed as a percentage and multiplied by the maximum percentage salary increase available to management employees. The minimum salary increase available to Management employees will be that available to bargaining unit employees. Salary ranges for Management personnel will be reviewed annually by classification and will be adjusted by either the % available to the Town's bargaining units or adjusted to reflect the results of the market survey (see description of market survey) whichever is greater. The top of the range is considered the control point. An individual's pay can exceed the control point, but any increase above the control point is subject to re- evaluation annually. An individual's compensation adjustment will be based on performance as demonstrated by the review of the Management Plan and the % accomplished. An individual may receive no increase or any amount up to the total $'s available for annual increases, subject to a maximum of 10 %. As indicated above, the top of the salary range for the classification will be adjusted at a minimum by that percentage granted to the bargaining unit, but may be adjusted higher based on the Management compensation survey. No individual, however, is guaranteed to receive the same increase. All increases will be based on performance. PAGE 6 MANAGEMENT PERFORMANCE & COMPENSATION PLAN To determine the total available for Management increases, the following uill occur: ° Market survey of comparable positions in similar organizations. See Attachment C for list of selected agencies. ° Ranges by classification will then be adjusted to equal the market survey average or the % granted to the Town's bargaining units, whichever is greater. The dollar difference between the current actual Management salaries paid and the dollar change in Management ranges will be available for Management compensation increases. ° Management employees will then be eligible to receive an increase from 0 to 10% based on performance limited to the total dollars available for Management personnel, Department heads will recommend increases for their Management personnel to the Toren Manager who will give final approval to the increases on a Town -wide basis. As indicated, individuals may exceed the top of their salary range (control point) but will be re- evaluated annually and may subsequently be paid an amount lower than the top of the range. 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. If a contract is not prepared and finalized no increase will be considered. Management performance shall he formally evaluated on a quarterly basis. The tlanager or superior have a continuing responsibility throughout the year to review efforts vis -a -vis work program milestones and to take actions necessary tc 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 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 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. The evaluated emLloyee may attach to the evaluation form anv written comments and these will become a Dart PAGE 7 MANAGEMENT PERFORMANCE & CONPEdSATION PLAN SALARY ADJUSTMENTS FOR NEW HIRES Management employees hired during the fiscal year will complete a management plan within 30 days of their appointment, The employee will then be eligible for a salary increase based on what portion of the plan is completed by year -end. The general duties will be pro -rated by the number of months of employment with the Town. For example, an employee hired on January 1st of the fiscal year would be eligible for 6/12 of the points for general projects. Specific projects completed will receive full - value. Bonus points may be added to an individuals performance based on specific documented accomplishments which could warrant up to the full increase available under the management compensation plan. 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. The employee will then be considered for an adjustment, when a complete Year of Fro rk has elapsed since their last evaluation. Time absent will rounded to the closest month. Salary adjustments, if any, will become effective after the employee has completed a full year since their last evaluation /increase. 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. LEAVE ACCRUALS Management employees shall not accrue vacation or sick leave during any period of unauthorized leave, suspension without pay, or leave without pay. PAGE 8 MANAGEMENT PERFORMANCE 9 COHPENSATION PLAN EXEMPLARY 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 and shall be considered one -time, non- recurrino awards. CONTINUATION OF BENEFITS Management employees shall continue to receive cafeteria fringe benefits so long as those employees remain on the Town payroll. PLAN REVIEW In order to assure the continued relevance of the Management Compensation Plan to both the Town and its management personnel, the Plan shall be reviewed in its entirety annually or as necessary throughout the year. That review shall include discussions with affected management personnel. 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 nay it be cashed out. SICK LEAVE CASH -OUT Beginning with the 12 month period from 1211181 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 12/1 to 11/30 Cash -Out 0 -24 6 days at 75% value 25 -32 6 days at 2/3 value 33 -48 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 22 days on November 30 of the year cash -out is taken. PAGE S MANAGEMENT PERFORMANCE A COMPENSATION PLAN CAR ALLOWANCE All management personnel shall receive unless an incumbent is not required to license as a condition of employment. a car allowance of at least $200 /month possess a valid California driver's If exceptional work circumstances warrant, the Town Manager may assign a Totem vehicle to a management employee for official use only. Town vehicles so assigned may he 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 (or 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. DISABILITY INSURANCE Management employees shall receive Town paid disability insurance providing disability benefits equal to sixty percent (60 %) of salary subject to a thirty (30) day waiting period for insurance benefits. PAGE 10 MANAGEMENT PERFORMANCE & COMPENSATION PLAN CAFETERIA BENEFIT OPTIONS FY 1987 -88 Amount Medical Coverage Single Double Family Kaiser 1,054.56 2,097.12 2,884.20 Lifeguard 1,096.20 2,184.60 3,022.80 Blue Cross 1,754.76 3,509.76 4,414.32 Dental Program TOWN SELF - INSURANCE PROGRAM ($360) Additional Life Insurance Deferred Compensation Uniform Allowance ,Medical Examination Local Hemberships Management Development TOTAL Note: Medical examination allocations may be used for eye examination and the purchase of prescription eyewear. Local membership allocations may be used for reimbursement of membership costs for "in -Town" facilities and organizations only. See Appendix D for current allocation to Management supplemental benefits PAGE 11 MANAGEMENT PFRFORNANCE & COMPENSATION PLAN 1. For all current employees, benefit selections must be made prior to the beginning of each fiscal year. No changes to selected dollar ($) 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. 2. All benefits selected from the cafeteria plan must he 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 medical premiums. 3. Funding for deferred compensation may only be provided after all other benefits selected by the employee e paid for in full from the maximum benefit }provided. 4. No unexpended dollar araounts associated with selected benefits may e 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. 6. `rlanagement 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: Plumber of months left in fiscal year divided by 12 multiplied by approp. group benefit - total benefit. 7. All requests for reimbursement must be approved in advance on a Request for Reimbursement Form. The employee may select to receive reirabursement before or after completion of the course. All expenses must be documented however, with a copy of the course description, flyer, registration packet, etc. Receipts must also be submitted for any books. Following completion of the course, documentation must be submitted to reflect satisfactory completion, i.e., passing grade, or verification of completion of the course. If reimbursement (or advance) is requested prior to course completion, documentation of satisfactory course completion must be submitted within 3 months of the completion of the course. Documentation within the prescribed time frames is the responsibility of the employee. If documentation is not received, a deduction will occur on the paycheck to cover the expenses advanced the employee will be notified in advance prior to any deduction from the pay check. All other finance and paperwork procedures must also be followed. PAGE 12 MANAGEMENT PERFORMANCE & COMPENSATION PLAN Claims for medical examination reimbursement employee and the department head. Requests reimbursement for medical examinations shall examination up to the maximum reimbursement signed by the individual employee and shall the physician. MGTCOMPLAN /PERSO DS:pm 10/29/£37 shall be signet: by the individual for approval of claims for shoe: the total charges for medical allowable. The claim from shall be be accompanied by an invoice from APPENDIX A MANAGEMENT POSITIONS Assistant Town Manager Associate Civil Engineer building Official Comnunity Services (Manager Director of Parks, Forestry, and laintenance Services Finance Administrator Maintenance Superintendent Parks and Forestry Superintendent Parks Maintenance Supervisor Planning Director Police Chief Police Commander II Police Commander I Public Works Maintenance Supervisor Senior Planner Town Engineer Town Librarian Rev. 10/29/87 Misc. Planaaegent APPENDIX B MANAGEMENT SALARY LEVELS (1)87 -88 (Adopted) Police Chief $61,060 Planning Director 53,428 Director of P01 $56,500 Torn Engineer 53,428 Assistant Town Manager 53,428 Commander 11 55,187 Buildincg� Official 46,382 Town Li€rarian 46,382 Sr. Planner 46,382 Finance Administrator $48,750 Parks, Forestry, Maint, Super. 44,620 Community Services Manager 40,510 Commander I 48,750 PM Supervisor 40,510 PW Supervisor 40,510 (2 )88 -89 (Proposed) $63,505 60,000(2)] $58,760 58,760* 58,760* 1 1 1 57,395 $53,000**1211 53,000 1 51,500(2)] $50,700 50,700 *(')7 50,700* 2 50,700 42,130 42,130 *Range increased to reflect 1)market or 2)internal comparisons (I)Reflects 6% adjustment granted to bargaining unit, and Management (2)Reflects 4% adjustment granted to barganing unit plus range adjustment if starred for market or internal adjustments APPENDIX C *Campbell *Cupertino *Gil roy *Los Altos Fii 1 pi tas *I'lorgan Hill Mountain View Palo Alto San Jose Santa Clara *Saratoga Sunnyvale *Watsonville *Eureka *Menlo Park Pleasant Hill *San Carlos *i`lari na Martinez Monterey *Roseville *Santa Cruz Review to include: Average of all agencies listed Average of agencies starred Average of agencies starred in County Apperrd1x D MANAGEMENT SUPPLEMENTAL BENEFITS FY 1987 -88 Vacation Cafeteria Years of Accrual Sick Life Benefits ITEM Serviee (Days) Leave Insurance Allocation GROUP I Assistant Town Manager Building Official Planning Director Police Chief Town Engineer Director of Parks, Forestry, and Maintenance Services Town Librarian Finance Admin GROUP II Associate Civil En9r. tlaintenance Supt, Parking Program f4gr. Parks Plaint. Supr. Parks /Forestry Supt. Police Captain Public Works Plaint. Supervisor Police Commander I /II Police Lieutenant Senior Planner Community Services "tanager 0 -4 15 days $4,683 5 -10 20 days per year 10+ 25 days 0 -5 15 days 6 -14 20 days $4,183 per year 15+ 25 days 1. All rnanagernent 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.