Compensation StudyPreliminary Results Overview

Presented by:CBIZ Human Capital Services

October 26, 2015

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Introduction

CBIZ Human Capital Services● Priya Kapila, CCP, SPHR

Senior Manager, Compensation Consulting

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Introduction

What we want to accomplish today:• Review the compensation study methodology• Discuss the preliminary project results• Outline recommendations and next steps• Answer your questions

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Introduction

The District has asked CBIZ to review current practices and recommend improvements related to:• Job classifications and descriptions• Current compensation compared to market• Internal equity assessments• Compensation policies and procedures

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Methodology

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Project Steps

1. Planning Meetings2. Job Evaluation3. Compensation Analysis4. Salary Schedule Development5. Benefits Cost Analysis6. Policy Review and Recommendations

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Job Evaluation

● Job descriptions and job analysis questionnaires (JAQs) were evaluated to identify:– Essential Functions– Duties and Responsibilities

● Job descriptions, not titles, were used to ensure correct matches to the market.

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Job Evaluation

● Job Classification and Description Updates– Title consolidation and separation– Title revision to better reflect job roles and create

consistency throughout the District– Review organizational hierarchy and clarify career

paths

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Compensation Analysis

What is market pricing?• Valuation of pay for the District’s jobs in the external

labor markets.• Key considerations when determining labor markets:

– Locationo St. Joseph, Missourio Regiono Nation

– Industryo School districtso Broad spectrum of employers

– Sizeo Revenue/Operating budgeto Number of employeeso Number of students

Compensation Analysis

• Blue Springs*• Center*• Independence*• Lee’s Summit• Liberty*• Kansas City*

• North Kansas City• Park Hill*• Platte County*• Raytown*• Raymore-Peculiar*• Smithville*

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Custom Survey – Peer Districts

* Survey participant

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Compensation Analysis● Market Benchmark

– 50th percentile: Also known as the median; this is the middle point of the market. By definition, half of organizations pay more and half pay less. A majority of organizations follow a compensation philosophy that strives to pay employees at the median.

– An objective of the project was to align salary range midpoints with the market 50th percentile. This is typically the point at which pay for fully-functioning, satisfactorily-performing employees is targeted.

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Compensation Analysis● Definitions

– Base Salary: The annual fixed rate that an individual is paid for performing a job.

– Employee Benefits: Non-cash compensation provided to an employee. Benefits reviewed include:• Paid leave (e.g., holidays, vacation, sick, etc.)• Medically-related benefits (e.g., health insurance, dental

insurance, vision insurance, short- and long-term disability insurance, life insurance, etc.)

• Retirement plan benefits• Other common benefits (e.g., education cost

reimbursement, specialized training and development, etc.)– Total Compensation: The sum of base salary and

benefits.

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Compensation Analysis● Definitions

– 25th percentile: The point at which 75% of organizations pay more and 25% pay less.

– 50th percentile: The point at which half of organizations pay more and half pay less.

– 75th percentile: The point at which only 25% of organizations pay more and 75% pay less.

– Compa-ratio: An employee’s current salary divided by the midpoint of the salary range.

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Salary Range Development

• New salary schedules and ranges were developed in order to best reflect:– Market-competitive pay levels for District jobs– Job classifications and functions– Organizational hierarchy

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Salary Range Development

Example

Title: Job XYZMarket Median: $35,450

Grade Minimum Midpoint Maximum

1 $24,778 $30,972 $37,166

2 $27,398 $35,618 $43,837

3 $31,508 $40,960 $50,413

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Benefits Cost Analysis● The cost of the District’s employee benefits

package will be compared to market-competitive data.– For medical and medically-related benefits, it is

most accurate to utilize a fixed cost per employee to estimate the cost incurred

– For other benefits, including paid time off and retirement, a percent of the incumbent’s base salary is the most appropriate metric

● Total compensation will also compared to the market.

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Policy & Procedure Review

● Setting new hire pay● Adjusting pay for promotions, demotions and lateral

transfers● Job classification process● Assigning new and revised jobs to salary ranges● Salary range adjustments● Salary increase planning● In-range pay progression

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Preliminary Results

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ResultsActual Annual Base Salary Compared to Market 50th Percentile Base Salary

y = 1.01x - 2,820.76R² = 0.87

0

25,000

50,000

75,000

100,000

125,000

0 25,000 50,000 75,000 100,000 125,000 150,000

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Market Base Salary

St. Joseph Base Salary

Market Base Salary

Linear (St. Joseph BaseSalary)

Linear (Market Base Salary)

St. Joseph School DistrictSalary Trendline Equation

and R-Square:

Below Salary Range Minimum

Above Salary Range Maximum

Number of Employees 398 179

Total Amount ($) 1,972,169 1,210,613

Total Amount as a % of Payroll 3.0% 1.9%

Results

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● Comparative Salary Analysis– Many employees fall within the proposed salary ranges for

their jobs.– The average overall compa-ratio is 93.9%, indicating that

employees, in general, receive salaries below the market 50th percentile.

Results

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● Comparative Salary Analysis– In addition to simply adjusting employees to minimum, the

District will continue to recognize education and experience for teaching positions.

– The District may consider further adjustments to address compression and internal equity issues.

Results

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● Comparative Total Compensation Analysis– On average, employee salaries are slightly below the

market median, while benefits are somewhat above market.– As a result, the competitiveness of total compensation will

fall between that of salaries and benefits.

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Recommendations and Next Steps

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Recommendations

● Review and adopt the proposed market-based salary schedules.

● Implementation of the compensation plan should occur uniformly across all positions. While different implementation scenarios may recognize budget constraints, partial or sporadic implementation can result in pay equity issues.

● Update schedules annually. ● Perform a comprehensive market review every 3 to 5

years to ensure that the salary ranges remain market-competitive.

● Periodically assess benefits offerings to ensure that the employer cost is market-competitive and fiscally sound and that the benefits provided by the District are of value to the employees.

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Next Steps

1. Review the preliminary compensation results and identify any jobs for re-evaluation due to equity or competitiveness observations.

2. CBIZ reviews jobs pursuant to District feedback and revises the recommendations, as appropriate.

3. Updated study results are presented to the District for finalization.

Questions?