Agenda Index City of Vancouver

ADMINISTRATIVE REPORT

TO: Vancouver City Council

FROM: General Manager, Human Resources on behalf of the Corporate Management Team

SUBJECT: Exempt Staff Compensation

RECOMMENDATIONS:

CITY MANAGER'S COMMENTS

COUNCIL POLICY

Vancouver City Council approves changes to the wages, benefits and working conditions of employees.

PURPOSE

This report seeks Council approval to address a number of issues with respect to exempt staff compensation that are adversely affecting the City's ability to attract and retain qualified professional and managerial staff.

BACKGROUND

The civic exempt staff complement is very small compared to the total size of the work force. The staff complement of the City and its various Boards totals approximately 8500 regular, temporary and seasonal staff. The exempt staff complement, by comparison, comprises only 400 staff. Of this number, only 239 hold managerial roles.

The remaining staff are employed in a professional or exempt administrative support capacity. Typically the turnover amongst the exempt staff group has consistently been within the range of four per cent (4%).

The City and its various Boards have been experiencing unusually high turnover rates (see Appendix `F'), and are having considerable difficulty attracting and retaining qualified and experienced exempt managerial and professional staff. Over the past fifteen (15) months the City and its related Boards have lost fifty six (56) excluded staff members. This amounts to approximately 14% of the excluded staff complement. The loss of experienced managerialand professional staff and the difficulties in replacing such staff have adversely impacted on the organization's ability to continue to deliver service in a number of program areas. This is especially true given the comparatively small size of the exempt staff complement relative to the total size of the workforce. In addition to the loss of staff, the City has had to hire many of the replacement staff at the top step of existing salary ranges and/or increase existing compensation levels in order to attract qualified candidates. The problems commenced in 1998, have persisted throughout 1999 and continue to be a problem during the first quarter of year 2000.

In late 1999 and early January 2000 the Corporate Management Team (CMT) met to discuss a number of the issues felt to be contributing to the above problem. The issues identified included an outstanding job evaluation review that was never fully completed or implemented, the need to address market compensation issues, problems with the number of pay levels and structure of the existing pay plan, flexibility around hours of work issues and issues related to exempt staff overtime. Given the level of turnover and difficulties in recruiting to fill vacancies, these were made key priority issues for both the Corporate Management Team and Human Resource Services.

DISCUSSION OF ISSUES

Uncompleted Job Evaluation Review

In 1994, the City of Vancouver along with its related Boards commenced a full Job Evaluation Review of the exempt staff group. The review involved the participation of exempt staff representatives. Although the review was intended to develop a new job evaluation system and establish appropriate internal relationships amongst the exempt positions, it was set aside in 1996. Neither the exempt staff group nor senior management were comfortable with the system or the results it produced. However, the failure to complete the review and to make necessary adjustments to many of the exempt staff compensation levels has remained an outstanding issue with the exempt staff and in many cases has adversely affected our ability to retain existing or attract new staff.

Earlier this year, the Corporate Management Team undertook to complete the review of internal compensation relationships under the existing pay plan. The review included broad banding positions and adjusting the internal compensation relationships. The objective was to simplify the classification system through broad banding and to better align the compensation relationships between positions on the basis of their authority, accountability, responsibility and working conditions (see Appendix `A').

The CMT has recommended that the results of this review be implemented effective January 1, 2000 and that Human Resource Services be instructed to develop a comprehensive Job Evaluation System that can be used to fine tune the internal relationships established as aresult of this review. It is anticipated that development of the system will take approximately 12-15 months but will greatly simplify exempt staff job evaluation in the future.

A. Market Rate Comparisons and a Revised Pay Plan

Although the establishment of appropriate internal relationships will assist in correcting some of the pay anomalies amongst exempt staff positions, it does not completely address the issue of how the City's and its related Board's rates of pay compare to the market.

Over the past few months Human Resource Services has been gathering and reviewing public and private sector market data with respect to a number of key managerial, professional and administrative classifications in order to determine how far behind the market our exempt staff rates of pay have fallen. The results of the review confirm that the rates of pay for administrative support positions are comparable to the market and do not require significant adjustment. However, our rates of pay for middle management and professional staff are of particular concern. In most cases, both our starting and top step rates are low for these groups. This is particularly evident amongst the engineering, information technology, human resource and to a lesser extent finance staff. In these groups our starting rates are 2-3% behind the starting rates for the market and our top step rates are approximately 6-9% behind the market - although some individual positions and classes are even further behind market rates. Amongst senior managers, the starting rates are relatively close to market but are low by about 5-6% at the top end of our salary ranges.

As a result the CMT is recommending that we also make an adjustment to exempt staff salaries for year 2000 in order to bring our salary ranges closer to market. The market adjustment is recommended to be effective March 10, 2000. The market adjustment has been combined with the introduction of a new pay plan (see Appendix `B') in order to correct anomalies that existed in the previous plan. These include widening the salary ranges, reducing the number of pay levels to seventeen (17) from forty-one (41), amending the increment structure and adjusting the differentials between pay levels to better reflect changes in authority and accountability.

The CMT suggests that our rates of pay, turnover rates and hiring difficulties should be monitored regularly to avoid similar situations in the future.

B. Exempt Staff Overtime Issues

Exempt staff are not currently entitled to overtime for most of the situations in which extra hours are worked in the course of their duties. Generally, they are expected to work the hours necessary to get the job done. Below the senior staff level, exempt staff do have some ability to "flex" their time on an hour-for-hour basis for required pre-scheduled work beyond the normal working hours. There are also some limited provisions for required emergencyovertime (not pre-scheduled) to be paid at 1.5x for the first two (2) hours and 2x for the balance of hours worked. Senior exempt staff can accumulate "flex time" to a maximum of two weeks for attendance at Council/Board or other required public meetings but there are no other provisions for overtime or additional flex time. These provisions do not, however, provide compensation for the number of hours typically expected of exempt staff.

The CMT recommends that:
1) Administrative support staff be compensated for required overtime in accordance with the CUPE local 15 collective agreement.
2) Exempt middle managers and professional staff continue to be covered by the hour for hour "flex time" provisions for required pre-scheduled overtime and by the payment provisions for "emergency overtime". In addition, the CMT recommends that middle management and professional staff be provided one additional week of vacation in recognition of the additional overtime they can be expected to work as part of their jobs. The CMT recommends that this be implemented effective July 1, 2000 on a pro-rated basis.
3) Senior Managers have one of their possible two (2) weeks built into the vacation provisions and that the second week remain as an accumulation of "flex time" for attendance at Council/Board meetings or other public meeting or sessions. The CMT also recommends that if the remaining one (1) week of accumulated "flex time" cannot be taken prior to year end, it be paid out as soon as possible following year end.

C. Compensation Rates for Year 2001 and 2002

Given the length of time exempt staff compensation issues have been outstanding and the volatility of the market especially for engineering, information technology and other professional staff, the CMT recommends that we implement wage increases for the years 2001 and 2002 (see Appendices `C' and `D'). This will enable exempt staff to have some certainty with respect to up coming increments and annual wage adjustments. The CMT recommends that a two percent (2%) increase be accorded to exempt staff for each of the years 2001 and 2002 and that these increases be effective on January 1 of each year.

D. Implementation of a Scheduled Additional Time Off System

Following cancellation of the Four (4) Day Week, Council directed that the "City Manager discuss with staff work schedules which will achieve the primary goal of providing optimum customer service to the public while allowing for consideration of other flexible arrangements...". Although the City entered into discussions with CUPE 15 on this topic, the discussions faltered when the City was unable to meet the preconditions set by the Union. As Council will recall, CUPE 15 rejected further discussions with the City on a possible accumulated time off system and elected to carry the matter into contract negotiations.

Since then, the City has continued to develop a pre-scheduled Additional Time Off system that meets the City's needs to optimize both internal and external customer service while at the same time providing some balance between work life and personal demands placed on employees (see Appendix `E'). The system requires staff to work an extra one half (1/2) hour per day and provides for an additional nine (9) days that can be taken off throughout the year on a pre-scheduled basis. The system has been discussed with representatives of both VACMPS and the Superintendent's Association who are supportive of its implementation on behalf of exempt staff. The system is also capable of being used in conjunction with CUPE 15 staff as part of the contract negotiations providing the City can obtain the flexibility it seeks on hours of work issues.

E.Flexible Benefits Plan - "Own Occupational Period"

With the introduction of the flexible benefits package for exempt staff, a number of staff elected to remain on the accumulated sick leave plan rather than convert over to the new sick leave plan. These staff had previously had a waiting period for Long Term Disability that consisted of 26 weeks and a two year "own occupation" disability provision under the LTD plan. They were able to use their accumulated sick leave to have disability protection for the entire two years plus 26 weeks. Under the conversion, those staff that elected to stay on the old system actually were converted to a maximum period of disability protection of two years plus 17 weeks. The CMT recommends that this be restored to those exempt staff that elected to remain covered by the previous provisions.

BUDGET ISSUES

There are a number of cost elements associated with the recommendations included in this report. These include:

1) The cost of completion of the outstanding Job Evaluation Review is estimated at approximately $975,000.
2) The cost of the market adjustment in year 2000 pro-rated for the portion of the year following March 10, 2000 is approximately $550,000 or 2.0% of the exempt staff payroll.
3) The increased overtime costs for the 23 administrative support staff are negligible and the additional one-week of vacation for middle managers and professional staff (pro-rated in year 2000) is more than offset by the savings to the City associated with the unpaid overtime hours that can be expected from these staff members.
4) The increases for year 2001 and 2002 will result in a 2% increase in the exempt staff payroll in each of those two subsequent years.
5) The Scheduled Additional Time Off system is designed to be a no cost system because it maintains the same number of paid hours as is currently in place under the5-day week system. It also addresses some of the lost productivity issues that were problematic with the 4-day week.

The Manager of Budgets has advised that provision has been made in the year 2000 budget to address the costs associated with the recommendations.

SUMMARY

The City and its related Boards have been and are continuing to experience significant difficulties with the turnover and subsequent replacement of key managerial and professional staff. The Corporate Management Team has identified a number of issues that relate to exempt staff compensation and our position relative to market rates. The Corporate Management Team has recommended that these issues be addressed immediately as a matter of priority given the continuing turnover problems and recruiting difficulties. The recommendations include completion of an outstanding job evaluation review for exempt staff with only limited retroactive effect. The CMT has also recommended that an exempt staff compensation package be implemented that includes an adjustment of exempt staff rates relative to the market with a cost impact of 2.0% in year 2000. Other elements of the package include some minor adjustments to exempt compensation in recognition of the requirement to work extra hours without overtime compensation and a wage increase of 2.0% effective January 1 in each of the years 2001 and 2002. And finally, the CMT has recommended the introduction of a Scheduled Additional Time Off system that meets Council's previously stated objective of "providing optimal customer service while allowing for other flexible work arrangements".

The above recommendations have been discussed with representatives of the Vancouver Association of Managerial and Professional Staff (VACMPS) and with the Superintendent's Association both of who concur herein.

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