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1989-053NOTE THIS ORDINANCE HAS BEEN AMENDED BY ORDINANCE NO 89-162 ORDINANCE NO 7 q AN ORDINANCE OF THE CITY OF DENTON, TEXAS AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT BETWEEN THE CITY AND MERCER MEIDINGER HANSEN FOR CONSULTING SERVICES FOR THE REVISION OF THE CITY'S COMPENSATION PLAN, AUTHORIZING THE EXPENDITURE OF FUNDS THEREFORE, AND PROVIDING FOR AN EFFECTIVE DATE THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS SECTION I That the City Council hereby authorizes the Mayor and City Secretary to execute and attest, respectively, the agreement between the City of Denton and Mercer Meidinger Hansen for consulting services for the revision of the City's Compensation Plan, under the terms and conditions contained in said agreement which is attached hereto and made a part hereof SECTION II That the City council authorizes the expenditure of funds not to exceed Fifty-five Thousand Seven Hundred Dollars ($55,700 00) SECTION III, That this ordinance shall become effective immediately upon its passage and approval PASSED AND APPROVED this the day of April, 1989 4~_4_ RAY S ENS, MAYOR ATTEST f JE FER V LT' S, CITY SECRETARY APPROVED AS TO LEGAL FORM DEBRA A DRAYOVITCH, CITY ATTORNEY BY jj~&a~ L1LdAL_ ORD 6 ORDINANCE NO A, AN ORDINANCE OF THE CITY OF DENTON, TEXAS, AUTHORIZING THE PAYMENT OF FUNDS FOR COMPLETING CONSULTANT SERVICES AS PROVIDED FOR IN THE AGREEMENT ENTERED INTO WITH MERCER MEIDINGER HANSEN, AND PROVIDING FOR AN EFFECTIVE DATE WHEREAS, by Ordinance No 89-053, enacted on the April 18, 1989, the City Council approved an agreement for consulting services with Mercer Meidinger Hansen which provided for funding part of the services approved therein out of the 1988-89 budget and of the remainder from the 1989-90 budget, and WHEREAS, the funds for funding the remainder of the agreement were appropriated in the 1989-90 budget, NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS SECTION I. That the City Council authorizes the expenditure of funds for payment of phases III and IV of the consulting work to be provided by Mercer Meidinger Hansen, as specified in Section V of the agreement approved by ordinance No 89-053 SECTION II That this ordinance shall become effective immediately upon its passage and approval PASSED AND APPROVED this the -/•p~day of A&" W ' , 1989 RAY S ENS MAYOR ATTEST JENNIFER WALTERS, CITY SECRETARY BY 1~l6dGfd6dL_ APPRO D AS TO LEGAL FORM DEBRA ADAMI DRAYOVITCH, CITY ATTORNEY BY Y~~ 1HE STATE OF 1EXA5 COUNTY OF DENTON AGREEMENT BETWEEN OF DENTON AND MERCER MEIDINGER THE CITY HANSEN The City of Denton, Texas, a Municipal Home Rule City situated in Denton County, Texas, hereinafter called "City", acting herein by and through its City Manager and Mercer Meidinger Hansen, a corporation, hereinafter called "Consultant," hereby mutually agree as follows SERVICES TO BE PERFORMED City hereby retains Consultant to perform the hereinafter designated services and Consultant agrees to perform the following services A Conduct a comprehensive study and provide recommendations for changes, improvements, and adjustments to the City's Classification and Compensation Programs The specific tasks to be completed are as set forth in Consultant's Proposal, dated October 28, 1988, particularly Section Two (2), a copy of which is attached hereto and incorporated by reference herein PHASE I - ANALYSIS, DESCRIPTION - EVALUATION Project Orientation and Review of Present Systems Conduct a review of City's current salary program, including interviews with 8 to 10 key employees to assess cultural aspects of the current programs Job Analysis a Review City's current position information questionnaire and recommend modification or replacement as appropriate b Analyze positions in a computer scored position analysis questionnaire called a Job Model Report (JMGRE) as set out in pages 7 and 8 of MMH's proposal, a copy of which is attached hereto c Administer JMORE to the balance of the jobs and conduct "Auto-Check" Response Validation and audit 20% of said jobs d Identify and weigh JMORE questions and demonstrate "Compmaster" 3138g/l PAGE 1 3 Work with City to develop job description formats and review and revise job descriptions to meet system requirements and deliver final descriptions in a format as set forth in this contract 4 Review City's current job evaluation system, assess the need for modification or replacement If possible, compare the fob evaluations made under the present system to new scores collected on the computer scored questionnaires collected during the project, determine the relative impact of each of the compensable factors and summarize the internal relationships between jobs at the City Consultant will generate all initial job evaluations using the computer scored technique City will assist Consultant in making final job evaluation decisions through its initial review of recommendations 5 Present City's Personnel Director and Executive staff with a preliminary report of work completed through this phase PHASE II - MARKET ANALYSIS AND SALARY STRUCTURE DESIGN 1 Market Analysis Define, with the City, the appropriate labor market, identify survey sources, and consider regional and local market differentials 2 Salary Survey Development and Planning Develop and conduct salary survey as discussed on pages 12, 13 and 14 of consultant's proposal, surveying 45-50 participants, present a summary report of survey results to City 3 Develop Salary Structure and Testing Reconcile job evaluations and market comparison into a cohesive salary structure 4 Develop cost analysis in accordance with page 15 of Consultant's proposal 5 Develop administrative manual to operate the program developed by Consultant and train managers to use the program 6 Present Personnel Director and Executive staff with a status report of the program PHASE III - PERFORMANCE MANAGEMENT PROGRAM DESIGN AND INTEGRATION WITH THE SALARY MANAGEMENT PROGRAM 1 Review City's current performance appraisal programs, outlining areas needing modification or replacement 2 Consider alternative pay delivery strategies pursuant to pages 15 and 16 of consultant's proposal 3138g/2 PAGE 2 3 Design and test pay-for-performance programs for all of City's job families 4 Develop policies and procedures in accordance with pages 16 and 17 of Consultant's proposal 5 Perform merit budget cost analysis and projections 6 Develop training schedule and conduct training for managers and supervisors to use the programs developed by consultant 7 Present Personnel Director and Executive staff with a report summarizing work completed and prepare for program installation PHASE IV - FINAL REPORT, INSTALLATION AND MONITORING 1 Install "Compmaster" software and train city's personnel staff on its application 2 Conduct training with city's administrative team to be designated by the City Manager, to ensure that each aspect of the program is understood Conduct a 1/2-day training session with all employees to explain the program 2 Assist City in developing plan for communicating and implementing the new programs Be available on a monthly basis for one year following presentation of the final report to the City Council 3 Develop appeal procedures and assist City in addressing appeals during the 12-month period discussed in Section 2 above 4 Conduct briefing of City's supervisors and managers, in conjunction with the personnel staff, to overview the program and answer any questions 5 Prepare final report, Compensation Program Manual, summariz- ing all aspects of Consultant's study, including each step of each phase outlined herein In the event of any conflict between said proposal and this Agreement, the provisions of this Agreement shall be controlling B Provide typewritten copies of all updated fob descriptions, pay plans, performance evaluations, market data, policies and procedures, position control documents, and classification appeal procedures as set forth in the attached Consultant's proposal and a tape, disk, or other format compatible with Wang word processing equipment or equipment as agreed to by Consultant and City of such documents described above for future use by 3138g/3 PAGE 3 City Consultant also agrees to provide the City with "CompMaster" software, compatible with IBM PS-2 equipment Such media is delivered as is, and any and all warranties expressed or implied are hereby excluded including warranties of fitness for a particular purpose and merchantability C Consultant will make initial presentation to the City Council on April 18, 1989 D Consultant will provide weekly oral status updates to the Personnel/Employee Relations Department Director or his designee from April, 1989 to May, 1990 Consultant shall also conduct monthly meetings with the City's Executive Staff, provide written updates, and obtain approval on methodology, results, and appeals Such approval shall not be unreasonably withheld or delayed E Consultant will make final presentation to City's Executive Committee during May, 1990 Consultant shall provide twenty (20) copies to the City Council and Executive Staff of the detailed written comprehensive report of the study, findings and recommendations, which shall include the cost of implementation F Consultant will make the final presentation to the City Council of the Comprehensive Report in May, 1990 G Consultant will provide the Personnel Department staff, City managers and employees, training on the classification program, classification appeal process, pay plans and administration procedures and performance appraisal program H Implementation of the new procedures will occur during July through November, 1990, the specific dates shall be established between the Personnel Director and Consultant I Availability of City Resources City will make available to Consultant the following 1 Copies of all available job specifications and current organizational charts 2 Current payroll, performance appraisal program, market data, policies and procedures, classification appeal procedures, and position control documents, etc 3138g/4 PAGE 4 3 The Personnel Director and/or Assistant Director of Personnel will be reasonably available for progress update consultations 4 The time required of each City employee to complete the position analysis questionnaire (approximately 1-3 hours each) in a timely manner and to be available for interview with consultants, as needed (up to approximately 1-2 hours per interview) 5 Part-time assistance in the activities described in Consultant's proposal, including distribution and collection of position analysis questionnaires, providing information on the city's current pay program procedures, and scheduling of interviews II Term of Agreement Consultant shall commence its services upon execution of this agreement A Final presentation of the work described herein to the City Manager shall be completed no later than May 31, 1990 Presentation to the City Council shall be completed no later than July 30, 1990 B The Consultant shall make monthly, one-half day, on-site visits without additional cost for a twelve month period commencing upon the date of presentation to the Council to assess effectiveness of project implementation and shall be available to respond to telephone questions regarding implementation of the project for a twelve month period Deviation from this schedule is acceptable only if approved by City's Personnel Director, and if for reasons beyond the Consultant's control 3136g/5 PAGE 5 III COMPENSATION TO BE PAID CONTRACTOR City agrees to pay Consultant for the services performed hereunder as shown in the table below and for the minimum and maximum hourly rates as shown in Exhibit B A Amount of Payment for Services Project Phases and Steps Phase I - Internal Equity 1 Project Orientation and Review 2 Job Analysis Fees Minimum Maximum $ 500 $ 750 a Computer Scored Job Analysis 3,150 30675 b Administration 30500 30850 C Autocheck Response Validation 5,900 60600 d JMORE Weighting 2,800 30500 3 Job Description Review and Completion 81700 9,200 4 Job Evaluation 6,800 7,500 5 Preliminary Report 700 1,050 PHASE I TOTAL $32,050 $360125 Phase II - Market Analysis and Salary Str ucture Review 1 Market Comparison $ 6,200 $ 7,000 2 Salary Structure Design and Testing 4,000 4,500 3 Implementation Cost Analysis and 3,700 4,500 Salary Planning 4 Administrative Policies and Procedures 1,000 1,300 5 Preliminary Report 1,050 1,575 PHASE II TOTAL $150950 $18,875 PHASES I AND II SUB TOTAL $48,000 $55,000 3138g/6 PAGE 6 Fees Project Phases and Steps Minimum Maximum Phase III - Performance Management Program Design 1 Performance Management Program Review $1,000 $1,600 2 Performance Management Planning 1,100 1,500 3 Performance Management Program Design 4,200 5,250 4 Performance Management Policies and Procedures 1,100 1,300 5 Merit Budget Cost Analysis 22800 3,500 6 Supervisory Training 3,500 4,200 7 Preliminary Report 1,050 1,500 PHASE III TOTAL $14,750 $18,850 Phase IV - Final Report, Installation and Monitoring 1 CompMaster Software $ 7,000 $109000 2 Training of Administrative Staff 3,150 30675 3 Implementation Plan and Strategy 1,450 2,100 4 Appeals Procedures and Forum 7,000 79700 5 Compensation Program Briefing 1,400 1,900 6 Final Report 5,250 5,775 PHASE IV TOTAL $25,250 $31,150 PHASES III AND IV SUB T01AL $40,000 $502000 GRAND T01AL $88,000 $105,000 Estimated Expenses, Estimated Cost Includes travel, lodging, meals, clerical and computer time, to be 500 $ 10 (10%) billed at actual cost , 3138g/7 PAGE 7 It is agreed and understood that the City and Consultant will make extra efforts to monitor and control the above expenses However, regardless of estimates set forth and time and expenses expended, in no event will the total project cost exceed $115,500 for Consultant's fees and expenses Furthermore, Consultant will not exceed the maximum fees stated above for each phase B Dates of Payment The City will be invoiced every 30 days, payments will be made within 20 days of receipt of invoice Within 30 days of receipt of final invoice and upon completion of services provided for herein, excluding those services pprovided under Paragraph II B, final payment will be made IV SUPERVISION AND CONTROL BY CITY It is mutually understood and agree by an between City and Consultant that Consultant is an independent Consultant and shall not be deemed to be or considered an employee of the City of Denton, Texas for the purposes of income tax, withholding, social security taxes, vacation or sick leave benefits, worker's compensation, or any other City employee benefit The City shall have supervision and control of Consultant and any employee of Consultant while on City premises, and it is expressly understood that Consultant shall perform the services hereunder according to the attached Consultant's proposal at the direction of and to the satisfaction of the City Manager of the City of Denton or his designee under this agreement V SOURCE OF FUNDS All payments to Consultant under this agreement are to be paid by the City from funds appropriated by the City Council for such purposes in the Budget of the City of Denton For purposes of this contract, monies for Phases I and II will be paid with funds appropriated from the 1988/89 budget Payment for Phases III and IV will be subject to approval of funds by the City Council for the 1989/90 budget year and Consultant shall not commence performance of Phases III and IV until such funds have been appropriated VI INSURANCE Consultant shall provide at its own cost and expense worker's compensation insurance, liability insurance, and all other insurance necessary to protect Consultant in the operation of Consultant's business 3138g/8 PAGE 8 VII INDEMNIFICA JN Consultant shall and .oes hereby agree to indemnify and hold harmless the City of Denton from any and all damages, loss or liability of any kind whatsoever, by reason of injury to property or third persons to the extent directly and proximately caused by the error, omission or negligent act of Consultant, its officers, agents, employees, invitees, and other persons for whom it is legally liable, in the course of the performance of this agreement, and Consultant will, at its cost and expense, defend and protect the City of Denton against any and all such claims and demands VIII CANCELLATION City right to cancel this other party fourtee intention to cancel pays Consultant for of cancellation and Consultant each reserve the Agreement at any time by giving the n (14) days written notice of its this Agreement, provided the City services performed prior to notice IX TERM OF CONTRACT This Agreement shall commence on the th day of May, 1989, and end upon the completion of the project EXECUTED this &t16 ' day of ATTEST CITY OF DENTON, TEXAS BY ~ RAY ENS, AYO n , _ . % JEq FER' WLTERS, CITY SECRETARY CI OF DE TON, TEXAS APPROVED AS TO LEGAL FORM DEBRA ADAMI DRAYOVITCH, CITY ATTORNEY CITY OF DENTON, TEXAS BY BY om R ey, r nc pa Mercer Meidinger Han n That Thomas W Klinck, is hereby designated as the p to administer the provisions of this agreement on 3138g/9 PAGE 9 MERCER M ')INGER HANSEN EXHIBIT "A" SECTION 2 SUGGESTED APPROACH AND TECHNICAL DESIGN All _ A /1 11 MERCER M ')INGER HANSEN SUGGESTED APPROACH AND TECHNICAL DESIGN The approach we propose to take in assisting The City of Denton, has been carefully planned to result in a systematic program which will provide managers who will administer the program with the skills and ability to maintain it, allow for management input and generate commitment to the new job evaluation plan, accommodate the management style, cultural environment, and budgetary considerations of managing human resources within the City, and assist the city's management team to make individual and administrative decisions based on established compensation management practices In addition to basic compensation management considerations, the proposed salary management system is flexible and addresses other program components These include management training, and implementation of automated compensation management systems, as may be feasible and appropriate for the city, both at the present time and in the future This study cannot possibly succeed if the consultants do their work from a distance, present a report outlining their solutions, and depart To succeed, we must make sure that we develop findings, conclusions, and recommendations with the full input, agreement, and enthusiasm of The City of Denton Therefore, we are structuring the assignment as a series of phases with informal and formal progress meetings to assure an ongoing meeting of the minds and a no-surprises end result We have structured our approach to include four phases Each phase is outlined separately However, each phase is inherently linked with the other phases as part of a comprehensive compensation management program 4 MERCER M ANGER HANSEN Phase I - Internal Equity Project Organization and Review of Present Systems, Job Analysis, Job Description Review and Completion, Job Evaluation, Preliminary Report Phase II - Market Analysis and Salary Structure Design Market Analysis, Salary Survey Development and Plannning (if required), Grade and Range Structuring, Grade and Range Testing and Competitive Comparison, Cost Analysis and Implementation Strategy Design, Salary Administration Policy and Procedure Development, Preliminary Report, Communications and Follow-up Phase III - Performance Management Program Design and integration with the Salary Management Program • Performance Management Program Review, Performance Management Planning, Performance Management Program Design, Performance management policies and procedures review, Supervisory Management Training, • Preliminary Report Phase IV - Progra_ Reporting, Installation and Monitoring In-House Training Program For Administrative Staff, Implementation Plan and Strategy, 5 MERCER M `SINGER HANSEN Appeals Procedures and Forum Format, Compensation Program Briefings For supervisors and Managers, Comprehensive Report and Follow-up Meetings, Project Monitoring and on-Going Assistance Each phase is followed by the presentation of a preliminary report and assistance in implementing the program This ensures the programs designed for The City of Denton are workable During the first phase of the project, we will fine-tune the work plan and work out a detailed action plan Each of the four plan phases that follow are introduced separately, however, each is inherently connected with the others as part of a comprehensive compensation management program PHASE I - Internal Equity 1 Project Orientation and Review of Present systems Before designing a salary management system, it is important that we understand the existing salary program and management's objectives This includes total human resource objectives and strategies for change over the long run Further, we want to ensure that City management understands and agrees with the specifics of the approach During this first step we will conduct a review of the city's current salary management programs This will include interviews with 8 - 10 key individuals to assess cultural aspects of the current program as well as the technical components We suggest that this review be accomplished in a very short time frame with the objective of assessing all components of the present system in brief Once this is completed, Mercer Meidinger Hansen (MMH), along with City management, will be in a position to modify our approach to focus on areas of particular concern and develop a program which meets the City's objectives We believe it is important that human resource management staff maintain a high profile in the strategy and developmental stages of the program This promotes in-house understanding of the program from onset to completion MERCER M' )INGER HANSEN 2 Job Analysis The key step in developing a system which has both internal and external equity is job analysis During this step, we will review the City's present Position Information Questionnaire and determine if it needs to be modified or replaced If it is deemed that the current questionnaire is in need of substantial modification or replacement, we have found that one of the best ways to review the efficiency and effectiveness of job analysis is through the use of a computer scored technique We will use computer scored analysis to assess both the effectiveness of the current system and to develop a system which is highly efficient Ease of administration typically translates into a system which is better maintained and more accurate We suggest the method discussed below be applied a. Computer Scored Job Analysis For the evaluation system to is effective, there must be accurate information about each position The approach we suggest in analyzing positions is a computer scored position analysis questionnaire which we call a Job Model Report (JMORE) (see Appendix 2 for a sample Job Model Report) The questionnaire is designed specifically for the City and incorporates into the analysis compensable factors that will be used to evaluate jobs This process efficiently assesses comparative job analysis data and assists management in making initial job evaluation comparisons Further, by including compensable job evaluation factors in the job analysis we are able to determine which factors best measure job value During the design stage of the JMORE, we test the instrument using a two stage process Stace I - Selected managers and supervisors will complete the JMORE for approximately 30 - 50 benchmark positions that represent the depth and breadth of jobs eventually to be covered by the study The purpose of this testing is not to create final evaluations but to test design issues related to the JMORE Such issues include the number of factors and the number of response levels within factors, readability of the instrument, 7 MERCER M SINGER HANSEN reliability, and validity Stage IT--- The JMORE is then tested live to simulate the communications and instructions, and method of administration, e g employees, supervisors, representative employees, or a combination The results within each of these aspects will be reviewed with City human resource professionals and modified to ensure the JMORE is truly functional b Administration With the comprehensive two-stage testing process c plated, the next design step is to administer the JMORE to the balance of the jobs Since admini- stration materials will have been prepared and tested, the only remaining question is who will complete the JMORE7 For single incumbent jobs, the choices are simple the employee or the supervisor However, in the cases of multiple incumbent jobs, many alternatives exist The basic choices are as follows every employee in a job title completes the JMORE, a representative sample completes the JMORE independently, an ad hoc committee job title completes employees, or of employees within the it on behalf of all an individual employee is designated to complete the JMORE for each job title c "Auto-Check" Response Validation Probably the most important reason for using the computer-scored approach is the ability to validate or "clean" JMORE responses By comparing questionnaire scores within and between jobs, we are able to determine if responses are consistent and logical Through the auto-check process, the response to any MORE question can be examined 8 Nil UAVV MERCER M' IINGER HMSEN relative to all other responses to balance evaluations, marketplace values, and any other relevant factors (e g , current pay, geographic location) MMH consultants will develop auto-check models for use in this validation process Each JMORE will be subjected to the auto-check models, proper responses will be validated and potentially improper responses "flagged " In a method to be decided upon by the project team, potential errors will be reviewed and resolved Typically, the questionable responses are reviewed directly with a department head This is an important step in the design of a program, since the quality of the ultimate weightings depends fully on the quality of data submitted Further, management participation in the decision-making process builds support for the program d JMORE Weighting ultimately, each JMORE question will play a unique role in the jobs' overall evaluations Through the use of multiple regression statistics, we can identify and "weight" individual questions according to their respective importance in reflecting competitive market rates, current midpoints, or current average pay We emphasize that this automated approach can be maintained manually, thus ensuring that The City of Denton will be able to operate independent of the consultant, or the City may choose to automate the system in the future We have developed a software program known as, "CompMaster" CompMaster is designed to track and monitor the compensation program on a fully automated basis We realize that automation is not a primary objective at the present time However, this option is available and we would be pleased to demonstrate the system for the city 3. Job Description Review and Completion Job descriptions are an important component of any compensation management program It is the job description which is used to communicate job responsibilities and it forms the foundation of the salary management and performance appraisal processes Because of the importance of good job descriptions, we 9 N I r% M MERCER N RINGER HANSEN have developed a method for keeping job descriptions up to date, accurate and functional our scored questionnaire approach integrates three basic salary administration components These components are connected and interdependent upon each other They include Job Analysis, Job Descriptions, and Job Evaluation When designed correctly, the computer scored job analysis instrument forms the basis of the job description or can be used as the job description and consequently as a basis for job evaluation This eliminates the arduous task of transferring information between each of the above components and ensures the continuity of the salary administration process This approach results in a cohesive analysis of each job, written job description for each job, and comprehensive data base measuring how each job reflects specific compensable factors that the City and labor markets value most The City of Denton already has job descriptions, some of these descriptions have recently been revised, so our scored questionnaire will provide the City with additional information to ensure that the descriptions are adequate and correct We will work with the City to develop the job description formats and we will review and revise job descriptions to meet system requirements MMH will be responsible for delivering final descriptions 4 Job Evaluation we will review the city's current job evaluation system and assess the need for modification or replacement on many occasions we are able to utilize the current program as a foundation for developing the computer scored questionnaire when this is possible we are then able to compare job evaluations made under the present system to new scores collected during the project This results in an objective assessment of how jobs have changed within the organization, and hence, how the 10 MERCER M- RINGER HANSEN salary structure should be modified to reflect these changes We have concluded that a workable job evaluation system should be designed to fit the specific operating characteristics of the organization Utilizing "Job Models" obtained in the computer scored job analysis process, we then determine the relative impact of each of the compensable factors and summarize the internal relationships between jobs at the City This approach further recognizes the human element in the evaluation process computer modeling permits managers to examine internal practices and job relationships and alter factor evaluations to assess how evaluation changes impact the internal equity relationships between jobs and between jobs in different parts of the organization As a result, management may run a series of "what if" scenarios to assess the impact of different factor assignments Furthermore, those responsible for making final job evaluation decisions are not faced with making evaluation guesses based only on job content information Rather, they have job content information and a comprehensive data base of preliminary job evaluations which reflect job value attitudes of managers and employees Support for the system is further enhanced because employees and/or managers have participated in the evaluation process through completion of the computer scored questionnaire MMH will take responsibility job evaluations using the The city will assist MMH in decisions through a recommendations for generating all initial computer scored technique making final job evaluation review of our initial 5. Preliminary Report We maintain quality and assure the program is on target by coordinating with an in-house project director We will present preliminary results upon completion of this phase PHASE II - Market Analysis and salary structure Design 1 Market Analysis In assessing external competitiveness, we will define with the City, the appropriate labor market, identify 11 W 1AM N MERCER M" 'SINGER HANSEN survey sources, and consider regional and local market differentials We also have the variety of reports The MMH Comoensatia source of market published and pri, comparisons capabilities to analyze data in a to meet your specific requirements n institute will be used as a primary information We also use other Late survey sources to make market 2 Salary Survey Development and Planning (Optional) Before conducting a survey we suggest that available market information be examined to determine the availability, timeliness and accuracy of survey data sources which MMH maintains and other published sources which might be purchased Surveying is an expensive proposition and one which requires full assessment of available data We believe that it would be unwise to conduct a survey if timely and accurate data can be obtained through other published sources If it is determined that a survey is required to obtain competitive and comparative labor market data we will conduct a customized survey for the City of Denton to supplement our available data bases and the City's June 1988 survey Before beginning the survey it is important that we understand management's short and long term plans for the survey and exactly how survey information is to be compared on an internal basis Further, we will review any survey documentation which the City currently has to determine if it can be used or modified to conduct the survey Consequently, we will meet with representatives of The City of Denton to • Clarify the survey objectives and determine the approach and procedures which most accurately and efficiently meet The City of Denton's objectives Determine the targeted benchmark positions to be surveyed and verify functional position descriptions and reporting relationships Designate and define specific factors on which data is to be collected 12 MERCER M 'SINGER HANSEN Determine a proposed format and results orientation for the final report compile a proposed list of survey participants Determine the number of participants needed for a representative sample For purposes of this proposal, we anticipate surveying approximately 50 job titles with 30 - 50 participants a Survey Design and Content Based on our review and the information obtained in step 2, we will modify or develop data collection documents and an instruction guide to aid in the completion process These documents will be presented to The City of Denton and representatives for their review and input b Distribution of the Data Collection Forms With the City we will identify survey participants and draft a prospectus soliciting participation from targeted participants to be mailed under the joint signature of The City of Denton and MMH Each prospectus would include an explanation of the survey approach and the results which participants can expect to receive in the final report The prospectus would include a response card to be returned to MMH if an organization elects to participate in the study Data collection forms will then be mailed only to those organizations responding affirmatively to the initial participation request This ensures the confidentiality of the survey and reduces costs associated with the production of the collection documents During the data collection process, members of MMH's staff will be available to answer questions which participants may have regarding the survey or the data collection forms To ensure that data is as accurate as possible, questionable entries will be verified directly with each participating organization's contact person 13 'Nil LAM M MERCER M- DINGER HANSEN c Analysis of Data Data will be statistically analyzed on a position- by-position basis in the manner agreed to in step 1 The approaches we offer for your consideration in the analysis phase of the survey may include Linear regression formulas and pay line graphics to allow prediction of pay line policy based on predictors of pay levels job evaluation points, number of employees, budget size (operating, expense or both) Those variables that prove to be the best predictors of pay can be reported individually or in combination allowing The City of Denton and each participant to use the equations which best meet their comparison requirements d Survey Summary Report Preparation and Presentation MMH will meet with The City of Denton to present and discuss the results of the survey before the report is distributed to participants e. Distribution of Survey Reports to Participants After final approval of the report format, final reports will be distributed to each survey participant Further, MMH will be available to answer any questions that survey participants might have 3 Development of a Salary Structure and Testing Based on internal and External Comparison Considerations and Salary Budgets upon completion of job evaluation and market comparison, it is necessary to reconcile the two into a cohesive salary structure Working from the previously established objectives and the results of our analysis, we will identify outlying positions, reconcile internal job evaluations, and determine the proper salary ranges for the jobs included in the study We will then develop strategies for monitoring salary structures to bring outliers into alignment 14 VVILLIr,%A M MERCER M SINGER HANSEN 4. Implementation Cost Analysis and Salary Planning Strategy To assure the program is properly implemented within budgetary and organizational constraints, we will develop a cost analysis The cost analysis will include a summary of where each individual employee falls within the suggested salary ranges This ensures that management is fully apprised of the costs or savings associated with implementing the program The cost analysis will be completed using PC based software with the data base delivered to the City of Denton upon completion of the project Hence, the City will be able to run a series of "what if" scenarios for making compensation decisions during implementation and in the future 5. Administrative Policies and Procedures As an ongoing process throughout the project, we will work with your staff to document policies and procedures which govern the operation of the program This will involve development of an administrative manual and training managers to use the program 6. Preliminary Report We maintain quality and assure the program is on target by coordinating with an in-house project director who reviews and approves each step of the project as it is completed PHASE III - Performance Management Program Design and integration with the Salary Management Program 1 Performance Management Program Review Based on our work to this point we will review the current performance appraisal programs During this step, we will outline areas where the performance management program may require modification or replacement 2. Performance Management Planning The distribution of pay increases should be accomplished toward the delivery of management messages, not merely money We will consider alternative pay delivery strategies including variable reward strategies such as lump sum distributions and gainsharing We will 15 M ER M 71NGER HANSEN 3. consider how differing pay delivery strategies fit with the City s public service responsibilities and public image we will also identify the proper mix between increases to base and variable compensation arrangements Performance Management Program Design Based on our work to this point, we will design and test pay-for-performance programs to include service/maintenance, office Support, Technical/Paraprofessional, Professional, 4. Management/Supervision, and Executive we anticipate that more than a single performance management program will be required to accommodate the job families listed above Testing includes both the practical application of the new program by managers and employees and quantitative assessment of how the program relates pay to performance We also consider the strengths and weaknesses of several alternative methods for distributing pay increases and determine which method will maximize the City's return on its compensation investment During this step, we consider criteria against which performance is to be assessed and determine which measures best meet management needs Performance Management Policies and Procedures We will develop policies and procedures to govern the distribution of pay increases to ensure policies fit well with the new salary management program and the management philosophy of the City of Denton This will consider all aspects of the performance appraisal process and specifically Annual versus employment date evaluations integration of the program with the budgeting process 16 Nil uAM M MERCER M 71NGER HANSEN Ramification of varying the amount and timing of pay increases Ramification of mixing variable cost and fixed cost components 5. 6 7. We ensure the program is designed to assist management to meet performance, quality, and budgetary cost objectives Merit Budget Cost Analysis and Projections As part of the performance management program, we will consider range penetration and projected employee distributions within the various performance levels This will be included as part of the cost analysis discussed in Phase II This analysis will allow the City to assess the actual cost that could result from various projected merit budgets supervisory Training The supervisory training sessions are probably the most significant element in implementing a performance management program We will develop a training module that can be used to train managers and supervisors on how to use the new programs Further, we will work with City staff to determine the best means for conducting the training This training includes open discussion, presentation of the new program, and skills development sessions Preliminary Report We will present a preliminary report summarizing Phase III and prepare for program installation PHASE IV - Final Report, Installation and Monitoring 1 In-House Training for City Administrative staff As an ongoing process we will work closely with City administrative staff to ensure that each program step is understood We will ensure that the skills required to administer the program are fully developed within the city's administrative team 1~ In addition we will conduct a half day training session with administrative staff toward the end of the project to ensure full in house capability to manage the 17 WILLIAM M MERCER W 'LINGER HANSEN programs developed and installed for the City Implementation Plan and Strategy We will assist the City to develop a plan for communicating and implementing the new programs This step, however, will stop short of actual communication program design as we see this beyond the scope of this project as outlined in the City's proposal request We will assist the City in bringing the new program on board by being available on a monthly basis for a period not to exceed twelve months after the formal completion of the project We will, of course, be available after this period to assist on an as needed basis 3 Development of Appeals Procedures and Forum Format We will develop appeals procedures and conduct a forum in conjunction with City management to address departmental appeals relating to job evaluations and job descriptions We will also assist City management in addressing appeals as part of the implementation over the twelve month period discussed in step 2 above 4. Compensation Program Briefing we will meet with supervisors and managers in conjunction with City personnel staff to overview the new program and to answer any questions we will also present examples of how various components of the new program function to ensure a full understanding of the program among the management ranks 5 Final Report we will compile a final report (Compensation Program Manual) which summarizes all aspects of the study including each step of each phase outlined in this proposal This report will be presented to the Director of Personnel, Personnel Analyst, City Manager, Executive Committee and the City Council We suggest that an executive summary be presented to those not directly involved with the day-to-day operations of the system Approach Summary The approach we are proposing is flexible and will accommodate changes as they may occur Unique operational considerations that may arise during the project will be is Wlt LIAM M MERCER M ')INGER HANSEN integrated into the approach We believe this is necessary to ensure that the system will function within the operating characteristics of The City of Denton Upon completion of the project we will provide all data bases created during the project to allow tracking and monitoring of the system using a personal computer, should you have this capability now or in the future 19 EXHIBIT B Consultant fees for each phase of the project for the City of Denton are stated as a range of estimated fees based upon hourly rates for each task and project phase The minimum represents the fewest number of hours anticipated to complete each task, the maximum represents the highest number of hours per task which will be billed Consultant fees will not exceed the maximum estimated dollars for any project phase, unless the City changes the scope of the project and a new fee estimate is determined Protect Hourlv Estimates Minimum Maximum - Phase I 213 240 - Phase II 127 151 - Phase III 98 125 - Phase IV 202 249 As stated in the contract, regardless of estimates set forth and time and expenses incurred, in no event will the total project cost exceed $115,500 for Consultant fees and expenses