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