Item 1.0 Classification and Compensation Study Final Report� bake�rti'tty
niu joined wvith
Sprungsted and Ulmb ugh
Baker Tilly Virchow Krause, LLP
380 Jackson Street, Suite 300
St. Paul, MN 55101
651.223.3000
651.223.3046
November 6, 2020
Mr. Adam Flaherty
City Administrator
City of Otsego
13400 90th Street NE
Otsego, Minnesota 55330
Re: Classification and Compensation Study Final Report
Dear Mr. Flaherty:
Baker Tilly is pleased to provide the City of Otsego with the completed Classification and Compensation
Study.
The City of Otsego retained Baker Tilly to conduct a Classification and Compensation Study in the spring
of 2020. The Study included a thorough market analysis of equivalent positions in comparable
organizations; the review of job descriptions for select City positions to ensure equitable internal
relationships of City positions and updating the City's compensation plan to ensure internal equity and
market competitiveness of City positions.
A compensation system provides the framework for determining how employees will be paid. As a
general rule, most organizations conduct comprehensive classification and compensation studies
approximately every five to seven years, ensuring their ability to hire and retain qualified employees, and
that internal relationships are equitable. The external market comparison is important because it ensures
that the compensation plan is adequate to attract new employees and retain existing employees.
Conducting periodic reviews of internal and external comparability of an organization's compensation
program will assist in maintaining a long-term compensation program and in recruiting and retaining
qualified, experienced employees.
Market Survey. The comprehensive compensation survey included a review the organizations which
participated in the comprehensive classification and compensation study conducted by Springsted (now
Baker Tilly) for the City in 2015. Eighteen communities, listed below, were selected to participate in the
survey. We were able to obtain information for the entities in bold s with 17 total responses:
• City of Albertville
• City of Anoka
• City of Big Lake
• City of Buffalo
• City of Elk River
• City of Farmington
• City of Forest Lake
• City of Ham Lake
• City of Hastings
• City of Hugo
• City of Lino Lakes
• City of Monticello
• City of Northfield
• City of Ramsey
• City of Rogers
• City of Rosemount
• City of St. Michael
• City of Waconia
The survey participants were selected based on their similarity to the City of Otsego, geographic location
and comparability of positions to City of Otsego positions. Survey respondents were asked to provide
information only on those City of Otsego positions which they considered to be comparable to positions
in their organizations. Therefore, survey respondents did not provide data for every position surveyed.
Survey Results. Twenty-three City positions were included in the survey. We were able to use the
information for twenty City positions in the analysis of the data, three positions were excluded from the
overall analysis as the data was either incomplete (not enough information received) or inconsistent
(responses not consistent with the position in the City of Otsego). Based on the analysis of the data, on
average the City's salary ranges are slightly below the average with minimum salaries 6.00% below the
market average minimum salaries, 7.08% below the market midpoint salaries and on average, 6.81%
below the average maximums reported by the survey participants. For comparison purposes, wages
which are within 5% above or below the market average, dependent on the organizations pay philosophy
regarding market relationship, are considered to be competitive. A summary of the salary survey results
can be found in Appendix I.
Compensation Philosophy. A pay philosophy guides the design of a compensation system and answers
key questions regarding pay strategy. It generally takes a comprehensive, long term focus and explains
the compensation program's goals and how the program supports the employer's long-range strategic
goals. Without a pay philosophy, compensation decisions tend to be viewed from a short-term tactical
standpoint apart from the organization's overall goals.
Market competitiveness and internal equity are among the most important areas addressed in a pay
philosophy. An organization's desired market position involves defining the market and identifying where
the organization wants to be positioned within that market. Market position should balance what it takes to
attract new employees and retain skilled employees (in other words, eliminate higher pay as the reason
employees leave the organization) with the organization's financial resources. Internal equity expresses an
organization's desire to provide comparable pay to positions with comparable duties and responsibilities.
A pay philosophy should be developed that establishes a compensation program based on individual
employee performance as a key feature of the pay philosophy. Therefore, we emphasize references to
performance in the pay philosophy discussion. As part of the study, it is recommended that the City
consider these concepts in the adoption of a formal pay philosophy:
• Providing fair and equitable rates of pay to employees
• Defining the City's market area
• Developing a system that establishes a "market rate" for each position and states the minimum wage
and maximum rates that the City will pay individuals within a position
2
• Establishing rates of pay that allow the City to compete successfully for new employees within its
market area
• Establishing a market position that is fiscally responsible with public resources
• Ensuring that pay rates for existing employees are based on individual performance that meets or
exceeds expectations and reflects changing economic conditions
• Developing a compensation system that allows employees to progress through the pay range as long
as their performance consistently meets expectations
• Developing pay administration policies and procedures that ensure their consistent application
between departments
• Ensuring that the compensation program is understandable to employees, supervisors, managers,
the Board of Aldennan and the public
Developing a Salary Schedule. The process of developing a salary schedule draws from the results of
the salary survey along with the internal relationships of positions within the City. The City's
compensation plan was updated and City positions were placed within the compensation plan based on a
review of the evaluation of each position utilizing the SAFE job evaluation system based on the current
job responsibilities and job requirements. We utilized the information from the City's current job
descriptions as well as discussions with the City Administrator. The factors considered in determining the
relative value of positions are:
• Training and Ability
• Level of Work
• Physical Demands
• Independence of Actions
• Supervision Exercised
• Experience Required
• Human Relations Skills
• Working Conditions/Hazards
• Impact on End Results
The City's compensation plan has 23 grades with a 6% spread between grades. There are 9 steps in each
grade with a 2.75% spread between each step. The current pay plan was updated by increasing the
structure by 6.25% (4% market adjustment and 2.25% cost of living adjustment). The updated
compensation plan can be found in Appendix II of this report.
The placement of each position was reviewed to ensure the position was assigned to the appropriate salary
grade in the salary schedule based on the job evaluation points of the position (the majority of positions did
not change in grade placement). The List of Positions and Assignment to Salary Grades is shown in
Appendix 11.
It is recommended that as part of this compensation plan, individual employee movement within the range
be based on an annual adjustment which incorporate individual employee performance. Employees should
only wage increases if their performance is satisfactory or better.
Implementation. Implementation of the proposed compensation plans is effective at a time to be
determined by the City Administrator and the City Council.
Compensation Plan Implementation
The first step in implementation is to provide each employee with a 2.25% cost of living adjustment to
ensure individual employee wages stay consistent and competitive with the established market. The
3
annual cost of this adjustment is $39,394.93. Based on this adjusted wage employees would then be
placed in the updated pay plan. There are four options for moving employees into the update plan.
Option 1. This option moves employees who have a current wage below the minimum to the minimum of
the range. Of the City's 28 employees, 6 have a current wage which falls below the proposed minimum
of the range. The annual cost to move these 6 employees to the minimum is $15,594 which is a .87%
increase in the City's total payroll.
# of Staff
Current Salary
Proposed Salary
Difference % Increase
totals
28 $
1,750,885.76
$ 1,805,874.31
$ 15,593.62 0.87%
3mployee Below Min
6 $
282,609.18
$ 298,202.81
$ 15,593.62 5.52%
3mployee Within Range
22 $
1,507,671.51
$ 1,507,671.51
$ -
3mployee Above Max
0
Option 2. This option provides a base increase to those employees whose current wage falls within the
proposed range for their position. Twenty-two of the remaining City employees have a current wage
which falls within the proposed range for their positions. This option moves these employees to the step
closest to their current wage without any employees seeing a decrease in pay. The annual cost to move
these employees within the proposed compensation plan is $17,631. The total annual cost to move all
employees onto the proposed wage scale is $33,225, which is a 1.86% increase in total payroll.
# of Staff
Current Sala
Proposed Sala
Difference
%Increase
Totals
28 $
1,750,885.76
$ 1,823,505.69
$
33,225.00
1.86%
E to ee Below Min
6 $
282,609.18
$ 298,202.81
$
15,593.62
5.52%
E to ee WithinRan e
Employee Above Max
22 $
0 $
1,507,671.51
-
$ 1,525,302.89
$ -
$
$
17,631.38
-
1.17%
Option 3. In this option employees would move onto a step based on their years of service in their
current position, i.e., employees with 4 years of service would move to step 4 unless their current wage is
higher than the wage for that step. The annual cost of moving employees onto the wage scale with this
option is $71,533 which is a 4% increase in the City's total payroll.
Option 4. Employees would move to the same step in the updated pay plan as their current step, i.e. an
employee currently on step 7 would move to step 7. The annual cost of this option is $87,623 which is a
4.89% increase in the City's total payroll.
4
Summary. The City's current compensation plan is, on average below market when comparing
minimum, midpoint and maximum wage ranges. A review of the internal relationships of positions
within the City indicated that some positions had undergone changes in job responsibilities since the last
review which is indicated in grade placement. The proposed compensation plan is designed to be
competitive with the external market and internally consistent and equitable.
5
APPENDIX I
Market Survey Information
Market Average
Number of
Respondents
Average
Midpoint
Minimum
Salary
Midpoint Salary
Maximum Salary
Position Surveyed
Lowest
Highest
Average
Lowest
Highest
Lowest
Highest
Average
Accountant
7
71,401.86
58,781.00
71,800.00
63,996.00
66,123.50
80,714.50
72,446.00
89,629.00
78,807.71
Administrative Assistant
12
53,122.95
41,621.00
51,487.00
47,024.36
49,514.50
57,923.00
56,098.00
64,359.00
59,221.55
Building Permit Technician
10
54,476.78
41,621.00
52,728.00
48,177.78
49,514.50
59,321.50
54,850.00
65,915.00
60,775.78
City Administrator
17
136,440.65
106,142.00
145,381.00
122,028.07
120,296.50
153,886.50
134,451.00
172,066.00
150,786.87
City Clerk
11
74,036.98
35,593.00
76,137.00
66,080.47
41,820.50
82,855.00
48,048.00
93,484.00
81,993.50
Deputy Clerk
5
56,521.33
45,074.00
53,435.00
50,239.00
50,710.50
60,114.50
56,347.00
66,794.00
62,803.67
Finance Director
16
111,382.50
89,128.00
117,711.00
99,534.33
99,278.50
124,250.00
107,040.00
135,283.00
123,230.67
Fleet Maintenance Technician
13
62,717.39
49,442.00
63,287.00
56,555.92
56,867.50
68,671.00
62,358.00
76,294.00
68,702.62
Human Resource Generalist
4
57,688.00
46,062.00
53,061.00
50,334.00
54,031.50
59,696.00
62,001.00
66,794.00
65,042.00
Lead Parks Maintenance
1
62,005.00
55,120.00
55,120.00
55,120.00
62,005.00
62,005.00
68,890.00
68,890.00
68,890.00
€vj _ t
arks Recreation Operations Coordinator
6
72 i 69.7�
u nn
2. t t
7 —558-00
4
6 0
59,32 -50
s nn";
8:,6_8-100
n
6u,Y 5.00
n ::
9 t,698-00
u1 5
u ,21 -.00
Park Maintenance 1
12
54,928.96
38,251.00
54,642.00
48,017.92
44,304.00
59,467.50
50,357.00
66,286.00
61,840.00
U KS and Recreation Director
6
1104,438-99
73,637. 4
vv
.1r
?L4,t U.Uv
7.t?t u. 4
.63-00
,L
Receptionist Office Assistant
8
45,512.23
20,415.00
43,992.00
39,929.50
23,821.00
49,483.00
27,227.00
54,974.00
51,094.96
DNU- Recreation Coordinator
2
61132.25
514180.00
56,345.00
53,912-50
7.a}i.
5f n
64 __
L ,JiF7.i/i/
'�;5((
v4,x. v.4�
a 00
68,352-00
4'4'
Street Maintenance 1
2
52,343.00
45,490.00
48,794.00
47,142.00
51,158.00
53,528.00
56,826.00
58,262.00
57,544.00
Street Maintenance 11
14
56,986.92
42,012.00
55,370.00
50,007.92
53,394.00
62,286.00
59,925.00
69,202.00
64,027.64
Street Operations Foreperson
10
67,107.00
49,442.00
70,611.00
60,012.67
56,867.50
76,841.00
64,293.00
83,071.00
74,201.33
Street Operations Manager
9
94,110.08
70,595.00
97,677.00
83,906.50
80,007.00
106,295.50
89,419.00
114,914.00
104,313.67
Utility Billing Clerk
8
55,283.69
42,286.00
55,370.00
48,709.50
48,869.50
62,286.00
55,453.00
69,202.00
61,857.88
Utility Foreperson
5
67,353.83
57,533.00
61,048.00
59,148.33
65,208.00
68,671.00
72,883.00
77,501.00
75,559.33
Utility Manager
6
94,318.75
77,905.00
87,922.00
84,923.75
87,603.00
99,694.50
97,301.00
111,467.00
103,713.75
Utility Operator -Class D
13
58,163.67
46,426.00
57,782.00
51,685.42
53,394.00
64,397.00
59,384.00
72,488.00
64,641.92
Averages
8.57
DNU - did not use scree°, inforration
City of Otsego, MN Information
Position Surveyed
Min
Diff
%
Mid
Diff
%
Max
Diff
%
Accountant
59,583.00
(4,413.00)
-7.41%
66,413.00
(4,988.86)
-7.51%
74,025.00
(47782.71)
-6.46%
Administrative Assistant
47,195.00
170.64
0.36%
52,605.00
(517.95)
-0.98%
58,635.00
(586.55)
-1.00%
Building Permit Technician
47,195.00
(982.78)
-2.08%
52,605.00
(1 , 871.78)
-3.56%
58,635.00
(27140.78)
-3.65%
City Administrator
113,107.00
(8,921.07)
-7.89%
126,071.00
(10,369.65)
-8.23%
140,521.00
(10,265.87)
-7.31%
City Clerk
63,158.00
(2,922.47,
4.63%
70,397.00
(3,639.98)
-5.17%
78,466.00
(3,527.50)
4.50%
Deputy Clerk
47,195.00
(3,044.00)
-6.45%
52,605.00
(3,916.33)
-7.44%
58,635.00
(4,168.67)
-7.11%
Finance Director
94,966.00
(4,568.33)
-4.81%
105,852.00
(5,530.50)
-5.22%
117,984.00
(5,246.67)
4.45%
Fleet Maintenance Technician
53,029.00
(3,526.92)
-6.65%
59,107.00
(3,610.39)
-6.11%
65,882.00
(2,820.62)
4.28%
Human Resource Generalist
47,195.00
(3,139.00)
-6.65%
52,605.00
(5,083.00)
-9.66%
58,635.00
(6,407.00)
-10.93%
Lead Parks Maintenance
53,029.00
(2,091.00)
-3.94%
59,107.00
(2,898.00).
4.90%
65,882.00
(3,008.00)
4.57%
DNU - Parks and Recreation Operations Coordinator
71
4r' 95:00
-2-60-:00
58-6
35=00
Park Maintenance 1
42,004.00
(6,013.92)
-14.32%
46,818.00
(8,110.96)
-17.32%
52,185.00
(9,655.00)
-18.50%
DNU - Parks and Recreation Director
7 5 222-00
831844:00
93 455:00
Receptionist Office Assistant
37,383-00
(2,546.50)
-6-81%
41,668-00
(3,844.23)
-9.23%.
46,444.00
(47650.96)
-10-01%
DPI' - Recreation Coordinator
47.195=00
605:00 552 vf-
58.635:00
Street Maintenance 1
42,004.00
(5,138.00')
-12.23%
46,818.00
(5,525.00)
-11.80%
52,185.00
(5,359.00)
-10.27%
Street Maintenance 11
50,027.00
19.08
0.04%
55,761.00
(1,225.92)
-2.20%
62,153.00
(1,874.64)
-3.02%
Street Operations Foreperson
56,211.00
(3,801.67)
-6.76%
62,653.00
(4,454.00)
-7.11%
69,835.00
(4,366.33)
-6.25%
Street Operations Manager
79,736.00
(4,170.50)
-5.23%
88,875.00
(5,235.08)
-5.89%
99,062.00
(5,251.67)
-5.30%
Utility Billing Clerk
47,195.00
(1,514.50)
-3.21%
52,605.00
(2,678.69)
-5.09%
58,635.00
(3,222.88)
-5.50%
Utility Foreperson
56,211.00
(2,937.33)
-5.23%
62,653.00
(4,700.83)
-7.50%
69,835.00
(5,724.33)
-8.20%
Utility Manager
79,736.00
(5,187.75)
-6.51%
88,875.00
(5,443.75)
-6.13%
99,062.00
(4,651.75)
4.70%
Utility Operator -Class D
47,195.00
(4,490.42)
-9.51%
52,605.00
(5,558.67).
-10.57%
58,635.00
(6,006.92)
-10.24%
Averages
(3,460X)
-6.00%
(4,460.118)
-7.08%
(4,685.89)
-6.81%
DNLj - did not use survey nformaflon
APPENDIX II
Compensation Plan and Position Assignment
Pay Plan
Between Grades: 6%
%Between Steps: 2.75% I Range: 24.24%
Starting midpoint: 41,766.39
...................
Step
Pts
Grade
1
2
3
4
5
6
7
8
9
0
- 93
1
37,471.37
38,501.84
39,560.64
40,648.55
41,766.39
42,914.97
44,095.13
45,307.74
46,553.71
94
- 112
2
39,719.66
40,811.95
41,934.28
43,087.47
44,272.37
45,489.86
46,740.83
48,026.21
49,346.93
113
- 131
3
42,102.84
43,260.66
44,450.33
45,672.72
46,928.72
48,219.26
49,545.29
50,907.78
52,307.74
132
- 151
4
44,629.01
45,856.30
47,117.35
48,413.08
49,744.44
51,112.41
52,518.00
53,962.25
55,446.21
152
- 173
5
47,306.75
48,607.68
49,944.39
51,317.86
52,729.11
54,179.16
55,669.08
57,199.98
58,772.98
174
- 197
6
50,145.15
51,524.14
52,941.06
54,396.94
55,892.85
57,429.90
59,009.23
60,631.98
62,299.36
198
- 223
7
53,153.86
54,615.59
56,117.52
57,660.75
59,246.42
60,875.70
62.549.78
64,269.90
66,037.32
224
- 251
8
56,343.09
57,892.53
59,484.57
61,120.40
62,801.21
64,528.24
66.302.77
68,126.09
69,999.56
252
- 281
9
59,723.68
61,366.08
63,053.65
64,797.62
66,569.28
68,399.94
70.280.93
72,213.66
74,199.54
292
- 314
10
63,307.10
65,049,04
66,836.86
68,674.88
70,563.44
72,503.93
74,497.79
76,546.48
78,651.51
315
- 350
11
67,105.52
68,950.93
70,847.08
72,795.37
74,797.24
76,854.17
79,967.66
81,139.27
83,370.60
351
- 389
12
71,131.86
73,087.98
75,097.90
77,163.09
79,285.08
81,465.42
83,705.72
86,007.62
88,372.83
390
- 431
13
75,399.77
77,473.26
79,603.77
81,792.88
84,042.18
86,353.34
88,728.06
91,168.08
93,675.20
432
- 476
14
79,923.75
82,121.66
84,380.00
86,700.45
89,084.71
91,534.54
94,051.74
96,638.17
99,295.72
477
- 521
15
84,719.18
87,048.95
89,442.80
91,902.48
94,429.80
97,026.62
99,694.85
102,436.46
105,253.46
522
- 566
16
89,802.33
92,271.89
94,809.37
97,416.63
100,095.58
102,848.21
105,676.54
108,582.64
111,568.67
567
- 614
17
95,190.47
97,808.21
100,497.93
103,261.62
106,101.32
109,019.11
112,017.13
115,097.60
118,262.79
615
- 662
18
100,901.90
103,676.70
106,527.81
109,457.32
112,467.40
115,560.25
118,738.16
122,003.46
125,358.55
663
- 710
19
106,956.01
109,897.30
112,919.48
116,024.76
119,215.44
122,493.87
125,862.45
129,323.67
132,880.07
711
- 761
20
113,373.37
116,491.14
119,694.64
122,986.25
126,368.37
129,843.50
133,414.20
137,083.09
140,852.87
762
- 812
21
120,175.77
123,480.61
126,876.32
130,365.42
133,950.47
137,634.11
141,419.05
145,308.07
149,304.04
792
- 842
22
127,386.32
130,889.44
134,488.90
138,187.35
141,987.50
145,892.16
149,904.19
154,026.55
158,262.29
836
- 886
23
135,029.501
138,742.81
142,558.241
146,478.59
150,506.75
154,645.68
158,898.44
163,268.15
167,758.02
10
Position Listing
Points
Department
Division
Title
Proposed
Grade 1 5 9
108
Building
N/A
Receptionist Office Assistant
2
39,719.66
44,272.37
49,346.93
167.5
Parks and Recreation
N/A
Park Maintenance I
5
47,306.75
52,729.11
58,772.98
158
Streets
N/A
Street Maintenance
5
47,306.75
52,729.11
58,772.98
1801
Administration
N/A
Administrative Assistant
6
50,145.15
55,892.85
62,299.36
183
Administration
N/A
Deputy Clerk
6
50,145.15
55,892.85
62,299.36
183
Building
N/A
Building Permit Technician
6
50,145.15
55,892.85
62,299.36
178
Finance
N/A
Utility Billing Clerk
6
50,145.15
55,892.85
62,299.36
193
Utilities
N/A
Utility Operator -Class D
6
50,145.15
55,892.85
62,299.36
195
Parks and Recreation
N/A
Parks and Recreation Operations Coordinator
6
50,145.15
55,892.85
62,299.36
200
Administration
N/A
HRGeneral ist
7
53,153.86
59,246.42
66,037.32
198
Parks and Recreation
N/A
Recreation Coordinator
7
53,153.86
59,246.42
66,037.32
220
Streets
N/A
Street MaintenanceI1
7
53,153.86
59,246.42
66,037.32
218
Utilities
N/A
Utility Operator -Class C
7
53,153.86
59,246.42
66,037.32
240
Streets
N/A
Fleet Maintenance Technician
8
56,343.09
62,801.21
69,999.56
250
Parks and Recreation
N/A
Lead Parks Maintenance
8
56,343.09
62,801.21
69,999.56
2651
Streets
N/A
Street Operations Foreperson
9
59,723.68
66,569.28
74,199.54
262.5
Utilities
N/A
Utility Foreperson
9
59,723.68
66,569.28
74,199.54
313
Finance
N/A
Accountant
10
63,307.10
70,563.44
78,651.51
317.5
Administration
N/A
City Clerk
11
67,105.52
74,797.24
83,370.60
475
Parks and Recreation
N/A
Parks and Recreation Director
14
79,923.75
89,084.71
99,295.72
500
Streets
N/A
Street Operations Manager
15
84,719.18
94,429.80
105,253.46
5151
Utilities
N/A
Utility Manager
15
84,719.18
94,429.80
105,253.46
635
Finance
N/A
Finance Director
18
100,901.90
112,467.40
125,358.55
7751
Administration
N/A
City Administrator
21
120,175.77
133,950.47
149,304.04