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SCC Item 1. Classification and Compensation Study-Progress Report Position Classification & Compensation Study Report City of Otsego Otsego, Minnesota 9/11/2023 September 11, 2023 City of Otsego Executive Summary Abdo was contracted by the City of Otsego to provide an independent position classification and compensation study to accomplish a variety of important strategic priorities, including job description compliance review, an analysis of the current municipal compensation markets, a comparison of select benefits offerings between municipalities, and a review of current and potential Minnesota Pay Equity compliance requirements. The City last conducted a formal independent position classification and compensation study in 2015 and has experienced a change in its workforce, challenges finding technical skilled employees, and competition for employees from neighboring larger cities. As part of our study, Abdo supported the City as they drafted updated position descriptions for each current position and, as part of the job description analysis, we conducted a Fair Labor Standards Act (FLSA) review to support the overtime exemption election for all applicable existing positions. To achieve the objectives set forth in our project scope of work, we completed a scoring exercise using a model similar to the State of Minnesota Hay Study. Using this model, each position was given a score in the following categories; Know- How, Problem Solving, Accountability and Special Conditions. These categories are intended to measure and rank the level of knowledge, skills, influence and impact on City operations for each position. Details on this methodology are included below. To complete the evaluation and scoring of Otsego positions, we reviewed the organizational structure, current job descriptions and requested additional information and clarification from City leadership, as needed. Upon completing the scoring of positions and conducting pay equity testing, our firm also completed a market wage analysis to compare the City’s current wage scale, by position, to the comparable public employee wage market in Minnesota. The market analysis consisted of analyzing salary data from comparable local governments in Minnesota by directly soliciting wage data from several municipalities that the City and Abdo selected. The table below shows how each department’s hourly rates compare, on average, to the minimum and maximum market pay. Further details for each position will be included in the final report. In partnership with city leadership, we developed a proposed compensation plan using the new classification and market analysis. If adopted, the plan would place the City’s pay grades within 0.5% of market pay, on average. We have also developed a phased implementation plan and the associated costs for the council’s review. The results of both the classification (position scoring), compensation analysis, and cost to implement will be reviewed during the September 11th meeting. Department Public Works (3.26)$ -11% (5.43)$ -15% Admin/Finance (2.97)$ -9% (5.05)$ -13% Parks and Rec (4.64)$ -15% (7.54)$ -19% +/(-)+/(-) Market Max Comparison Market Min Comparison 3 Methodology The last compensation and classification study was completed by the city in 2015 with another market survey conducted in 2020. While some positions may have been paid higher or lower than the predicted pay scale, the City has maintained consistent compliance with the Minnesota Pay Equity Act, submitting its most recent reporting in 2021. The City will be required to submit their next Pay Equity Report for 2024. In recent years, the City has experienced challenges finding and retaining skilled workers which have impacted both the job duties and wage demands for many positions. The City of Otsego determined that a formal, independent, system- wide position reclassification and market wage analysis was necessary to assist executive leadership in establishing a new, logical and justifiable employee wage and salary framework to build upon in the future. Scoring Analysis This section reflects the review, analysis and scoring of all Otsego positions. To complete this task Abdo used updated job description information for current positions, based on direction from the City. Our firm reviewed the job descriptions and solicited necessary feedback from City representatives to gain the insight needed to accurately score each position. Scoring was completed using a plan adapted from the State of Minnesota Hay Method. The model assigned each position a score in the following categories (adapted from the State of Minnesota 2009 Hay Manual): Know-How, Problem Solving, Accountability, and Special Conditions. Know-How represents the knowledge, skills and abilities (KSAs) an employee needs to be successful in a particular job. The Hay Method places the greatest emphasis on Know-How. Know-How is defined as an expert skill, information or body of knowledge that imparts an ability to cause a desired result. The Know-How category is the most heavily weighted category. If a position is more easily learned, the position will point toward the lower end of the scale. Know-How category is further divided into three parts: Depth and Breadth of Job-Specific Knowledge (aka Technical and Specialized Know-How and Job-Specific Knowledge); Integrating Know-How (aka Managerial Breadth or Know- How); and Human Relation Skills (aka Human Relations Know-How). A number is assigned for total Know-How points by making several separate choices for each of the three elements described and an overall assessment. Job-Specific Knowledge includes the position’s requirements for knowledge and skills related to practices, procedures, specialized techniques and professional disciplines. It also includes basic and job-specific supervisory and managerial knowledge, skills, and abilities (KSAs), when appropriate. This aspect of Know-How does not make distinctions among differently sized managerial jobs nor does it include human relation skills. It is important to remember that this element measures the requirements of the position, not the qualifications of an incumbent. Integrating Know-How considers the need to integrate and manage progressively more diverse functions and is used to rank managerial breadth and scope, from similar to very different functions. When required, basic and job-specific supervisory and managerial knowledge, skills and abilities are included in the Job-Specific part of a Know-How rating. The overall size of an organization directly influences the number of managerial breath categories, because the organizational size often reflects requirements for increased managerial complexity and diversity. Human Relation Skills is the third element of a job’s Know-How rating. It is the active, practicing interpersonal skills typically required for productive working relationships to work with, or through, others inside and/or outside of the organization to get work accomplished. It assumes that each job requires a foundation of basic human relations skills. To be effective, an employee must typically be proficient at the highest level of Human Relations Skill regularly required for the position. Problem Solving is the process of working through details of a problem to reach a solution. Problem solving may include mathematical or systematic operations and can be a gauge of an individual’s critical thinking skills. Problem Solving measures the intensity of the mental process that uses Know-How to: (1) identify, (2) define, and (3) resolve problems. It is a percentage of Know-How, reflecting the fact that “you think with what you know.” This is true of even the most creative work. Ideas are put together from something already there. The raw material of any thinking is knowledge of facts, principles and means. 4 Context includes the influences or environment that limit or guide decision-making such as rules, instructions, procedures, standards, policies, principles from fields of science and academic disciplines. Positions are guided by organizational, departmental or functional goals, policies, objectives and practices circumscribed by procedures and instructions. In general, policies describe the “what” of a subject matter, procedures detail the steps needed to follow through on a policy (i.e., how, where, when, by whom) and instructions outline the specific aspects of how to perform the tasks, such as the operation of a machine or how to select the appropriate letters to use in particular situations. Thinking Challenge includes the nature of the problems encountered and the mental processes used to resolve the problems. The scale ranges from simple problems to very complex issues, with the premise that simple issues recur regularly in the same form and after a while are resolved by rote or instinct, but very difficult issues require substantial thinking and deliberation. The types of situations encountered and the processes involved in identifying, defining or resolving related problems are considered. Thinking Challenge reflects the degree of difficulty in finding improvements and adapting to changes. Accountability does not mean being responsible for getting one’s own work done. Rather, it reflects responsibility for actions and their consequences and the measured effect of the job on end results for the organization. Accountability includes three factors: Freedom to Act/Empowerment, Magnitude, and Job Impact. Freedom to Act/Empowerment involves the degree of personal or procedural control or guidance exercised over the position. For example, what constraints are put on an employee in this job? How closely supervised is the position? What kinds of decisions are made higher up in the organization? Magnitude is the portion of the total organization encompassed by the position’s primary purpose. It’s most typically indicated by the general dollar size of the area(s) most directly affected by the job, i.e., the resources over which the position has control or influence. A variety of factors are considered such as size of budget is employee responsible for, what degree of influence is held and is this person a decision maker. Job Impact is considered to be indirect (indirect or contributory) or direct and measurable (shared or primary). It involves the way in which the position’s actions affect end results in the agency. For example, how does the employee influence the business - directly or indirectly? Does the employee provide advisory or interpretive services for others to use in making decisions? Is the job an information-recording one? Does it provide a necessary service with a relatively small effect on the business of the agency? “Contributory” and “primary” are, by far, the most frequently used options.” Special Conditions consider the physical effort, environmental conditions, hazard exposure, and sensory attention demands that an employee is commonly subject to in the position. For example, two positions may be assigned identical points in all other areas but the position that is regularly required to work in extreme outdoor conditions (i.e., heat or extreme cold) would receive additional points for these factors. The work associated with this scoring represents the primary work conducted for this assignment, which is to review positions and functions and provide a consistent measurement and "scoring" of functions and responsibilities within the municipality.