Consideration and Approval of Contract:Consideration of a Contract for Compensation Study Services.

1. Approve a Contract for Professional Services between the City of Flagstaff and Evergreen Solutions, LLC, in an amount not to exceed $78,000; and
2. Authorize the City Manager to execute the necessary documents.

This Contract will provide for services from Evergreen Solutions, LLC (“Evergreen”) to conduct a comprehensive compensation study and assist in the development and implementation of a compensation plan with a total reward strategy that will support the growth of the City and provide a competitive edge necessary to compete for highly qualified employees. 
 
Evergreen has been providing these services for over 15 years and if the Contract is awarded, will provide the City with a comprehensive compensation review and assist in the development and implementation of a total reward strategy.
 
Within 90 days, Evergreen will complete the study and create a compensation plan covering the entire process, an evaluation of the current broadband and all other pay plan structures, total compensation survey, identification of benchmark jobs and organizations, salary structure guidelines considering current and future minimum wage increases, program guidelines, and implementation plan and recommendations.
 
The following objectives will be met as Evergreen develops the compensation plan:

• Creating a comprehensive review of the classification and compensation policies, practices, and structures and development and implementation of a total reward strategy that will support the growth of the City and provide the competitive edge necessary to compete for highly qualified employees.
• Establishing realistic and sustainable solutions considering the City’s financial condition.
• Defining policies and procedures to support the total reward strategy and can be flexible, so the compensation plan remains responsive to changes within the City, the market and the economy.
• Developing the steps to administer the compensation plan in a simplified, straightforward and easily described method.
• Ensuring that the compensation plan maintains a high level of credibility.

This study is funded in Human Resources FY 2019-2020 Budget in Account No. 001-01-012-0020-1-4290 for $150,000, and the proposal from Evergreen Solutions, LLC is $78,000.

Council Goals
Personnel: Attract and retain quality staff.

Team Flagstaff Strategic Plan
Strategic Priority #2: Invest in our people by providing competitive compensation.

No.

By failing to move forward with this Contract, Human Resources would not have the same ability to address the compensation issues identified at the employee level through the EAC and by the Leadership Team within the timeframe identified and by a team of professionals with 15-20 years of specialized experience in compensation.

1. Approve the award as recommended.  
2. Have the Human Resources staff perform the compensation study services, but it would take much longer since it could not be the sole focus of the staff. Additionally, staff does not have the same qualifications as the compensation professionals from Evergreen.
3.  Not conduct a comprehensive study and continue moving forward with additional attempts of bringing the City’s compensation plan closer to market competitiveness and one that will assist the City in attracting and retaining a highly qualified workforce.  
4. Reject the recommended award and direct Staff to re-solicit.

The last comprehensive compensation study for the City was conducted in 2008 and resulted in several initiatives and enhancements to the City’s compensation philosophy and total rewards strategy including: 

1. Creation of an established market, also known as benchmark organizations, to use for analysis.
2. Identification of 26 positions to serve as benchmark positions during market evaluations.
3. Implementation of standard practices for classification evaluation, such as frequency of annual check-in surveys, market analysis (every 3-5 years or as dictated by results of check-in surveys), and full comprehensive compensation studies (every 10-15 years).

The Human Resources Division has continued to promote implementation of the recommendations from that 2008 study to include moving the organization towards a market-based compensation program and continuing to conduct market surveys and provide recommended compensation adjustments as part of the annual budget process.
 
The City currently has 1,017 employees and 266 classifications.  Annual check-in surveys are conducted each year, and comprehensive market analysis is conducted every three (3) to five (5) years, depending on how quickly the market is moving. Market movement is determined by reviewing the annual check-in data. The annual market check-in surveys and periodic market analysis ensure the City remains competitive with our established market.  Following the completion of Market Based Pay (MBP) implementation, the City has chosen to continue reviewing changes in our established market but focus on reviving merit increases for employees to address compaction in the ranges.
 
In alignment with the City’s compensation philosophy, the City’s goal was to secure the services of a compensation consulting firm to conduct a comprehensive review of our compensation program every 10-15 years. It has been 11 years since the last comprehensive review.  This compensation study is necessary to bring the research up-to-date.
 
The Scope of Work sought for completion by Evergreen includes the following:
 
PHASE I – Address the following with recommendations due on January 2, 2020:

1. Conduct a comprehensive review and provide recommendations on the Broadband Pay Plan structure and process as follows:

PHASE II – Address the following with recommendations due on February 14, 2020:
 

1. Conduct a comprehensive review of the remaining pay plan structures.
2. Address the City’s minimum wage impact (per City Ordinance).
3. Review market comparisons and application of market data to all pay structures to ensure that City salaries remain competitive.
4. Identify ways in which the City may adjust the pay structures to respond to changes within the City, the market, and the economy.
5. Suggest any further evaluations or studies necessary for the City to implement a total reward strategy established by this process.
6. Provide written status reports on a bi-weekly basis.
7. Be available for a minimum of three (3) on-site meetings to present the status of the findings to the Compensation Committee, the Employee Advisory Committee and Leadership, including, the cost of implementing the proposed compensation strategies and future impacts of the recommended changes.
8. Prepare an implementation plan.
9. Present the compensation plan and recommendations to the Mayor and City Council.

N/A

The total reward strategy will support the growth of the City and provide the competitive edge necessary to compete for highly qualified employees.  Employees who have a direct impact on the level and type of service we provide to the Community.  

Inform.