030607 CompensationCity of Virginia Beach
Compensation Update
March 2007
History of Compensation System
1993: Changed from step system to open range to
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provide greater flexibility in granting pay adjustments
1994: Input from City Council, City Manager,
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Department Directors and employee groups:
establish goal of 4.5% annual merit increases, to
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reach top of pay range in 10 years
move to market-based pay system
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1995: Implemented first market salary survey
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Department of Human Resources
Market-Based Pay System
Philosophy
:Best paying municipal employer in our market
Survey Market:
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Norfolk ·Portsmouth ·Chesapeake
·Hampton ·Newport News
Approximately 150 benchmark jobs surveyed
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and linked to remaining City titles
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Department of Human Resources
Prior Methodology
Compare salaries using highest market pay range
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maximum
salary
Provide pay range increase if VB salary is 2.5%
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below highest market maximum
Actual pay not increased with market adjustment
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unless salary falls below new pay range minimum
Provide pay structure adjustment, also without
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increasing actual salaries
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Department of Human Resources
Ex: Application of the 2004 Market Survey
Employee Salary: $35,000 (Actual)
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Employee Pay Range: 15
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$25,410 minimum –$36,845 maximum
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5% Market Adjustment –Increase to pay
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range 16
$26,696 minimum –$38,710 maximum
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Department of Human Resources
Ex: Application of the 2004 Market Survey
-Continued
2% Pay Plan (Structure) Adjustment
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$27,230 minimum -$39,484 maximum
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Employee Salary: $35,000
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Employee Pay Range: 16
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$27,230 minimum -$39,484 maximum
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Department of Human Resources
Outcomes:
Allowed progression through the pay range based
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on performance
Cost effective while increasing earning potential for
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current employees and recruitment potential for
applicants
Fewer employees reach pay range maximum
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(“topped out”)
Caused increased salary compression
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Department of Human Resources
Methodology for 2007
Compare salaries using highest market pay range
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midpoint
salary
Provide pay range increase if VB salary is 2.5%
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below highest market midpoint
Actual pay is increased with market adjustment
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(market survey every 3 years)
Provide pay structure adjustment that also increases
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actual salaries
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Department of Human Resources
Ex: Application of the 2007 Market Survey
Employee Salary: $35,000
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Employee Pay Range: 15
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$26,437 minimum -$38,334 maximum
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5% Market Adjustment –Increase to pay
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range 16
$27,775 minimum -$40,274 maximum
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Employee Salary: $36,750
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Department of Human Resources
Ex: Application of the 2007 Market Survey
–Continued
1.5% Pay Plan and Salary Adjustment
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$28,191 minimum –$40,878 maximum
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Employee salary: $37,301
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Department of Human Resources
Outcomes:
Results in significant additional costs
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Market $3.8m
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Pay Plan and Salary Adjustment $5.2m
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Increases recruitment potential for applicants
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Promotes greater retention of employees
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Greater number of employees reach maximum of
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pay range (“topped out”)
Does not cause salary compression
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Department of Human Resources
2007 Market Salary Survey
Preliminary Results
148 benchmarks included in survey
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46 benchmarks indicate a need for market
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increase
A total of 196 titles would be increased based
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on the benchmarks
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Department of Human Resources
2007 Market Salary Survey
Preliminary Results: Public Safety
Police Officer
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Highest Survey Midpoint: $46,909
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City of Virginia Beach Midpoint: $46,446
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1% Below Market
Firefighter
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Highest Survey Midpoint: $46,880
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City of Virginia Beach Midpoint: $46,446
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.94% Below Market
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Department of Human Resources
2007 Market Salary Survey
Preliminary Results: Police Officer
CityMinMidptMax
Norfolk $38,319 $46,909 $55,499
Ches$34,136 $42,038 $49,940
Ptsmh$32,983 $43,701 $54,420
Hampton $35,620 $46,880 $58,141
NN$35,620 $37,348 $39,075
VB $37,915$46,446$54,977
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Department of Human Resources
2007 Market Salary Survey
Preliminary Results: Firefighter
CityMinMidptMax
Norfolk $38,222 $42,979 $47,736
Ches$34,136 $42,038 $49,940
Ptsmh$32,983 $43,701 $54,420
Hampton $35,620 $46,880 $58,141
VB$37,915$46,446$54,977
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Department of Human Resources
Other Compensation Implementation
Actions for July 2007
Public Safety Salary Compression
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Adjustments: Year 2
Addresses horizontal and vertical compression
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1,100 Employees
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Cost: $3.6 million
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Department of Human Resources
Other Compensation Implementation
Actions for July 2007
Vertical Compression: General Employees
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Estimated Impact:
100 Employees
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$600,000
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Department of Human Resources
Comparative Practices of Other Local
Jurisdictions
Findings based on a national survey with 13 cities
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responding:
Practices related to promotions similar to our City
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Most use salary surveys to ensure pay competitiveness for
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recruitment and retention
Most provide merit increases based on performance to
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move employees through pay range
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Department of Human Resources
What does all of this mean?
Continued efforts to remain competitive in the
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market.
Adjusting our pay practices to minimize
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compression.
Based upon affordability, implement market results
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and pay for them as we go.
Demonstrates a City commitment to ensure a quality
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workforce by offering a competitive compensation
package.
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Department of Human Resources
QUESTIONS?
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Department of Human Resources