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City working to align employees’ pay with work experience

The Danville City Commission unanimously passed a municipal order at a Nov. 16 compensation workshop to establish a pay rate scale compensation adjustment recognizing work experience. Mayor Michael Perros gave it a yes vote “with the understanding that there’s some difficult decisions that lie ahead.” According to the municipal order, its passing reflects the commissioners find it “necessary and appropriate” to revise the city’s handbook of policies and procedures “to reflect a pay rate scale compensation adjustment to equate for years of work experience.” The projected total annual cost of enforcing the municipal order is estimated to be $449,138.14.

The municipal order will not change any of the pay grades for the city employees, as City Manager Earl Coffey discussed in the meeting. Instead, it uses the existing range of a pay grade, which consist of a minimum, mid-range and maximum amount an employee can receive within their pay grade, to ensure the city is paying people based on how much experience they have. So, Coffey said, some employees who have been hired more recently may not be as affected as employees who have been in particular pay grades for a longer period of time. An initial evaluation of employees’ compensation found that 86 employees would be impacted and the remaining employees, based on their experience, were at the appropriate compensation level.

“Pay equity was referenced by the HR Director as an important component to compensation planning,” City Manager Earl Coffey said in an email. “The full implementation of the policy means a 10-year employee will be proportionately paid within the respective pay grade range no matter which department or function within the City. All employees would be treated the same, equity. The Municipal Order ratified the policy making it applicable to all city employees and the cost was an estimate. The final value may be slightly different as a result of consultation with department heads during implementation.”

This order is an effort to improve pay equity between city employees, attract and retain qualified, professional employees and reduce turnover, according to the municipal order. Also, this is to address the fact that the handbook of policies and procedures does not currently have provisions to allow for a pay scale based on years of experience, so this change will be formally added to the handbook the next time it is updated and approved.

One way to improve equity, Danville’s Human Resources Manager Randy Boyd said, is that for example, a city firefighter with 10 years of experience in Danville needs to be paid at the 10-year firefighter pay rate to make sure they are paid the same as a 10-year firefighter hired from another agency.

In this scenario, “Both employees have the same amount of experience, and need to be paid the same salary,” Body said in an email.

Coffey mentioned during the meeting that the current compensation plan is “neat and tidy” but was developed many years ago, making it lag behind the market, thereby making city employees’ salaries in Danville less competitive. As an example, he said, the compensation for employees in the police department are, under the current plan, the most divergent from the market. The largest increases as a result of compensation adjustments will be to police and fire departments, according to the initial analysis Boyd submitted to the commission on Oct. 26.

During a past compensation workshop on Nov. 9, Police Chief Tony Gray said the police department is currently understaffed and has difficulty retaining employees, including recruits, as compensation within the department currently stands. The city has lost some officers as they have gone to work in other cities, as salaries in Danville may not be competitive enough. This municipal order aims to take steps to address such issues.

In terms of the annual cost of putting the municipal order in place and how the city can afford it, Boyd said a review of the city budget was conducted with Coffey and Chief Financial Officer Michele Gosser to determine if the proposal was affordable.

“Upon review with the CFO, they felt confident the salary adjustments were achievable within each of the departments operational budgets,” Boyd said.

During the meeting on Nov. 16, Perros said he has concerns about how the city can afford putting the municipal order in place and expressed concern about some of the predicted fund balances for future years, but Gosser told him some of the numbers laid out were worst-case scenarios and may factor in projects the city is considering pursuing but may not pursue and do not account for grants the city could receive.

And, Commissioner Denise Terry said, “Well, mayor, I know you are all about the numbers, but this is an investment in our employees, and how do we survive without our employees?”

Later Terry said, “Danville is on the cusp of being a real powerhouse in the state … And we got here without a plan. So imagine what we could do with a plan and with our employees happy and well-paid and experienced and trained and sticking around with us to work the plan.”

It was discussed during the meeting that the city may need to prioritize compensation over purchase of some projects or resources, and Commissioner Kevin Caudill said, “I think it’s time that we did invest in human capital, and if that is at the expense of some bricks and mortar or four more tires on the ground or whatever, we’re going to have to make that decision.”

Boyd said during the meeting that hiring experienced people “is a cost-saving mechanism” that can’t necessarily be measured, but the potential for savings is there. Looking forward since the municipal order was passed, Boyd said he will need to have further discussion with department heads.

“Prior to implementation of the final salary adjustments, I will be meeting with each Department Head to conduct a final review of each of their employee’s relevant work history,” Boyd said in an email. ‘We will discuss the employee’s work history, their current salary, and where they should align on the City’s experienced pay rate scale.”

From there, Boyd said employees will be reviewed in detail to make sure all their relevant work history is considered, both for the city and any experience gained elsewhere, to make sure they are appropriately aligned on the pay scale. He said once department reviews are completed and agreed on with department heads, the city will start to implement salary adjustments for their departments. All salary adjustments will become effective for the payroll period ending on Dec. 16, he said. He added that the city will conduct a full compensation analysis in the coming months, which will include a review of the city’s market study, retirement cost, health care cost, payroll taxes, existing compensation policies and employee incentive programs.