Plan Ahead for a Classification and/or Compensation Study

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All sectors of the economy experienced difficult times during the economic downturn that occurred in 2008-2010. Public agencies had to undertake cost cutting measures, such as hiring freezes, layoffs and furloughs, to be able to continue functioning and providing services to their constituents. These downsizing and organizational reconfiguration measures led to a redistribution of work. The workforce fortunate enough to remain had to take on much of the work of those who were laid off.

This reassignment of job duties caused a significant departure from many agencies’ established classification systems. Classification specifications, in many instances, no longer matched the actual work being performed by incumbents. Therefore, classification reviews have become part of the everyday HR function, from reclassification requests for only one or a few positions to agency-wide classification studies.

Similarly, compensation systems have seen very little movement over the last several years. Due to budget crises and with CPIs (“Consumer Price Index”) close to zero, many agencies either froze salaries for several years, or went through concession bargaining to reduce total compensation packages.

With the slow, steady improvement of the economy and the housing market, we are finally seeing more movement in public sector compensation. Many agencies are going through a process of addressing these changes and much activity has occurred in the area of classification and compensation. Some agencies are slowly implementing cost of living adjustments again, while others are undertaking full-blown total compensation studies in an effort to readjust their compensation plans and remain competitive with the market. Agencies are anxious to get the ball rolling on these studies–tomorrow!

However, there is more lead time needed than you might think. In order to have the most success with completing a classification and/or compensation study (either internally or externally), here are some steps an agency can take to pave the way.

First, an agency will need to allow for time to develop a request for proposals (“RFP”), publish the RFP, allow adequate response time for bidders, time to review and evaluate RFPs, optional time to interview prospective firms, make a final selection, get a contract in place, and finally issue a Notice to Proceed (“NTP”). We have seen this process take up to three months. A comprehensive classification and compensation study for a mid-sized agency can easily take up to six months (see a sample timetable below) to allow for all of the steps and tasks required.

If an agency is trying to meet a specific timeline with a classification and compensation study that it hopes to align with upcoming union negotiations, it must keep in mind that planning may need to begin a year ahead of time.

Here is a sample timetable for a classification and compensation study for a mid-sized agency:

Task
PHASE I: Classification Study
Week #
A Initial document review/meetings with study project team
1
B Orientation meeting with employees and distribution of PDQ (optional)
1
C Position Description Questionnaire completion and review (optional)
5
D Employee/supervisor/management interviews (optional)
7
E Draft class description development/update
13
F Draft class description review/informal appeals process
17
G
Finalize classification plan/draft interim report/final report
19
Task
PHASE II: Total Compensation Study
Week #
A
Identify comparator agencies, benchmark classes, benefits to be collected
5
B Compensation data collection
19
C Analysis and preliminary data review
20
D Draft compensation findings/additional analysis/study project team meeting
22
E Internal relationship analysis/internal alignment
23
F
Compensation structure and implementation plan development
23
G
Development of draft final and final report and deliverables
24
H
Final presentation to governing body As scheduled

Posted: August, 2016

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