5.5 ERMUSR 06-04-2024Ji
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Municipal Utilities UTILITIES COMMISSION MEETING
TO:
FROM:
ERMU Commission
Mark Hanson —General Manager
MEETING DATE:
AGENDA ITEM NUMBER:
June 4, 2024
5.5
SUBJECT:
2024 Compensation Study
ACTION REQUESTED:
Receive and Approve the Baker Tilly's 2024 Compensation Study.
BACKGROUND:
At the December 2023 commission meeting, the Commission approved entering into a
professional service agreement with Baker Tilly to complete a company -wide compensation
study. After review by the respective managers, human resources, and the general manager, all
35 job descriptions currently on file have been submitted to Baker Tilly. In February 2024, the
Commission approved the ten peer utilities to be used as comparable utilities for purposes of
gathering compensation information.
Baker Tilly recommended the ten competitive peer utilities based on labor market competition,
population served, cost of living, and cost of labor. The ten peers were: Anoka, Austin, Chaska,
Connexus, Great River Energy, Moorhead, North St. Paul, Owatonna, Shakopee, and Wright -
Hennepin Electric. Three private sector databases were also used to represent the private
sector: CompAnalyst, Economic Research Institute, and PayFactors.
DISCUSSION:
A custom market survey was distributed to each of the recommended peer organizations
requesting base pay ranges for analogous positions. The survey included a minimum
qualification and a summary of work performed by each position to assist in matching position
titles with their responsibilities. All ten peers completed the survey and submitted responses to
Baker Tilly directly.
Using the surveyed data, Baker Tilly reviewed and validated survey responses to confirm a 75%
overlap in duties and responsibilities. A 75% overlap is the industry best practice definition for a
"good" match. Baker Tilly confirmed all our positions had sufficient data to proceed with
confidence. Our average was 6.3 matches per position. A minimum of four matches is
considered best practice for determining reliable market -based compensation data.
Once the compiled data had been analyzed for quality assurance, Baker Tilly developed and
shared with ERMU three market reports: First, an aggregate of the average minimum, midpoint,
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and maximum for each benchmark; second, a comparison of ERMU's current midpoints against
the market average midpoint; third, a comparison of the full range against the market.
Baker Tilly also prepared a new pay structure for ERMU based on the results of the project.
Grade assignments were established based on job evaluation results (per state law). The
relationship between internal and external data points were measured through a regression
analysis to ensure an unbiased and equitable approach to establishing grade assignments and
pay plan adjustments.
Baker Tilly has prepared a presentation to explain the methodology followed, the results
produced, and recommendations to ERMU based on those results. Their methodology is based
on best practices outlined by World at Work and the Society for Human Resources
Management (SHRM). They will fully train appropriate ERMU staff to maintain the new
classification and compensation system as positions and responsibilities evolve overtime. That
said, we may still use Baker Tilly for ongoing maintenance or updates to the compensation
system such as new or significantly revised job descriptions.
Baker Tilly's presentation specifically documents position title recommendations, market survey
results (average minimum, midpoint, and maximums), proposed pay structure(s),
recommended grade assignments, and implementation cost calculations. The first half of Baker
Tilly's presentation, documenting the process, is attached to this report. The second half of
their presentation, presenting the results and their recommended pay plan, will be provided at
the commission meeting. The Commission will be walked through the results and potential
options step by step so all the commissioners can ask clarifying questions together.
NEXT STEPS:
Once a pay plan is approved by the Commission, Baker Tilly will provide a final report
documenting the process, the results, and the approved pay plan.
ATTACHMENT:
a Baker Tilly Compensation Study Process
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