5.2. ERMUSR 07-15-2008~i
Elk River
Municipal Utilities
13069 Orono Parkway • P.O. Box 430
Elk River, MN 55330-0430
July 7, 2008
To: Elk River Municipal Utilities Commission
Jerry Takle
John Dietz
Jerry Gumphrey
From: Bryan Adams
Subject: Pay Structure Evaluation
Phone: 763.441.2020
Fax: 763.441.8099
At the June 2008 Elk River Municipal Utilities Commission meeting, staff was directed to secure
a proposal for a pay structure evaluation and comparable worth evaluation. The City in 2006 had
a similar study completed. The City received two proposals but both use their own point
evaluation system. The Elk River Municipal Utilities has used Hay Group for this type of work
previously and uses the Hay Job Profile method of job evaluation. It does not make much sense
to change job evaluation methods. Attached is Hay Group's proposal and it's broken down into
the following three separate areas.
1) Job evaluation with Internal Equity analysis and pay structure review.
2) Market Analysis with pay structure recommendations.
3) Comparable Worth Review.
I believe the City's study only included item #1 above along with some staff training.
~v~a ~a.~l..~
_ - _ _ _ __
July 7, 2008
Mr. Bryan Adams
General Manager
Elk River Municipal Utilities
13069 Orono Parkway
Elk River, MN 55330-0430
Dear Bryan;
Hay Group, Inc.
Suite 2050
1100 Walnut Street
Kansas City, MO 64106-2197
USA
tel +1.816.329.4900
fax +1.816.329.4911
www.haygroup.com
Thank you for inviting Hay Group to submit a proposal for consulting services evaluating key
positions in your organization and making recommendations concerning the current pay
structure. We are pleased to set out in this proposal our understanding of your needs, goals and
project outcomes.
Our Understanding of Your Needs
Elk River Municipal Utilities provides electric and water services to the citizens of Elk River
and surrounding communities. Additionally it provides billing services for the City of Elk
River. The utility has utilized Hay Group's job evaluation methodology combined with a
comparable worth system to measure equity. The purpose of this proposal is to validate current
evaluations and review the comparable worth process to assist Elk River in determining
consistent outcomes.
The project deliverables are three-fold:
I . Validate the evaluations for 17 key positions in the organization utilizing the Hay Group
Guide Chart Profile Method of job evaluation.
2. Review the current pay structure relevant to these positions and recommend changes
based upon updated evaluations and market movement.
3. Audit the process involved with
Minnesota Department of Financ
appropriateness.
the Comparable Worth and submissions to the
e and Employee Relations for consistency and
Hay Group's Proposed Approach
In engaging Hay Group, you will have experienced consultants at your disposition, backed by
extensive research, data, and state-of--the-art tools and methodologies. We will partner with
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you to tailor solutions that will help your organization work more effectively by organizing,
developing, and motivating people.
One of our core methodologies, the Hay Guide Chart-Profile Method of job evaluation, is a
method of job evaluation and is the most highly regarded, consistent and widely used method in
the world. It allows us to evaluate the relative value of jobs through apoint-factor system,
resulting in internal ranking of all evaluated jobs. The Hay points are also used to develop
grades, which form the bases for the development of salary ranges. The Hay Group method of
job evaluation values the know-how, problem-solving, and accountabilities of the job, and
allows us to account for the size, complexity and functional differences of the roles. The Hay
Guide Chart-Profile Methoa~' of job evaluation also provides specific tools to aid in meeting
the State of Minnesota Comparable Worth regulations regarding compensation. The
methodology has been successfully used in court proceedings, administrative hearings, and
labor arbitration cases to determine the extent of internal equity and as a basis for determining
minimum job qualification requirements.
Project Steps
Since we have worked with you in the past, and you are familiar with our approach, project
planning and actions will be largely handled by phone. Our recommended approach is
described in the following project steps below.
Data Acquisition: Hay Group consultants will work with Elk River designated
personnel to acquire all necessary documentation and information related to the project.
Hay Group will review existing organization charts and business descriptions to fully
understand the structure of the organization. Elk River will provide current job
descriptions, organizational charts, pay structure information, current position
evaluations and compensation policy documents. Additionally, detailed incumbent
information will be provided including job classification, pay grade assignment, date of
hire, gender, and pay levels. Hay Group will acquire the Comparable Worth Software
from the Minnesota Department of Finance and employee relations. Elk River will
provide detailed information including copies of submitted forms.
2. Evaluating Positions and Reporting Internal Equity: Hay Group will evaluate the 17
positions, or validate those recently reviewed using the Hay Guide Chart-Profile
Method® of job evaluation. Utilizing the evaluations, an analysis of internal equity will
be performed and reviewed with the General Manager of Elk River Municipal Utilities.
Adjustments to evaluations may occur post review.
3. Market Analyses and Structure: Hay Group will prepare market analyses of base salary
and total cash. The analyses will compare the positions to positions of similar size and
scope in the general market and the utilities industry where data is available. From this
July 7, 2008 ~,.,
information we will make recommendations concerning adjustments or revisions to the
pay structure.
4. Process Review: Hay Group will review the current comparable worth process in light
of current public scrutiny and regulatory requirements. We will examine submitted
forms and evaluate the process involved in utilization of the software. Hay Group will
test the new position evaluations utilizing the software provided by the regulatory
agency.
5. Recommendations: Hay Group will prepare and review our preliminary analyses and
recommendations.
Consulting Fees and Timing
We will be prepared to meet your timeline for project completion, provided that Hay Group can
have access to all necessary resources from Elk River within a reasonable timeframe.
Consulting fees are based on our best estimate of the time and level of consultants required to
produce quality, on time, results. We estimate that consulting fees required to complete all
phases outlined above will be $25,000. Any out-of-pocket or direct project-related expenses,
including travel, will be billed additionally. We will invoice the organization at the beginning
of the project for the full amount.
Per your request, to provide options in selection of services, we have categorized the cost as
follows:
Job Evaluation with Internal Equity Analysis Includes Pay Structure Review $10,000
Market Analysis with Pay Structure Recommendations $7,500
Comparable Worth Review
$7,500
Bryan, we want to thank you for inviting us to submit this proposal, and look forward to a
continued working relationship. Please don't hesitate to contact me if you have any questions
or require any additional information.
Sincerely,
~ a ~'°~
Greg J. Wolf
Senior Consultant
~ ~~~
Jay R. Highfill
Consultant
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