5.2. ERMUSR 08-12-2008Ji
Elk River -^~
Municipal Utilities
13069 Orono Parkway • P.O. Box 430
Elk River, MN 55330-0430
August 5, 2008
To: Elk River Municipal Utilities Commission
Jerry Takle
John Dietz
Jerry Gumphrey
From: Bryan Adams
Subject: Salary Structure Study
Phone: 763.441.2020
Fax: 763.441.8099
At the July Elk River Municipal Utilities Commissionmeeting, staff was directed to obtain a
proposal from the City's consultant Riley, Dettmann & Kelsey to complete a salary structure
study. Attached for your reference is Riley, Dettmann & Kelsey's proposal along with Hay
Group's proposal you saw last month.
If this commission desires to do a salary structure study, I do not have a strong opinion on which
firm to use. We already have a relationship with Hay and we use their point system. Riley,
Dettmann & Kelsey uses a different point system which is an added complication but they are
more familiar with Mn. Dept. of Employee Relations (DOER) which is an added benefit. The
study cost is also less expensive than Hay Group.
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Elk River ..~ ..
Municipal Utilities
CONSULTING SERVICES PROPOSAL
TO PLAN, CONDUCT, DOCUMENT AND PRESENT
AN UPDATED CLASSIFICATION STRUCTURE
and
A MORE FORMALIZED BASE PAY MATRIX
Submitted August St", 2008 by a-mail
Riley, Dettmann & Kelsey«c
11900 Wayzata Boulevard -Suite 104
Minnetonka, MN 55305
Phone: (952) 542-9400 Fax: (952) 542-2212
E-Mail: rdkmn@earthlink.net
Web Site: rdkcompsource.com
RILEY, DETTMANN Ss KELSEY LLC
TABLE OF CONTENTS
Page
SECTION 1
Background /Objectives /Scope ...................................................................................... 1
SECTION 2
Methodology ....................................................................................................................... 2
SECTION 3
Qualifications ..................................................................................................................... 3
SECTION 4
Project Staffing /Timing .................................................................................................... 4
SECTION 5
Professional Arrangements ............................................................................................... 5
SECTION 6
Summary of Job Evaluation Factors in the RDK Job Evaluation System ...................... 6
RILEY, DETTMANN & KELSEY LLC
BACKGROUND /OBJECTIVES /SCOPE
Background
We understand that Elk River Municipal Utilities intends to retain outside consulting expertise to plan,
conduct, document and present an updated classification structure and a more formalized base pay
matrix.
According to the Minnesota Department of Employee Relations (DOER) schedule, the utility submitted its
last pay equity report in January 2006 for classification and compensation practices effective as of
12/31/05 and is therefore scheduled to report again in January 2009 for practices effective as of
12/31 /08.
One key decision related to this proposal is whether to report the utility's current classification and
compensation practices for pay equity purposes, or to conduct the study with the intent to report an
updated classification plan and base pay matrix numbers instead of current practices.
We also understand from General Manager Adams that the organization's job descriptions may need
some review. Therefore, an internal review and verification of job content will be done with employees by
the management team prior to the beginning of any classification study.
Based on the internal review and verification of job content process, the utility may decide that it is
appropriate to have employees complete a copy of our job description questionnaire to ensure a
complete and current representation of job content. That is a second key decision.
Scope of fhe Study
Elk River Municipal Utilities currently has 35 employees and a total of 17 separate classifications.
RILEY, DETTMANN 8s KELSEY r,Lc
METHODOLOGY
Proposed Work Plan for the Study
Step One -Collection of Data and Documentation Required to Perform the Study
- The consultant will ask for and carefully review all available job descriptions, pay schedules and any
other materials deemed necessary to perform the study. We understand the utility will provide these
background materials.
Step Two -Completion of Job Description Questionnaires (If Required )
- If the utility decides that a job description questionnaire should be completed for each of the
seventeen separate classifications, the consultant will provided that questionnaire in an electronic
and hard-copy format for completion.
Step Three -Conducting Job Evaluations on All Positions Included in the Study
- The consultant will evaluate all positions included in the study using our job evaluation methodology.
A summary of all evaluation factors in the Riley, Dettmann and Kelsey Job Evaluation System
appears in Section 6 of this proposal.
Step Four - Integrating Job Evaluation with Existing Base Pav Rate Maximums and Preparing a
More Formalized Base Pav Matrix
- The consultant will integrate job evaluation results with existing base pay rate maximums as the
foundation for preparing a more formalized base pay matrix.
Step Five -Pav Equity Testing
- The consultant will complete pay equity testing to ensure ongoing compliance for the utility with the
State Local Government Pay Equity Act.
Step Six -Preparing and Presenting a Final Report
- The consultant will prepare a final report containing all study results and recommendations and
review the report with the General Manager before presentation to the utility Board.
RILEY, DETTMANN 8c KELSEY LLc
QUALIFICATIONS
RDK is a regional consulting practice specializing in compensation strategies and related services.
Principals in the firm have many years of experience in classification and compensation with public and
private sector organizations throughout the Upper Midwest.
A representative list of Minnesota cities we are currently assisting, or have assisted in the past, with
some combination of pay equity, classification, and compensation issues includes the following:
Client Contact Telephone Number
City of Bemidji Mr. Ron Eischens (218) 759-3568
City of Big Lake Mr. Scott Johnson (763) 263-2107
City of Blaine Mr. Terry Dussault (763) 785-6154
City of Eagan Ms. Lori Peterson (651) 675-5502
City of Elk River Ms. Lori Johnson (763) 635-1000
City of Fridley Ms. Deborah Dahl (763) 572-3507
City of Hastings Mr. David Osberg (651) 480-2383
City of Inver Grove Heights Ms. Jenelle Teppen (651) 450-2512
City of Lakeville Ms. Cindi Joosten (952) 985-4491
City of Maple Grove Ms. Ann Marie Shandley (763) 494-6016
City of Mound Ms. Kandis Hanson (952) 472-0609
City of New Prague Mr. Jerry Bohnsack (952) 758-4401
City of Northfield Ms. Elizabeth Wheeler (507) 645-3012
City of Oakdale Mr. Craig Waldron (651) 730-2705
City of Princeton Mr. Steve Jackson (763) 633-2040
City of Rochester Ms. Linda Hillenbrand (507) 328-2561
City of St. Louis Park Ms. Nancy Gohman (952) 924-2519
City of Shakopee Mr. Mark McNeill (952) 445-3650
City of Shoreview Ms. Laurie Elliot (651) 490-4615
RILEY, DETTMANN 8c KELSEY r.Lc
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PROJECT STAFFING /TIMING
Staffin4
Roderick M. Kelsey, Vice President and co-owner of the firm, assumes responsibility for a broad scope of
consulting engagements in industry, education and government. Mr. Kelsey earned his Master's degree
in educational psychology at the University of Minnesota following undergraduate studies in political
science and sociology at Illinois Wesleyan University.
He has served in multiple leadership roles for the Twin Cities Human Resources Association (TCHRA)
and holds memberships in WorldatWork (formerly called the American Compensation Association [ACA])
and the Society for Human Resources Management (SHRM).
His extensive experience with public sector classification and compensation consulting includes many
assignments before and following passage of the State's Local Government Pay Equity Act (LGPEA) in
1984.
Mr. Kelsey will assume direct accountability for all aspects of this assignment if Riley, Dettmann & Kelsey
is chosen as the consulting resource for Elk River Municipal Utilities.
Timin
Timing for beginning and completion of the study depends on when the Board acts on the proposal; how
long the internal job content review and verification process requires; and whether the utility decides
whether or not to have employees complete a job description questionnaire for each of the seventeen
existing classifications in the organization.
We would usually estimate the timing for a study of this size and scope at approximately eight to ten
weeks of calendar time.
RILEY, DETTMANN & KELSEY tLc
PROFESSIONAL ARRANGEMENTS
Based on the scope of work to be done as outlined in this proposal, our consulting fee estimate would be
as follows:
1) All work plan steps are followed, but no employee meetings to introduce completion of job description
questionnaires are included -
- $5,900 - $6,900
2) All work plan steps are followed, including employee meetings to introduce completion of job
description questionnaires -
- $7,800 - $8,800
Any mileage related to the study would be invoiced in addition at the current 2008 IRS rate of $.585/mile.
There would be no lodging or meal charges related to the study as proposed.
Thank you for inviting Riley, Dettmann and Kelsey to submit a consulting services proposal for this
important work.
i~ad~~lCCI¢ %r`, J~e~QPll
Roderick M. Kelsey
Vice President and Principal
August 5f", 2008
RILEY, DETTMANN Sc KELSEY LLc
.ri
Summary of Job Evaluation Factors in the RDK Job Evaluation System
(Including Rating Parameters for Each Factor)
Formal Preparation and Experience
This job evaluation factor is applied to determine the most representative combination of formal preparation
(schooling at whatever level) and relevant Qob-linked) experience typically required to gualify for the
position being evaluated. It is important in this factor to verify the minimum acceptable qualifications for the
position being evaluated. [There are two decisions made on this factor -one related to formal preparation
and one made related to relevant experience.)
- The 2 rating parameters for this factor go from No Required Specifications to Doctorate (eight levels)
for formal preparation and go from 0 to 12+ years (eight levels) for years of relevant experience.
Decision Making (Impact)
This job evaluation factor is applied to determine the regular and ongoing freedom to act; the extent of the
organization affected by those actions; and the best characterization of decision-making typical of the
position being evaluated. [There are three decisions made on this factor -one related to the degree of
freedom to act; one related to the extent of such judgments; and one related to the nature of decision
making.]
- The 3 rating parameters for this factor go from Least to Inclusive (six levels) for impact and go from
Job-Centered to Organization-wide (four levels) for extent of decision making and go from Ancillary to
Final (four levels) for type of decision making.
Thinking Challenges and Problem Solving
This job evaluation factor is applied to determine the representative thinking challenges and problem
solving required on an ongoing basis and thereafter the depth of intellectual response to those challenges
and creativity involved in solving problems. [There are two decisions made on this factor -one related to
the context and complexity of challenges /problems and one related to the depth of response required to
address and resolve such challenges and problems.)
- The 2 rating parameters for this factor go from Low to Dealing with Governance Issues for context and
complexity (seven levels) and go from Make Clearcut Choices to Develop Original, Creative Solutions
(five levels) for responses.
Interactions and Communications
This job evaluation factor is applied to determine the context of business-related interactions and
communications that are an ongoing part of performing the position being evaluated. [There are two
decisions made on this factor -one related to the type and context of business interactions and one related
to the impact of the outcomes and effects on information content and flow throughout the organization.]
- The 2 rating parameters for this factor go from Responses Provided to Others for context of
communications to Interactions Consistently Focused on Critical Operational/Governance Issues (6
levels) and go from Effective Working Relationships to Dealing with the Most Maior Operational /
Governance Issues (five levels) for outcomes and effects.
Work Environment
This job evaluation factor is applied to determine the potential for injury in performing the position being
evaluated and also determine what recognized health hazards regularly exist in the typical work
environment of the position being evaluated. [There are two decisions made on this factor -one related to
potential for injury and one covering the recognized health hazards in the work environment.]
- The 2 rating parameters for this factor go from Minimal Potential to Continuous Potential (6 levels) and
go from Low to High (3 levels) for physical requirements.
2006 JE Factors including Scope of Factors.doc
6
RILEY, DETTMANN & KELSEY LLc
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:
1. 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.
Hay Group's Proposed Approach
the Comparable Worth and submissions to the
e and Employee Relations for consistency and
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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A
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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 Method® 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 I7
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 2/3
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
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Jay R. Highfill
Consultant
July 7, 2008 3/3