Change in Employee Compensation & Benefits, FY 2018 · The FY 2018 Change in Employee Compensation...
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Transcript of Change in Employee Compensation & Benefits, FY 2018 · The FY 2018 Change in Employee Compensation...
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Change in Employee Compensation & Benefits, FY 2018Presentation to Idaho State Legislature, Change in Employee Compensation Committee, January 10, 2017Susan E. Buxton, DHR AdministratorMalinda Riley, Principal KFHGFY2018 CEC Report Available online at: dhr.idaho.gov/PDFs/CEC/FY2018CEC.pdf
Purpose of the Report
The FY 2018 Change in Employee Compensation & Benefits Report dated December 1, 2016 contains current total compensation analysis and DHR’s recommendations concerning the 25,673 (13,080 classified and 12,593 non‐classified) state employees.
Idaho Code §67‐5309C Annual Surveys, Reports and Recommendations requires the Division of Human Resources (DHR) to provide workforce data and total compensation analysis to the Governor and the Legislature for their consideration on an annual basis.
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CEC Report Page 1
DHRRecommendations
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1. Salary structure adjustment 3% increase to entire pay structure to move toward target policy rate (Appendix E; pg. 21)
2. Specific occupational inequity/paylineexception componentMaintain the current payline exceptions (Appendix I; pg.77)
3. Merit increase component 3% salary increase budget
4. Employee benefit packageMaintain current funding
CEC Report Page 14
FOUR COMPONENTS OF THE RECOMMENDATION:
Total Compensation Mix for State Employee
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Based on average annual classified employee salary of $44,033
CEC Report Page 4
60%
40%
Total Compensation Market Analysis
DHR contracts with the Korn Ferry Hay Group (KFHG), a global HR consulting firm, to perform the State’s total compensation study. The State’s total compensation package is below market average when compared to both the private sector (general market) and public sector markets.
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CEC Report Page 6
KFHG General Market Update
According to KFHG’s 2016 Compensation Report –General Market, nationwide 95% of companies increased salaries for at least some employees. The total salary increases reported are 3% at all employee levels.
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CEC Report Pages 6‐8
History of State Employee Salary Increases
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0
1
2
3
4
5
6
FY 06 FY 07 FY 08 FY 09FY 10
FY 11FY 12
FY 13FY 14
FY 15FY 16
FY 17
3% 5%0%
3%
1%
0% 0%2%
0% 1%3%
3%
State Employee Salary Increases FY 2006 to FY 2017
CEC Report Appendix B
Idaho Total Compensation Analysis
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CEC Report Page 6Appendix G; pg.25‐70
Idaho’s average actual pay is 21% below the combined sector, and policy is 16% below the combined sector.
Annual Compensation Structure Adjustments
The period (usually annual) rate of adjustment to salary ranges are based on changes in market rates of pay.
Based on actual movement in market pay and/or market movement projections.
Published in annual Hay Group surveys and other market surveys.
Organization affordability, profitability, human capital priorities and reward philosophy needs to be taken into account in determining appropriate adjustments.
Example Pay for Performance Guide
This is an example salary increase guide which incorporates performance and position in range and is designed to pay out approximately 3% to 4% (based on assumed performance and salary distributions). Increase amounts should be reviewed and adjusted annually.
Penetration In Salary Range
Overall Performance 0%‐25% 26%‐50% 51%‐75% 76%‐100%
Exceeds Expectations 7%‐9% 6%‐8% 5%‐7% 4%‐6%
Meets Expectations 5%‐6% 4%‐5% 3%‐4% 2%‐3%
Needs Improvement 0%‐4% 0%‐3% 0%‐2% 0%‐2%
Unsatisfactory 0% 0% 0% 0%
Percentage of organizations that use a merit matrix foradministration/delivery of merit increases
Yes No
− Managers have the latitude to provide adjustments within the range of increases noted within the cell, however, total increases must be within department budget guidelines.
− Gray cells indicate a lump sum payment (i.e.. separate check).
− Matrix is designed to pay out approximately 3% to 4%.
− Employees with a salary over range maximum would receive a lump sum increase (via 76%‐100% cell)
Importance of Salary Structure Updates
External Market Impact – Getting the salary structure aligned with the market is the first, important step in ensuring employees are paid competitively relative to the market. The structures serves as the foundation for managing pay
Employee Relations Impact – Employees paid below the minimums will see an immediate impact, while other employees in key positions may see improvements in their salary. Research demonstrates that employees’ perception of fairness and equitable treatment is a core driver of retention, engagement and performance. If the salary structures are better aligned with the market, perception of fairness and competitiveness improves
Transformative Impact – Getting the structure in place to not only address positions where retention is an issue, but also to address the demographic shift currently underway in the workforce will put the State in a better position for attracting talent in the future
FY 2016 State Workforce and Retirement Rates
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CEC Report Page 10
A total of 631 employees retired in FY 2016 (2.4% of the workforce)
FY 2016 Total Classified Turnover
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The FY 2106 classified turnover rate for the State of Idaho was 14.2%, compared to the national turnover rate of 16%.
42%21%
11%7%
19%
CEC Report Page 11
FY 2016 Voluntary Turnovers and New Hires by Generation
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CEC Report Page 11
FY 2016 Voluntary TurnoverFY 2016 New Hire
‐17% ‐1% +18%=
Top Five Contributors to Employee Job Satisfaction
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CEC Report Page 11
42
31
5*Source: 2016 Employee Job Satisfaction and Engagement Report from the Society for Human Resource Management (SHRM)
DHRRecommendations
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1. Salary structure adjustment 3% increase to entire pay structure to move toward target policy rate (Appendix E; pg. 21)
2. Specific occupational inequity/paylineexception componentMaintain the current payline exceptions (Appendix I; pg.77)
3. Merit increase component 3% salary increase budget
4. Employee benefit packageMaintain current funding
CEC Report Page 14
FOUR COMPONENTS OF THE RECOMMENDATION: