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HomeMy WebLinkAbout1999-10-26; City Council; 15454; Management Classifications And AppropriationAB# 15,454 MTG. 10/76/9$ DEPT. HR F- --t CITY OF CARLSBAD - AGENDA BILL TITLE: PERFORMANCE MANAGEMENT AND COMPENSATION SYSTEM FOR MANAGEMENT CLASSIFICATIONS, AND APPROPRIATION CITY ATTY. &?’ CITY MG6%? Adopt Resolution No. 99-47 1 establishing the Incentive Pay Matrix for FY 1999/2000, and making an appropriation therefor. ITEM EXPLANATION On November 18, 1997, the City Council authorized the City Manager to administer a formal Performance Management and Compensation System for management employees. Compensation levels are determined using a market based salary structure, and employees are rewarded through 1) base pay, which rewards the development and demonstration of competencies in the job, and 2) incentive pay, which rewards the measurable achievement of specific goals. Any compensation increases granted under the program (either in base pay or incentive pay) are based on performance. Incentive Pav: At the beginning of each fiscal year, the City Council determines the incentive payout percentages associated with the achievement of goals at three performance levels: Threshold, Target and Optimum performance. In addition, the City Council communicates the incentive payout percentages to all management employees and appropriates funds to award incentive pay to be paid out at the beginning of the following fiscal year. Concurrently, each management employee meets with his or her manager to establish goals, to determine how performance will be measured against goals, and to understand the incentive payout percentages associated with the three performance levels. It is staffs recommendation that the City Council appropriate $486,000 for incentive awards to be distributed at the beginning of fiscal year 2000/2001. This recommendation assumes that employees who achieve their goals at the “Optimum” level will receive an incentive payout of 6% of base salary, and employees who achieve their goals at the “Target” level will receive an incentive payout of 4% of base salary, in accordance with the following incentive pay matrix: Performance Against Payout* Individual Measures {as a % of Base Salarv) Optimum.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.0% Target.....................................4.0% Threshold and below . . . . . . . . . . . . . . . . . . . . . . . . . 0.0% *Note: Incentive payouts are considered PERS eligible. Employees are eligible for incentive pay if they receive an acceptable competency rating on their performance review, and achieve an average rating on goals of “Target” or higher. AS was done last year, the $486,000 appropriation covers the maximum exposure under the incentive pay program by assuming that each management employee achieves his/her goals at the highest performance level (Optimum) and is thereby eligible for an incentive award of 6% ofbase salary. However, it is anticipated that the incentive payouts granted will fall below the budgeted amount of $486,000, as it is not expected that the majority of management employees will achieve their goals at PAGE 2 OF AGENDA BILL NO. 15,454 the “Optimum” level. Although the City Council establishes the Incentive Pay Matrix at the beginning of a fiscal year, incentive payouts under the program are not distributed until the beginning of the following fiscal year. For this review cycle, any incentive payout percentages authorized by the City Council in September 1999 will be realized by the affected management employees in July or August 2000. FISCAL IMPACT: It is recommended that the City Council appropriate funds to grant incentive pay pursuant to the proposed 1999/00 Incentive Pay matrix in July/August 2000. The potential net cost of incentive pay is up to $486,000. Sufficient funds exist in the General Fund Contingency Account and in the fund balances of the affected enterprise and special revenue funds to support these appropriations. EXHIBITS: 1. Resolution No. 99-47 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I RESOLUTION NO. 99 -4 7 1 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA ESTABLISHING THE INCENTIVE PAY MATRIX FOR FY 1999-00, AND MAKING AN APPROPRIATION THEREFOR. WHEREAS, the City Council has authorized the City Manager to administer a Performance Management and Compensation Plan for employees in management classifications; and WHEREAS, the City Council wishes to fund an incentive pay program which rewards the measurable achievement of specific goals; and WHEREAS, the City Council wishes to support a Performance Management and Compensation System for management employees in which all compensation increases granted (either in base pay or incentive pay) are based on performance. NOW, THEREFORE BE IT RESOLVED by the City Council of the City of Carlsbad as follows: 1. That the City Council hereby appropriates $486,000 from the contingency account of the general fund and other fund balances as appropriate to grant incentive pay for management employees for the 1999/2000 fiscal year. Any incentive payouts granted will be paid to management employees in July or August of 2000, in accordance with the Management Compensation Plan. 0 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PASSED, APPROVED AND ADOPTED at a regular meeting of the Carlsbad City Council, held on this 26th day Of OCTOBER , 1999, by the following vote, to wit: AYES: Council Members Lewis, Hall, Finnila, Nygaard, and Kulchin NOES: None ABSENT: None ATTEST: / MHA &#w?EN$+Nz, CITY CLERK KAREN R. KUNDTZ, AMstant City Clerk (SEAL) -2- 0 4