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CASE #: ~ RECEIVE RECOMMENDATION FOR EXEMPT SALARY IINCREASES By: Linda Waite Smith, Administrative Services Manager Background: At its October 14, meeting, the City Council received information about the history of salary increases for exempt and non-exempt employees in order to decide whether or not to grant additional exempt salary increases from a fund established during negotiations of 1997 exempt salaries. That information, which is attached to this cover sheet, includes: 1. The City's Classification/Compensation Plan which includes salary ranges for each position. 2. A history of salary increases by employee and union status. 3. A comparison of salaries paid to exempt positions in Ramsey and those paid to similar positions in metropolitan cities of similar population. The average 1997 salary increase among unionized employees who were eligible for increases was 5.66%. All exempt employees, except the City Engineer, received 3% salary increases. The City Engineer's salary increase of 6.47% was granted to bring his salary more into line with those of City Engineers in similar sized cities. The two percent pool of exempt salaries that was set aside for additional salary increases was supposed to be used for performance based salary increases. However, exempt employees were not consulted about establishing a pay for performance system and no discussion occurred between exempt employees and the City Council or between exempt employees and the City Administrator. Most importantly, there existed no jointly established measurable goals on which to evaluate performance. Measures would, because of timing, have to be established and then applied retroactively. There was also no training of staff in how to establish performance measures or of supervisors in how to evaluate performance. I believe those actions must be prerequisites to establishing an effective pay for performance system. I also believe that while there are many positive reasons to implement performance based pay, the intent expressed during Council discussions was punitive rather than positive, i.e. to "hold people accountable." Trying to structure and implement a system based on a such a negative foundation seems ill-advised.