Exh 5BAGENDr\ ITEM N513
SEl'TEMI3ER 8, 2003
CITY OF ATLANTIC BEACH
CITY COMMISSION MEETING
STAFF REPORT
AGENDA ITEM: Merit Pay
SUBMITTED BY: Jim
DATE: September 2, 2003
BACKGROUND: The City Commission adopted a pay plan approximately two years ago
upon recommendation of the Palmer &Cay Consulting Group. They
also recommended that the City use annual performance evaluations and
implement amerit-based system for awarding future pay increases. While
performance evaluations had been done annually in past years, they had
not been used for several years prior to the pay plan study.
Merit based pay requires first that a good system of written performance
evaluations be in place. Since the Commission adopted the pay plan,
several discussions have been held with Department Heads and Union
representatives about evaluation forms, criteria to be used and other
components of the evaluation system. Criteria for evaluation of each
specific job have been in place for most of this year and training
for preparing performance evaluations has been done with all City
supervisors. Additionally, preliminary performance evaluation meetings
were conducted with City employees several months ago in anticipation of
formal yearly evaluations, which would be done in September of each year.
The City is now ready to begin the merit-based component of the pay
system recommended by Palmer and Cay.
Because city supervisors have only limited experience with performance
evaluations, it is recommended that the merit pay component be relatively
simple for this first year. Employees will be eligible to receive the 6%
of midpoint raise proposed in the upcoming budget if the average score
on their performance evaluation is equal to or above the "meets
requirements" rating. We anticipate that a great majority of city
employees will receive this rating or better and thereby be eligible for the
annual raise. In addition, a bonus component of the merit plan may
provide aone-time 4% award if the overall score on the performance
evaluation equals "exceeds requirements" and the employee is
recommended by the Department Head and approved by the City
Manager. This would be awarded in the form of aone-time bonus check.
This would not be added to the base salary. We anticipate that 10% or less
of the city's employees would receive this bonus.
AGENDA ITEM 0513
SEPTEMIIER 8, 2003 ,
Subject to union negotiations for those employees that are covered, this
merit pay program will be in effect as of October I of this year.
BUDGET: The estimated cost of the raises for city employees has already been
included in the proposed budget for next year. The annual cost for the
bonuses is estimated to range from $15,000 to $20,000. It is anticipated
that these bonuses can be absorbed into the regular salary budget without
further adjustment by the City Commission.
RECOMMENDATION: This report is submitted for information only. If any member of the
Commission has concerns or comments, please let me know.
ATTACHMENT: "Merit Pay"; a description of the proposed merit pay plan prepared by
George Foster, Human Resources Director
AC1rNUA ITLM IISB
SEl'TEMBI~:R 8, 2003
Merit Pay
Merit Pay, or pay for performance, provides pay to employees based upon their level of
perfonnance. Employees must, at least meet satisfactory levels of performance (Meets
Standards) to receive a pay increase. Full Time (FT) and Regular Part Time (RPT) employees
may also receive a "Bonus" if their performance is outstanding (Exceeds Requirements)
Employees with 6 months or less service with the City, as of October 15L of each year, wilt not be
eligible to receive Merit Pay but shall receive a pay adjustment equal to that provided to the City
Pay Scale.
Employees with more than G months of service with the City, as of October lst of each year, will
be entitled to receive a merit pay adjustment as follows:
Merit pay adjustments are not automatic but are based upon overall satisfactory
performance and budgetary authority.
- An employee must have an overall performance evaluation of at least "Meets
Requirements" before a Merit pay adjustment maybe granted.
- Employees that receive an overall rating of at least "Meets Requirements," shall receive
a pay adjustment as approved by the City Commission or as approved within the union
contract, as appropriate.
- In a few instances, employees that receive an overall rating of at least "Exceeds
Requirements" maybe deserving of special recognition and are eligible to receive, in
addition to a Merit increase, a Bonus as established during the City's budget process.
Recommendations for a Bonus must be completelyjustifieii by specific comments on the
evaluation form and approved by the City Manager. If funding is available within the
budget, Bonuses shall be +4% of annual base salary as of the date of the evaluation
report. Bonuses shall be paid as a one-time lump sum amount.
If an employee's overall performance evaluation is less than satisfactory, pay adjustments will be
withheld and the supervisory may:
- Counsel the employee that they will be placed in a 90-day performance improvement
period and reevaluated after 90 days, at which time a new performance evaluation will be
completed; or
- Initiate action to terminate the employee.
If the 90 day re-evaluation is:
- Unsatisfactory: The supervisor may initiate removal proceedings or, with justification,
extend the employment period for an additiona190 days. If the second 90 day evaluation
is unsatisfactory, the supervisor shall initiate removal proceedings.
- Satisfactory: The employee shall receive a merit increase to be effective with the date of
the satisfactory evaluation