Hay Proposal For Classification and Compensation Study

August 19, 2011
Proposal: Classification
& Compensation Study
© 2011 Hay Group. All rights reserved. www.haygroup.com

Contents
1. Introduction .......................................................... 2
2. Hay Group History ............................................... 2
3. Statement of Qualifications ................................ 3
3.1. Proprietary Job Evaluation Methodologies......................... 3
3.2. Broad Rewards Expertise .................................................... 3
3.3. Hay Group Expertise........................................................... 3
3.4. Proposed Project Team ....................................................... 4
4. Our Understanding of Your Needs ..................... 4

5. Methodology ........................................................ 7
6. Key Goals and Objectives ................................... 9
6.1. Classification Phase ............................................................ 9
6.2. Compensation Phase ......................................................... 12
7. Recommended Approach ................................. 13

7.1. Planning and Data Gathering ............................................ 13
7.2. Implementation of Hay Group’s Job Evaluation
Methodology: Basic Methods Training ......................................... 15
7.3. Structure Design & Job Slotting ....................................... 16
7.4. FLSA Audit ....................................................................... 19
7.5. Reporting and Implementation ......................................... 20
8. Consulting Fees ................................................. 21

9. Appendix ............................................................ 22
9.1. Client References .............................................................. 22
9.2. Project Team Bio’s ........................................................... 24
9.3. Sample Classification and Compensation Study .............. 25
1/24 www.haygroup.com
1. Introduction
Hay Group is pleased to submit our proposal to assist the City of Muskogee’s Human
Resources Department with the classification and compensation study. We are excited at
the prospect of working with you on this important initiative and can begin the project
immediately upon winning the work.
2. Hay Group History

Hay Group was founded in 1943 with the mission to assist organizations in achieving their
objectives by focusing on the impact that people can make on their organization. By staying
true to this mission, Hay Group has grown to become one of the world’s largest
management and human resources consulting firms. Hay Group employs over 2,000 top
professional and support employees located in 75 offices in 41 countries (13 offices in the
United States – see list below).
Arlington, VA Dallas, TX New York Metro
Atlanta, GA Kansas City, MO Norwalk, CT
Boston, MA Los Angeles, CA Philadelphia, PA
Charlotte, NC Miami, FL San Francisco, CA
Chicago, IL
As one of the leading consulting firms, Hay Group is committed to partnering with our
clients to deliver high quality, innovative, value-added services. We support the
achievement of our clients’ strategic objectives.
The corporate office for Hay Group is located at:
100 Penn Square East
The Wanamaker Building
Philadelphia, PA 19107-3388
The local office which will provide Compensation Consulting Services is located at:
5001 Spring Valley Road
Suite 800 West
Dallas, TX 75244
3. Statement of Qualifications
We believe we are uniquely qualified to assist you in this particular assignment for the
following reasons:
3.1. Proprietary Job Evaluation Methodologies
Hay Group’s unique approach to job analysis enhances the quality of internal alignment or
equity and market pay information, especially for leadership roles. The Hay Method of Job
Evaluation continues to be the most widely accepted worldwide, in use by over half of the
world’s 50 largest companies as well as in government, public, and not-for-profit
institutions. Traditional surveys primarily consider organization size in differentiating
comparable jobs in different organizations. Our approach enables us to consider other
factors that influence organizational and job complexity, such as geographic diversity and
range of services that are important in setting a competitive level of pay.
3.2. Broad Rewards Expertise
Hay Group is a leader in the development and management of human resources,

compensation, and benefits. Our consultants help clients help themselves by providing
systematic methods and innovative ideas from the objective viewpoint of an outside
authority. We assist clients in a variety of human resources areas including the following:
• Compensation Design: Establishing classification, compensation and benefits

programs and policies that are economically sound, internally equitable, externally
competitive, and motivating to employees. Reward programs may include team-based
pay, pay for competencies, pay for quality, small group incentives, and gainsharing, as
well as more traditional merit increase and salary administration programs as
appropriate for the organization.
• Organization Effectiveness: Organizing jobs, people, and resources to increase

efficiency and meet the demands of emerging technologies and the changing
marketplace. Hay helps clients ensure strategies and objectives are reflected in the
organizational structure; communicated effectively throughout the organization;
embraced by management; and supported by the organization’s internal culture through
programs that are flexible enough to adapt to change.
• Performance Management: Introducing methods to analyze and measure both

organization and individual performance including the results achieved, as well as how
the results were achieved and how closely those results tie into the organization’s
overall strategy and objectives.
3.3. Hay Group Expertise

We have applied our approach for over 60 years and have analyzed all the positions in our
database that enable us to speak with authority about differences in job complexity and its
impact on pay.
Hay Group has helped more than 7,000 clients achieve their goals and strategies by
addressing critical people issues. Hay Group has worked with organizations ranging in size
from 35 to 250,000 employees. In addition to Compensation Consulting, Hay Group offers
services in Human Resources planning and development, work transformation, employee
surveys and culture studies, strategy and organizational effectiveness.
At Hay Group, the idea of partnering with clients to deliver tangible results is not a cliché, it
is the only way we conduct business. Our unique activities and services include:
• An exclusive relationship with Fortune magazine to benchmark best practices

concerning the “World’s Most Admired Companies”,
• Numerous publications that have set the pace for large-scale employee behavior
change. Recent publications include: Compensation for Teams; People,
Performance & Pay; and Reengineering Performance Management,
• The world’s only integrated Total Remuneration (Compensation and Benefits)

database…also available through the Internet (Hay PayNet™),
• Proprietary total pay information on 2,000 U.S. organizations and over 2 million
positions,
• State-of-the-art databases in the following areas: employee research, best HR

practices, work culture, individual and organizational competencies, performance
requirements, compensation and benefits,
• Proprietary methodologies to turn the information from these databases into today’s
progressive solutions, and
• Custom solutions, with processes to monitor their effectiveness.
As one of the leading consulting firms, Hay Group is committed to partnering with our
clients to deliver high quality, innovative, value-added services. We support the
achievement of our clients’ strategic objectives.
3.4. Proposed Project Team
Paul Glogowski
Client Relationship Director
Thomas Zorn
Client Relationship Manager – Training & Support
Godwin George
Rewards Consultant
4. Our Understanding of Your Needs

The City of Muskogee, population 38,300, named for the Muscogee (Creek) Indian Tribe, is
located in the historical Three Forks region of eastern, central Oklahoma. Established in
1872, Muskogee serves as the county seat for Muskogee County and was the most important
City in the State of Oklahoma during the Dawes Commission in 1893 serving as the
gathering point for various tribes meeting to create a constitution for the then State of
Sequoyah.
Today, employing approximately five hundred employees, two hundred of which are within
the Police and Fire Departments, the City government operates under a Council/City
Manager format. Under the City Charter, the City Council operates as the legislative and
quasi-judicial body of city government, comprised of a Mayor and eight member body
where the Mayor is the head of the City government for all ceremonial purposes. Appointed
by City Council, The City Manager appoints and directs all City employees and
administrative officers.
The RFP clearly articulates the City of Muskogee’s desire for the design and
implementation of a comprehensive job classification and compensation study for both full
and part-time positions. The City believes its current classification and compensation
systems are outdated and therefore do not predict market rates for jobs accurately. Having
been involved in similar situations in the past, these are often environments where it is
difficult to determine if employee pay is aligned with its internal and external reward
philosophies. In addition, the ability to effectively attract, motivate and retain qualified
employees is always a concern. The City is now interested in creating a program tailored to
its current needs: a time-tested, defensible and quantitative job classification system.
Specifically, the city requires the following pieces of work:
¾ A comprehensive classification and compensation study for approximately 280

full-time and part-time, non-sworn employees and their related positions.
¾ A comprehensive salary survey for approximately 480 non-sworn and sworn

employee groups and ranks keeping in mind the statutory arbitration requirements
within the State of Oklahoma bargaining statute for Police and Fire. This also
includes the utilization of any available public and or private sector surveys.
¾ A review of and recommendations for compensation/pay structures, pay

grade/salary banding and pay designator system changes and updates for the
various City pay groups. This also includes the formulation of implementation
strategies.
¾ Training on compensation study/job evaluation systems for an internal job

evaluation/study committee, review and conduct job studies and where appropriate,
have consultant perform limited evaluations on higher level jobs as part of the
City’s overall Class and Comp study process.
Within this study, there are approximately 138 diverse job titles among eight different job
groups, slotted into 3 different compensation structures. All compensation structures appear
to be “step” systems based on tenure. While elements of the described base salary structures
are somewhat common in the market, much of the current structure’s design would be
considered outdated and may not reflect the current trends in the market. Many
organizations have moved towards a more steam-lined design approach, typically utilizing
grades instead of steps. This change in approach would be a considerable modification to
the City’s current structure, and would require effective change management and
communication for a successful implementation.
Hay Group alone has the unique ability to demonstrate over 60 years of a proven track
record in evaluating jobs and linking those evaluations to the external market to ensure the
proper internal and external equity. The system has been tested countless times in all
manner of disputes, and has never been legally defeated in its entire existence.
As with most organizations, The City of Muskogee must ensure its programs meet the basic
objectives of any compensation program by:
Ensuring the program recognizes the internal value of jobs.
Best practices data from our research with the University of Loyola at Chicago and
with Fortune Magazine indicate that the world’s most admired organizations place
an emphasis, in their compensation programs, on the contribution made to the
organization by its employees. Valuing the internal worth of a job is a part of these
efforts.
Ensuring the compensation program is externally competitive with the appropriate

market.
Our research also indicates that companies want to ensure the base pay program is
well aligned with the market. The world’s most admired companies want to ensure
they don’t pay too much, or too little, relative to the market. Paying too little will
can have a significant impact on an organization’s ability to attract and retain
quality employees. Paying too much in the market often simply adds fixed
expenses to the organization that are not necessary.
Ensuring the program can attract and retain the right people for the organization.
The City needs to compete with other organizations to find talent as well as have
programs that align internally with its current workforce. In response, the City must
create a salary program that provides employees fair and market-competitive
compensation, ensuring that neither too much or too little is paid its employees.
5. Methodology
The primary goal of this project is to implement a comprehensive job classification system
that is proven and defensible. This is exactly what the Hay Group point factor job
evaluation methodology brings to the table.
Classification Job Evaluation

The The
Description Measurement
of Work of Work
Pricing Pay Delivery

(Pay Structure) The Recognition of
The Value of Performance of
Work Work
The core methodology of this project is the Hay Guide Chart®-Profile Method of Job
Evaluation, the most widely used (and imitated) job evaluation system in the world. This
methodology has been successfully applied across all business sectors and is being
successfully utilized in the public sector and private sector organizations.
The Guide Chart method is built on four key principles:

− The most significant factors in determining the internal value relationships of positions
can be grouped as representing the knowledge and skills required, the kind of thinking
needed to solve the problems commonly faced, and the job’s impact on and
accountability for achieving end results.
− Positions can not only be ranked in the order of importance within the structure of an
organization, but the distances between the ranks can be determined.
− These factors are related in patterns, or profiles, that are inherent in different types of
positions and reflect the "shapes" of those positions. Research has shown that jobs with
different shapes have different core competencies, and are predictive of success in talent
development planning.
− The focus of the process of evaluation must be on the nature and requirements of the
assignment itself, not on the skills or background or characteristics or pay of the person
doing the work.
We have listed representative clients under the “Client References” section within the
appendix. One of the reasons that Hay Group methodology is the most widely used method
of job evaluation is that it is a successful enabler in overcoming internal issues such as
artificial “glass ceilings”, a key issue that the City is currently facing. As noted above, one
of the fundamental factors that contributes to the success of this methodology is that this
method measures job-related factors exclusively, independent of incumbent
characteristics, current salary, or other non-job content factors.
Hay Guide Chart®-Profile Method of Job Evaluation:
The fundamental factors measured by this process are Know-How, Problem Solving and
Accountability.
• Know-How – The total of every kind of knowledge and skill required for acceptable
job performance, measured in three dimensions:
• Practical, technical, specialized knowledge;
• Managerial, supervisor skills; and
• Human Relations skills.
• Problem Solving – The intensity of the mental process which employs Know-How to
identify, define and resolve problems measured in two dimensions:
1) Thinking environment; and
2) Thinking challenge.
• Accountability – The effect of the job on end results, measured in three dimensions:
1) Freedom to act;
2) Type of job impact on end results; and
3) Magnitude of job impact on end results.
In addition to these three factors, which are known as job content, the methodology also
measures job context. These factors include:
• Physical Effort: Handling of light, medium or heavy weight materials in normal to

difficult work positions or unusual circumstances which results in physical exertion.
• Environment: Exposure to objectionable or noxious conditions such as dirt, dust,

fumes/gases, extreme temperatures or wide fluctuations in temperature, moisture, odors,
noise which results in physical discomfort.
• Hazards: Exposure to mechanical, electrical, chemical, biological, or physical factors

which involve risks of accident, personal injury, health impairment or death.
• Sensory Attention: Requirements for concentrated levels of sensory attention,

including seeing, hearing, smelling, testing, touching which may vary in intensity,
duration or frequency.
6. Key Goals and Objectives
6.1. Classification Phase
A. Develop a classification system and structure that ensures compliance with Federal
and State regulations including exempt/non-exempt status under the Fair Labor
Standards Act, ADA and EEO-4 designations. Included in this would be an
outcome of an ongoing system to properly evaluate new jobs and/or changes
brought forward for study on existing jobs by various managers and as approved by
the City Manager. City (75%) vs. Consultant (25%)
a. The Hay Group Job Evaluation methodology intrinsically serves as a

classification system to base compensation structures upon. The system
provides a time tested method for job evaluation that can be utilized going
forward for any new jobs and/or changes to existing jobs that may arise in
the future. The system has implications on all State regulations including
exempt/non-exempt status under the Fair Labor Standards Act, ADA and
EEO-4 designations. However, FLSA classifications require a separate
audit process that is addressed specifically in the section titled
“Recommended Approach”. A full FLSA audit will require more than the
25% consultant time mentioned above and therefore will need to be
discussed to determine the best approach to conduct this piece of the
project. Currently the proposal is priced assuming that the FLSA audit
will only be conducted to step two within the “Recommended Approach”
section.
B. Compile and review background materials including organizational charts, budgets,

personnel rules and span of control as appropriate. City (75%) vs. Consultant
(25%)
a. This is a key step in all projects Hay Group undertakes and will be
specifically addressed as a separate step in the section titled
“Recommended Approach”. Consultant time will be limited as it
primarily entails the request for all pertinent information which the City
will then be responsible for providing.
C. Conduct orientation and briefing session(s) with all department heads, managers,
and supervisors. A consideration would be made to have the Consultant make an
initial appearance before the City Council and Department Heads to introduce
themselves and answer any questions that might arise regarding their firm or this
process. City (90%) vs. Consultant (10%)
a. This is an essential piece of all projects Hay Group undertakes as it

provides an opportunity to create buy in from key stakeholders as well as
gather information from them that may be beneficial to the project.
Consultant time can be limited here by having the City serve as the lead
during the meeting as described above.
D. Conduct orientation and briefing session(s) with all employees who will be
primarily covered within the scope of this study. (At this point, it is believed to be
unlikely that Police and Fire sworn employees will be involved to any extent in this
classification phase of the process). City (95%) vs. Consultant (5%)
a. This again is an essential piece of all projects Hay Group undertakes.

However, in order to keep consultant time to a minimum on this task, Hay
Group can provide advice/counsel to the City on what should be
communicated and how. Hay Group can also assist the City in creating
communication materials but the City would be responsible for the overall
implementation of the communication plan.
E. Design, distribute and collect appropriate job-related questionnaires to be

completed by all employees and reviewed by supervisors/managers that will be
used for classification and compensation study purposes. City (85%) vs. Consultant
(15%)
a. This is another key step in all projects Hay Group undertakes and will be
specifically addressed in the section titled “Recommended Approach”.
Consultant time can be limited by utilizing our standard questionnaires
that can be modified if necessary. The City will be responsible for
distribution and collection of all questionnaires.
F. Perform training of an internal Classification Study Committee to enable them to

evaluate jobs and slot them into appropriate market driven grades and/or point
rankings based on valid and professionally designed methodologies that will meet
(to the extent reasonably possible) any future legal considerations and allow the
consultant to testify (if needed) on the City’s behalf in any related litigation based
on additional fees to be indicated in proposal. City (5%) vs. Consultant (95%)
a. Hay Group job evaluation training is a primary component of this project

and is specifically addressed in the section titled “Recommended
Approach”. There are multiple approaches for training that vary by both
consultant time and level of skill transference. Being that the City intends
on having an evaluation committee, a minimum of a two day training
course is recommended. This proposal is priced assuming the two day
training and therefore additional training will need to be discussed to
determine the impact on pricing. Hay Group will provide an instructor as
well as all training materials.
G. Conduct initial benchmark evaluations of sample jobs and then continue to provide
oversight involving job grade and exempt/non-exempt evaluations by internal study
committee, with Consultant sore thumbing the process for market norms, FLSA
and internal equity/integrity of Committee work product. It is hoped that much of
this review and communication process could be accomplished after initial training
and benchmarking evaluations through follow-up submissions by the City of study
results to the Consultant and communications occurring via email and telephone.
However, it is assumed at this point the Consultant would perform the grade level
evaluations on all department head level positions. City (80%) vs. Consultant
(20%)
a. The approach described is typical of these types of engagements. Proper

benchmark evaluations are necessary for the success of this project.
Consultant involvement can be limited by lowering the number of
benchmark jobs but it is important to have a sample large enough to
ensure that it is representative of jobs at all levels in the City. Certain
benchmark jobs can be evaluated at the end of the training session by
utilizing the built in time for practicing evaluations. Consultant
involvement may need to increase to 30% or 40% on this piece to ensure a
solid foundation for the City.
H. Allocate and create record systems of all employees/positions included in the scope
of this study to an appropriate job title, job class, pay grade and appropriate FLSA
designation. City (85%) vs. Consultant (15%)
a. Hay Group will provide a template excel file on which to store all
information that is gathered and created as a result of this project. The
template will store job title, job class, pay grade, FLSA information, as
well as the corresponding job evaluation points and compensation
information at an employee level. This template can be used going
forward as the depository for all such information and will be modifiable
to hold additional components as necessary by the City.
I. Prepare up-to-date and accurate job classification description for all classifications
within the study that more accurately reflect the essential job skills, knowledge,
abilities, education and licensing requirements of City jobs. City (95%) vs.
Consultant (5%)
a. Job Questionnaires provided in step “E” of this section can be utilized

here to cross reference against the existing job documentation to
determine the necessary updates that may need to occur. In order to keep
the level of consultant time down to the requested percentage, Hay Group
will provide template questionnaires and make ourselves available for any
questions that may arise during the update process. However, the City
will be responsible for the actual updates to the descriptions.
J. Design and administer an employee classification review/appeals and final

determination communication process. City (85%) vs. Consultant (15%)
a. Hay Group will create a template protocol to follow when employee

classification issues arise. This protocol will be the responsibility of the
City to implement and conduct but Hay Group Consultants will make
ourselves available for any questions that may arise.
K. Prepare appropriate Council recommendations and study background and results

maintenance documents. City (95%) vs. Consultant (5%)
a. Hay Group will assist the City in creating any recommendations and
maintenance documents by providing templates and making ourselves
available for phone meetings when necessary. Consultant time will be
limited to providing advice and counsel along with providing basic
templates.
L. Present the final study documents to City Council for approval and/or
consideration. A consideration would be made to again, involve the consultant in
this process as it is viewed appropriate/advantageous at the time considering budget
and impact considerations. City (85%) vs. Consultant (15%)
a. Consultant time can vary on this depending on the level of involvement in

the meeting. The 15% shown would include Hay Group being onsite at
the meeting to answer any questions that may come up. The presentation
itself would be lead by the City but the Hay Group Consultant will add
information where necessary.
6.2. Compensation Phase

A. Work to develop a comprehensive total compensation survey including both
benefits and direct wage data components through the local labor market,
comparable and local cities and towns and/or specifically determined organizations,
utilizing an appropriate number of benchmark jobs from each final pay group to
conduct the survey, collect and assemble such data in useful format. (Percent of
work to be performed by each party in regards to this task will depend upon not
only available budget, but likely the resources already available to the Consultant
to draw upon already compiled total compensation and/or wage data without
considerable extra time/expense. City (65%?) vs. Consultant (35%?)
a. Consultant time can vary significantly on this task depending on the

approach taken. At the 35% level, the consultant would gather and
analyze available survey resources, both from hay Groups proprietary
PayNet survey database as well as any other sources that are deemed
necessary, and assist the City in conducting a custom survey that focuses
on a specific peer group for the City, focusing on key jobs in question.
The level of consultant involvement here will again vary based on the
level of involvement that the City will take in conducting the survey.
Specific options will be discussed as a separate step in the section titled
“Recommended Approach”.
B. Complete development of appropriate pay ranges, including possible changes (e.g.,

reduced numbers of grades and/or salary banding) to the City’s current
compensation and pay grade structures based on grade and market study results.
The tangible goal here is to derive a compensation program structure that would
allow the City to be externally competitive and internally equitable for all
jobs/positions. City (25%) vs. Consultant (75%)
a. Hay Group will provide the City with a compensation structure that will
be both externally competitive and internally equitable. Specific steps
will be discussed as a separate step in the section titled “Recommended
Approach”.
C. Prepare and calculate implementation scenarios, related costs and maintenance

documents. Complete work involving the formulation and development of
strategies for implementing compensation recommendations. City (30%) vs.
Consultant (70%)
a. Hay Group will provide the City with an excel file that provides all
implementation scenarios, the related costs/impact analysis, and
maintenance documents. Specifics will be discussed as a separate step in
the section titled “Recommended Approach”.
Based on the methodologies and to achieve the City’s objectives, Hay Group proposes the
following work plan.
7. Recommended Approach
7.1. Planning and Data Gathering
Step 1: Planning
Hay Group believes that planning and communication is a crucial element in conducting
projects that are optimally useful to our clients. The Hay Group team will meet with the
City’s designated Project Team and whoever else you deem important to meet at the
commencement of the project in order to accomplish the following:
• Clarify the Scope of the Project. Agree on the scope of the project, including defining
the roles and responsibilities of the consultants and the City; clarifying project
expectations and anticipated outcomes; and determining the specific timetable of
events, including scheduling of status meetings with the City.
• Develop Communication Strategies. Employees need to fully understand the

intentions of this project and will need open communication channels established to ask
questions. Hay Group will assist the City in determining an effective communication
strategy. Our experience suggests that the initial communications, which are so critical,
should be done using a combination of group presentations, written communications
and, if available, electronic communications. Throughout the project, employees and
other key stakeholders must, at all times, be at least at a level of “suspicious
acceptance” in order for the project process and outcomes to be accepted and
implemented. In addition, it is very important that we manage expectations. Our
experience is that as soon as you communicate that you are doing a compensation
project, there is a “one-way” expectation and that is: “my pay will increase.”
• Agree on the Project Management Process. Hay Group will provide status updates
as the means by which Hay Group and the City will assume a partnership responsibility
for ensuring that the project is conducted on time, within budget and provides to the
City the deliverables needed. In addition, we will meet with relevant stakeholders at
key milestone events in the project for the dual purpose of gaining their input to project
process decisions and to keep them informed on project progress.
• Finalize the Job Questionnaire. Hay Group has multiple styles and approaches for
creating and distributing Job Questionnaires. During this step of the project, Hay
Group will work with the City to ensure the best approach and collection tool is created
to meet the needs of the project and evaluation work. We can work together to
customize our template tool to ensure a successful outcome.
Step 2: Collection of Current Job Documentation
Collecting current job documentation is critical to the success of the project. During the
planning meeting we will consult with you regarding the details of how this step will be
executed. We summarize a typical process in the next four paragraphs.
Hay Group recommends involving both managers and employees in the collection of current
job documentation. Bringing employees into the process allows their voices to be heard, and
helps built commitment to the results. We recommend distributing a Job Description
Questionnaires as soon as possible. The typical timeframe required to complete a data
request this size is at least two to four weeks.
Since these forms will be used in conjunction with job descriptions to assist in job
evaluation, we ask each employee currently in a single incumbent position to participate.
For those jobs with multiple incumbents, we typically suggest collecting a few quality
questionnaires from key individuals, and providing an opportunity for other employees in
the same job to review them. In all cases managers are asked to sign off on the accuracy of
the responses.
Our experience is that employees should be given at least two to three weeks to complete
the questionnaire. This time frame will be validated in the planning step described above to
accommodate the culture at the City of Muskogee. Once the initial period has expired, there
will need to be a week or so to collect the late responses and to perform quick validation of
the information.
From the materials in the RFP, we understand that the City wishes to update job descriptions
where necessary and that process can begin as soon as the job documentation questionnaires
are received by the compensation unit. However, the update of job descriptions is not a road
block since we will be able to use the questionnaires for job evaluation.
Step 3: Organizational Understanding / Data Gathering
This step occurs simultaneously with Step 2. We will gather information to increase our
knowledge of the existing classification, compensation and human resources processes so
that the project outcomes can be aligned with the strategy and culture of the City and the
outcomes are tailored to the City’s specific needs. Data gathering will include existing job
documentation, organizational charts, job questionnaires, the current structure, an incumbent
file to include: Employee ID, Title, Department, Grade, Base Salary, etc., and any other data
that will help us to understand the City.
Step 4: Select Benchmark Jobs
A key objective of this project is to redesign the classification plan and develop reliable,
consistent measurements of job content. Hay Group will work with the City to develop a
“diagonal cross-section” of the City’s jobs to utilize for both the classification and job
evaluation work that will be used to create the framework for the model classification
structure. A solid set of benchmarks will provide you with “anchors” when evaluating and
slotting the non-benchmark jobs, and anchors the evaluation of any new positions that may
be added later. Hay Group recommends identifying 30 to 40 benchmark positions.
Benchmark positions should be those positions which are:
• High incumbent populations;
• Well understood across the City; and
• Likely to be useful as both internal and external benchmarks.
7.2. Implementation of Hay Group’s Job Evaluation Methodology:

Basic Methods Training
The core step in this project is to provide the City with an objective, defensible, proven job
evaluation methodology. To meet the City’s needs we will provide a solid underpinning for
accurately and consistently measuring the value of a job.
First, we will work with the City to train and use the Hay Guide Chart®-Profile Method of
Job Evaluation, the most widely used (and imitated) point-factor job measurement system in
the world. This methodology has been successfully applied across all business sectors (in
fact, more than half of the Fortune 50 takes advantage of our methodology) and is being
successfully utilized by many State / Government clients.
Notably, the Hay Guide Charts contain unique methodological features in the concepts of
"step difference" and "job shape" (profile). When applied with discipline, the robust Hay
Guide Chart®-Profile Method is not subject to “drift” over time. Many of Hay Group’s
Government clients (such as Dallas County, City of Arlington, City of University Park,
States of Idaho, Oklahoma, Oregon, South Dakota, etc.) have used the method for over 10
years, and many of them over 25 years.
Hay Group recommends at least a comprehensive two day training course on how to use the
Guide Charts. The course is a customized mix of classroom training and hands-on job
evaluation. The hands-on job evaluation piece can be utilized to evaluate benchmark
positions, thereby decreasing the number of benchmark positions to evaluate later on.
Step 1: Job Evaluation Training & Benchmark Job Evaluation
At this point, we will partner with the City in job evaluation training and evaluating
benchmark positions. The RFP specifically requests that all department head level positions
be evaluated by the Hay Group alone. Therefore, department head level positions will
automatically count as benchmark jobs and be evaluated by Hay Group. Once evaluated,
results will be discussed and finalized with the City before moving on with the rest of the
benchmark evaluations and training. There are three options on how the rest of the
benchmark jobs can be evaluated:
Option 1 – The City forms an internal Job Evaluation Committee. This Committee is
typically made up of HR management and senior professionals. Many of our clients also
choose to include management or professionals from other disciplines, i.e., Legal, Finance,
etc. Hay Group trains the Committee in the job evaluation process and Hay leads the
Committee in the evaluation of the first 10 - 15 benchmark positions. All evaluations are
created and stored on an excel template that we will provide. The Committee then evaluates
the remaining benchmark positions, maintaining consistency with the initial evaluations.
After all benchmark jobs have been evaluated, Hay Group will meet with the Committee to
do a quality assurance review of all the evaluations. To ensure the proper understanding of
the benchmark jobs, we will rely on three main tools: Job Questionnaires, Job Descriptions,
and the Committee or team members’ understanding of the positions.
Option 2 – The City forms an internal Job Evaluation Committee. Hay Group trains this
Committee in the job evaluation process, and Hay Group leads the Committee in the
evaluation of all benchmark positions. To ensure proper understanding of the benchmark
jobs, we will rely on three main tools: Job Questionnaires, Job Descriptions, and the
Committee or team members’ understanding of the positions.
Option 3 – The City forms an internal Job Evaluation Committee. Hay Group trains this
Committee in the job evaluation process and Hay Group leads the Committee in the
evaluation of the first 10 - 15 benchmark positions. Hay Group then evaluates the
remaining positions against the benchmark and then meets with the Committee to do a
quality assurance and validation of all the evaluations. To ensure proper understanding of
the benchmark jobs, we will rely on two main tools: Job Questionnaires and Job
Descriptions. During the quality assurance and validation with the City’s team, we will
utilize team members’ understanding of the positions.
In terms of consideration of the options, Option 2 is the most used option when an
organization is implementing job evaluation for the first time. While Option 1 and 2 are the
most “City-time intensive”, they do develop internal capability. Option 3 is the preferred
option if you want to use an ongoing Committee but have limited time available resources.
Given that you are embarking on utilizing a new job evaluation system, we would
recommend either Option 1 or 2. The fee estimate is based on Option 1. Should you choose
Option 2 or 3, we will agree on the impact this has on the fee estimate.
At this point, Hay Group will create a protocol to follow when classification issues arise.
The protocol will most likely involve the City’s internal job evaluation committee and the
approval of Hay Group consultant if absolutely necessary. The protocol will be discussed
with the City before finalizing.
Step 2: Non-Benchmark Job Evaluations
At this point, the City’s internal job evaluation committee will have a firm understanding of
Hay Group’s Evaluation Methodology. The evaluation committee will now utilize the
information they have learned and complete the non-benchmark evaluations. The timing
here will obviously depend on the time available to work on evaluating jobs. Hay Group
experts will review/audit all evaluations before they are considered final.
7.3. Structure Design & Job Slotting
Considering the overall methodology changes, the City of Muskogee’s classification and
evaluation programs will be completely revitalized. Changes of this magnitude can often
have substantial impacts regarding the current classifications and the associated slotting and
pay decisions for the City’s positions. Compounded by the fact that the City has not
updated these programs or the base salary structure for some time, Hay Group would
strongly recommend completing the steps as outlined in this Phase of work.
Step 1: Review Compensation Philosophy
The first important step in this phase will be to review and understand the current
compensation philosophy. Such a philosophy statement sets the framework within which all
compensation decisions will be made. It is the link between the City’s general mission,
vision, values and goals and the City’s compensation goals.
Step 2: Review of Current Structure
Hay Group will review the existing salary structure and associate job hierarchy (slotting) at
the City. The key policy issues that will be addressed are:
• Internal equity
• Pay Compression
• Range Spread
• Midpoint Progression (structure compression)
• Slotting Practices
Hay Group will analyze the information gathered and provide the City with commentary on
the results of the pay structure review. This will include analysis covering on the bullet
points above, based on the incumbent file and structure data collected. Hay Group will
incorporate all jobs with a current evaluation.
Please note that Hay Group’s evaluation methodology has the built in functionality of
aligning internal equity and correlating to the applicable market data. This functionality will
be heavily used in the review, and design, of the structure. For this reason, we will only
include positions in this analysis that have been evaluated. Hay Group and the City can
work during the planning meeting and throughout the project to ensure the timing and
numbers of positions included for this step meet your needs.
Step 3: Gather Market Data
In this step, Hay Group will obtain market data from the sources identified in the project
planning meeting. This will most likely include Hay Group’s existing databases and any
other surveys you may have or purchase, as well as a custom survey for the local labor
market consisting of comparable cities, towns, and organizations.
The following steps outline the process for conducting the custom survey:
1. Preparing data collection materials

Hay Group will partner with the City to confirm the quantitative and qualitative elements to
be collected from the participants for each incumbent matched to one of the survey jobs. We
anticipate the compensation survey elements will include, but may not be limited to:
• Incumbent Job Title

• Degree of match to survey job descriptions
• Individual base salaries or hourly rates for incumbents
• Actual awards
• Total Cash
• Annual incentive bonus eligibility
• Target Cash
The benefits survey may include the following items but we would want to work with you to
collect the most meaningful benefits information:
• Health coverage
• Flexible benefits and spending programs
• Work environment benefits
• Employee recognition programs and awards
• Paid time off practices
• Educational assistance
Hay Group will partner with the City to determine the plans/benefits needing to be collected
and the best way to collect them. Benefits information will only be analyzed at a prevalence
level meaning the analysis will only identify which benefits are being offered in the
marketplace. Additional analysis on the benefits and the resulting impact on cost will need
to be discussed before proceeding with the survey.
Based on the above, Hay Group will design a data submission vehicle for use in
collecting both the quantitative information (incumbent-based) and the qualitative
information (company scope and benefit plan data). After the first survey year, Hay Group
will be able to furnish the participating companies with an electronic file that contains the
information the organization submitted last year. This will reduce the work and time needed
to complete the survey each year.
2. Analyzing and collecting information
The City will take the lead in distributing and collecting the completed surveys. Once the
completed surveys are turned over to Hay Group, we will contact participants if there are
any anomalies in their data that needs explanation. We will also utilize a variety of quality
control measures designed to ensure a sound survey product.
Participant input will be aggregated and reviewed once again for outliers and other
anomalies prior to finalizing results.
3. Delivery of survey results
Hay Group will compile and present the results of the information in a summary data excel
file with all compensation data on one tab, and all benefits information on another tab. We
anticipate this survey can be conducted and produced within one month following the
collection of data.
Step 4: Market Analysis
Hay Group will analyze and compile the appropriate market data for each position selected.
This information will be used to test the market competitiveness of the current pay practice,
as well as provide data to ensure the proper development of the base salary structure(s).
There are two common approaches for completing this step (as outlined below). With either
approach or a combination approach, Hay Group will provide summary tables and charts
that illustrate the City’s current market position compared to the identified market for the
25th, 50th, and 75th percentiles.
Step 5: Base Salary Structure Analysis
Based on our findings from the market analysis, Hay Group will analyze the base salary
structures to ensure they are meeting the needs of the organization as well as having the
desired market position in accordance with the stated compensation philosophy. We will
focus on ensuring an appropriate number of ranges along with the necessary spreads and
midpoint progressions to achieve the goals of internal equity and external competitiveness.
This is a comprehensive level of structure design. All structure recommendations will come
with a complete analysis to demonstrate the impact of implementing the new design. This
analysis will be conducted on an incumbent-by-incumbent basis, with results delivered in
aggregate as well as the incumbent level. The typical impact analysis will include: slotting
changes, new vs. old compa-ratio analysis, position in range analysis, cost to bring
employees to the new minimum, cost of employees over maximum, etc.
Once the initial structure updates are complete, Hay Group will slot all positions into the
structure. As mentioned earlier, not only do the Hay Group job evaluations ensure the most
precise market data, the methodology also provides an instant mechanism for slotting jobs
and articulating the variances in job content from one position to the other. Hay Group
builds this into the structure as well so slotting is automatic once an evaluation is complete.
It truly does merge the best of both worlds: external precision and internal equity.
Hay Group will conduct a meeting with the City to discuss the pros and cons of the new
structure and the associated impact analysis. Hay Group will then incorporate the feedback
and finalize the structure and slotting for implementation.
7.4. FLSA Audit

Step 1: Initial FLSA Audit
Based on the job documentation gathered in the previous step, Hay Group will review each
of the selected positions. This initial review will allow us to categorize the selected
positions into three categories; jobs that are clearly exempt, jobs that are clearly non-
exempt, and those positions that are “on-the-fence” between being exempt or non-exempt.
These positions are such where the job descriptions alone cannot be used to form a valid
opinion.
Step 2: Preliminary Report of Findings
Hay Group will prepare a report capturing our findings thus far in regards to our assessment
of the positions versus the exemption criteria within the FLSA, as outlined above.
Step 3: Subsequent Position Audits

For those positions that are identified as “on-the-fence” between being classified as exempt
vs. non-exempt, Hay Group would recommend a more thorough audit to ensure the proper
classification. The following steps outline the suggested approach.
Step 4: Interviews Process
Hay Group will work with the City’s project team to set-up a series of interviews and/or
focus groups in order to gain a deeper understanding of the job content of these positions.
This will give reviewers the ability to ask probing questions that get to the specific details
and nuances of a position, oftentimes not expressed in a job description. These interviews
will ensure a critical level of understanding for positions that are in the “grey area”.
The number and mix of positions requiring an additional review will be used to determine
the employees selected for interviews and/or focus groups. We estimate each interview to
last approximately 30 minutes to an hour. They can be conducted in-person or via telephone
as needed. Focus Groups tend to last a little longer, but would be set-up for a two hour
maximum. Hay Group will work to ensure the most effective and efficient approach is used
to complete this process, minimizing the number of meetings.
Step 5: Final Report
Utilizing all of the information captured in the earlier steps, Hay will prepare a final report
of findings which will include our assessment of the remaining positions versus the
exemption criteria within the FLSA. Our assessments will be reviewed by Hay Group legal
staff* to ensure all processes, assessments against the FLSA criteria, are reasonable.
*Hay Group is not a law firm and does not offer legal advice to clients.
7.5. Reporting and Implementation
Step 1: Recommendations and Reporting
Hay Group will prepare a preliminary report for review summarizing all project steps,
findings, and recommendations for the City. Specific issues covered in the report will be:
• The results of the job evaluation process;

• Results of the internal structure analysis;
• Recommended structure updates;
• Results of the associated impact analysis; and
• Key findings and consultant insight regarding the City’s HR programs and
procedures as learned through this initiative
This preliminary report will be presented to the City for review and feedback. Hay Group
will incorporate input from this review into the final written report. The final written report
will communicate relevant findings and implementation issues, review project objectives,
methodology, and discuss recommendations and ongoing program maintenance.
Step 2: Transition and Implementation Planning
Following Step 1 of this Phase, we will map out with the City an implementation plan and
timetable to enable the adopted recommendations to be communicated to employees and
implemented.
We have found that, unless management clearly understands and supports the new process,
even the most well designed system can fail once implemented. In this step, we will work
with you to: a) discuss the infrastructure necessary to support this new process, b) assist in
developing communication materials, and c) assist in educating and training human
resources and line-management on how to implement and administer the new system.
Step 3: Ongoing Support and Consultation
The consulting approach taken by Hay Group is that of skills transference. As the internal
capability increases, the need for external consulting support decreases. This is the way in
which we successfully partner with many of our Government clients on an ongoing basis.
“They call us when they need us, not because they are locked into using us.” However, we
do recommend that an end of year one audit of the implementation of the plan be conducted.
Further assistance after that will be on an as required basis. Many of our clients have an
annual contract with Hay Group for the provision of services such as the evaluation of jobs,
collection of survey data, etc. This is not a retainer – payment is only for services rendered.
We strongly recommend a further audit of the plan be conducted every 3-5 years to check
on the plan’s “currency.”
8. Consulting Fees
Project Phases & Steps Cost

Planning and Data Gathering
- Planning
- Collection of Current Job
Documentation $4,000
- Organizational Understanding /
Data Gathering
- Select Benchmark Jobs
Implementation of Hay Group’s JE
Methodology: Basic Methods
Training
$12,500
- JE Training & Benchmark JE
- Non Benchmark JE
Structure Design & Slotting

- Review Compensation
Philosophy
- Review Current Structure
$26,500
- Gather Market Data
- Market Analysis
- Base Salary Structure Analysis
FLSA Audit
- Initial FLSA Audit
$4,500
- Preliminary Report of Findings
Reporting & Implementation

- Recommendations and
Reporting
- Transition and Implementation $6,500
Planning
- Ongoing Support and
Consultation
Total $54,000
9. Appendix
9.1. Client References
City of Houston
Janet McCown
Manager of Compensation
(713) 837-9325
Janet.McCown@cityofhouston.net
P.O. Box 1562
Houston, TX 77251
Hay Group is current working with the City of Houston to implement Hay Group’s
evaluation methodology for all city positions. Similar to this initiative, Hay Group
will also perform a competitive market analysis, update the salary structure
accordingly, and help ensure the current compensation programs are effective and
align with industry best practices.
City of Santa Monica

Ms. Bridget Cade
Sr. Human Resources Analyst
1685 Main Street, Suite 1016
Santa Monica, CA 90401
310.458.8411
Bridget.Cade@SMGOV.net
City of Santa Monica has been a Hay Group client for over 13 years. Projects have
included classification and compensation studies for the Management bargaining
Unit ( MTA) and the nonexempt bargaining unit (MEA).
City of Irvine
Ms. Jan Walden
Human Resources Manager
One Civic Center Plaza
3rd Floor – Human Resources
Irvine, CA 92606-5207
949.724.6277
jwalden@ci.irvine.ca.us
City of Irvine has been a Hay Group client for over 5 years. Projects have included
a staffing study and living wage study in 2006 and a salary study for selected jobs in
2009.
Chickasaw Nation
Sharon Darby
Director of Human Resources, Division of Commerce
(580) 272-5852
sharon.darby@chickasaw.net
2020 Lonnie Abbott Road
Ada, OK 74820
Hay Group has worked extensively with the Chickasaw Nation for several years.
This work has included implementing Hay Group’s evaluation methodology,
developing base pay structures, conducting market analyses, and creating Career
Pathing Models.
*Hay Group can provide more references upon request.
9.2. Project Team Bio’s
Paul Glogowski
Dallas, USA
Overview
Mr. Glogowski works with clients to tailor and
design human resource programs to ensure they
maximize their ability to attract and retain a talented
workforce. His more than twenty years of experience
includes the delivery of organizational effectiveness
& design initiatives, performance management
programs and compensation programs solutions
across multiple industry sectors.
Delivering Results for Clients

Mr. Glogowski’s experience includes the development and implementation
of various compensation programs affecting all levels of an organization
from executives to hourly workers.
Organization design, performance management design and implementation,
leadership development and culture assessment has also been an area of
responsibility for Mr. Glogowski. Mr. Glogowski has also designed
company-wide compensation and marketing & sales incentive plans.
Mr. Glogowski also serves as a leader for the Southwest Region in the area
of total rewards systems.
Prior to joining Hay Group, Mr. Glogowski held several human resource
management positions for Texas Utilities Company. Immediately prior to
joining Hay Mr. Glogowski served as a HR Business Partner to a major
division within the utility.
Areas of Expertise
Mr. Glogowski is the Principal of Reward Services for the Southwest
Region of Hay Group. His twenty years of experience in the Human
Resources field include the delivery of diverse compensation, benefits and
performance management services in several industry categories including:
chemical, energy, utility, manufacturing, mining and the health care
industries. Additionally he has provided diverse consulting services to
public sector clients in city/county government and higher education.
In these capacities, Mr. Glogowski is focused on developing a variety of
human resource solutions that solve client business issues.
Paul’s Education and Affiliations
Mr. Glogowski holds a Bachelor of Business Administration (Personnel
Management) from the University of North Texas.
Contact
Email: paul.glogowski@haygroup.com
Tel: (469) 232-3843
www.haygroup.com
Thomas Zorn
Dallas, USA
Overview
Mr. Zorn is currently a Senior Consultant in the Dallas
Office of Hay Group. Mr. Zorn consults in the
Rewards Practice, assisting clients in the development
and implementation of compensation programs,
including base pay plans, short-term and long-term
incentive programs, executive compensation, and total
remuneration. His ten years of experience in the
Human Resources field include the delivery of diverse
total reward solutions.
Delivering Results for Clients

Thomas’s consulting experiences with Hay Group has included working with
clients in the following industries: retail, health care, information technology, not-
for-profit, hospitality / services, public sector, and manufacturing. Additionally, he
has several years of industry experience as a compensation professional in the
restaurant industry, as well as executive compensation experience with Watson
Wyatt Worldwide.
Areas of Expertise
Mr. Zorn has recently partnered with several companies to evaluate the
effectiveness of their compensation programs. As part of these initiatives, Mr.
Zorn has conducted extensive job evaluation / slotting and market analyses to
develop and implement compensation strategies and programs including: base pay
structures, incentive plans, LTI plans, career ladders, administration manuals, etc.
After many successful implementations, organizations reaped “best in class”
programs that link compensation philosophies to overall business objectives, while
maintaining the desired market position to attract and retain talented employees.
Thomas’ Education and Affiliations

Mr. Zorn received a Bachelor of Science (Applied Mathematical Sciences) from
Texas A&M University. He is a member of the World at Work and the North
Texas Compensation Association. He is a Certified Compensation Professional
(CCP).
Contact
Email: Thomas_Zorn@Haygroup.com
Tel: 469-232-3820
www.haygroup.com
Godwin George
Dallas, USA
Overview
Mr. George is a Senior Associate Consultant in the

Dallas Office of Hay Group. He consults in the
Rewards Practice, assisting clients in the development
and implementation of compensation programs,
including base pay plans, short-term and long-term
incentive programs, executive compensation, and total
remuneration. His previous work in the Human
Resources field consists of delivering and defending
diverse compensation solutions within the financial
services and healthcare industries.
Delivering results for clients

• Re-Designed compensation structures that assist with creating internal equity while
providing a framework for attracting and retaining talent throughout the U.S.
• Designed and implemented systems that effectively improved the quality of reporting and
administration of executive compensation
Areas of expertise
• Developing and implementing rewards programs
• Developing executive compensation programs
• Market analysis using statistical or regression modeling tools such as excel
• Job analysis, job evaluation, and job documentation
• Conducting and analyzing custom salary surveys
• Human capital budgeting based on attrition, projected salary growth, and statistical analysis
Godwin’s Education and Affiliations

Prior to joining Hay Group, Mr. George served as an Executive Compensation Analyst with
Residential Capital, a subsidiary of General Motors Acceptance Corporation. Prior to
Residential Capital, he held the positions of Compensation Intern at United Health Group in the
Compensation Department.
Mr. George received a Master of Arts in Human Resources and Industrial Relations with a focus
in Compensation from the Carlson School of Management, University of Minnesota. Mr.
George received his Bachelor of Arts in Psychology from the University of North Texas.
Mr. George is a Certified Compensation Professional (CCP) and is a previous member of the
Twin Cities Compensation Network.
Contact
Email: Godwin.George@haygroup.com
Tel: 469-232-3842
www.haygroup.com
9.3. Sample Classification and Compensation Study
ABC
Compensation Analysis
March 4, 2011
DRAFT
Compensation Analysis
Prepared by:
Thomas Zorn – Senior Consultant
Godwin George – Consultant
ABC Company
March 4, 2011
CONFIDENTIAL
DRAFT
2
Table of Contents
Page Number
I. Executive Summary 4
II. Internal Pay Practice Analysis 8
III. External Competitiveness 16
IV. Recommendations 20
Appendices:
A. Current Base Salary Practice – Exempt 25
B. Current Base Salary Policy – Exempt 29
C. Current Base Salary Practice – Nonexempt 33
D. Current Base Salary Policy – Nonexempt 37
E. Recommended Policy P50 – Exempt 41
F. Recommended Policy P50 – Nonexempt 45
G. List of Participants 49
3
I. Executive Summary
• Project Scope
– ABC Company, retained the Hay Group to assess current pay practices and
external competitiveness for all exempt and nonexempt employees. The
objectives are as follows:
• To provide internal pay practice analysis for exempt and nonexempt positions
• To provide external competitiveness analysis based on data from appropriate labor
markets
• To provide recommendations for salary range movement and merit adjustments for
exempt and nonexempt employees
4
I. Executive Summary (cont.)
• Findings – Exempt Employees
– Internal Equity
• In general, ABC Company has internal equity among jobs in the exempt classification
– The pay practice continues to show a relationship between pay and job size
– There is limited dispersion indicating relatively consistent administration of pay.
– Currently, three employees fall outside the normal range of dispersion (all are above the
range).
– External Competitiveness
• ABC Company’s exempt pay practice was compared to the All Public Services
industry and Transportation industry in the 2010 Hay Compensation Reports.
– Market data was projected forward to June 1, 2011, at an annual trend rate of 3.5%.
• In aggregate, the exempt policy line approximates the P50 of the market, while the
actual pay practice approximates a P25 to P30 position
5
• Findings – Nonexempt Employees
– Internal Equity
• In general, ABC Company has internal equity among jobs in the nonexempt
classification, though the dispersion is slightly greater than the exempt positions
– The pay practice shows a relationship between pay and job size
– There is slight dispersion in the pay practice, but overall, we see a relatively consistent
administration of pay.
– Currently, six employees fall outside the normal range of dispersion (all are above the
range).
– External Competitiveness
• ABC Company’s nonexempt pay practice was compared to the General Industry from
the 2010 Hay Compensation Reports.
– Market data was projected forward to June 1, 2011, at an annual trend rate of 3.5%.
• In aggregate, the nonexempt policy line approximates the P50 of the market, while the
actual pay practice approximates the P25 of the market
6
• Salary Structure Recommendations
• Hay Group recommends implementing minor changes to the current salary structure
– By adjusting the Midpoint Progressions slightly, the alignment with grades J/J1 and K/K1,
and to the external market, can be maintained
7
II. Internal Pay Practice Analysis
• Exempt Analysis
– The graph on the following page shows ABC Company’s exempt employees’
current pay plotted against job content points. Each data point represents an
individual employee’s pay and the points assigned to the job being performed.
These data points are regressed into “Lines of Central Tendency”, which
represent ABC Company’s average pay practice at different point levels. A 50%
band was drawn around the pay practice to indicate a normal range of tolerance
within which jobs should fall.
• Three incumbents fall above the range.
8
II. Internal Pay Practice Analysis (cont.)
9
– The following graph shows the compensation practice for all Exempt positions
and the current minimum, midpoint and maximum of the salary range. The
overall compa-ratio (range penetration) is 90.5%,
– 85.7% of the exempt population is being paid below the midpoint of the salary
range.
See Appendix B for details
10
11
• Nonexempt Analysis
– The following graph depicts ABC Company’s nonexempt employees’ current
pay plotted against job content points in the same manner as that followed for
exempt jobs.
– The scatter gram shows a good relationship between job content points and pay.
– Six incumbents fall outside the normal range, which is 6.6% of all nonexempt
employees included in the scatter gram.
12
13
– The following graph shows the compensation practice for all nonexempt
positions and the current minimum, midpoint and maximum of the salary range
(policy). The overall compa-ratio (range penetration) is 89.1%.
– 87.7% of the exempt population is being paid below the midpoint of the salary
range.
See Appendix D for details
14
15
III. External Competitiveness
• Exempt vs. All Service Organizations And Transportation
Organizations
– The graph on the following page shows ABC Company’s pay policy and actual
pay practice lines for all exempt employees compared to market data at the 25th
and 50th percentiles
• A list of participants in this Hay survey can be found in Appendix G.
– For all exempt positions, ABC Company’s pay practice falls below market
median and approximates a P25 to P30 market position
– In addition, ABC Company’s current stated policy (structure midpoints) has
maintained a market median position
16
III. External Competitiveness (cont.)
17
• Nonexempt vs. General Industry Organizations
– The graph on the following page shows ABC Company’s pay policy and actual
pay practice lines for all nonexempt employees compared to market data at the
25th and 50th percentiles
– In aggregate, the pay practice for most of the nonexempt positions approximates
the P25 of the market.
– In addition, the current policy approximates a market median position
18
19
IV. Recommendations
• Exempt and Nonexempt Salary Range Movement
– Hay Group recommends a market strategy position for ABC Company to
continue to target the 50th percentile (P50), for both exempt and nonexempt
positions
– The graphs on the following pages illustrate the impact of the recommendations
shown on page 7, as compared to their respective market P50 and P25 positions.
• Policy vs. Practice
– ABC Company’s current policy lines are consistently above the actual pay
practice for the lower level positions for both exempt and nonexempt positions.
– Hay Group would recommend using the annual merit increase cycle, as well as
off-cycle increases in specific cases, to bridge the gap.
20
IV. Recommendations (cont.)
21
22
23
24
Appendix A: Current Base Salary Practice – Exempt
25
26
27
28
Appendix B: Current Base Salary Policy – Exempt
29
30
31
32
Appendix C: Current Base Salary Practice – Nonexempt
33
34
35
36
Appendix D: Current Base Salary Policy – Nonexempt
37
38
39
40
Appendix E: Recommended Base Salary Policy – Exempt
41
42
43
44
Appendix F: Recommended Base Salary Policy – Nonexempt
45
46
47
48
Appendix G: List of Participants
49

Hay Proposal For Classification and Compensation Study

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August 19, 2011

© 2011 Hay Group. All rights reserved. www.haygroup.com

4. Our Understanding of Your Needs ..................... 4

7. Recommended Approach ................................. 13

8. Consulting Fees ................................................. 21

2. Hay Group History

Arlington, VA Dallas, TX New York Metro

Atlanta, GA Kansas City, MO Norwalk, CT

Boston, MA Los Angeles, CA Philadelphia, PA

Charlotte, NC Miami, FL San Francisco, CA

The corporate office for Hay Group is located at:

100 Penn Square East

The Wanamaker Building

5001 Spring Valley Road

Suite 800 West

3.1. Proprietary Job Evaluation Methodologies

3.2. Broad Rewards Expertise

Hay Group is a leader in the development and management of human resources,

• Compensation Design: Establishing classification, compensation and benefits

• Organization Effectiveness: Organizing jobs, people, and resources to increase

• Performance Management: Introducing methods to analyze and measure both

3.3. Hay Group Expertise

• An exclusive relationship with Fortune magazine to benchmark best practices

• The world’s only integrated Total Remuneration (Compensation and Benefits)

• State-of-the-art databases in the following areas: employee research, best HR

• Custom solutions, with processes to monitor their effectiveness.

3.4. Proposed Project Team

4. Our Understanding of Your Needs

¾ A comprehensive classification and compensation study for approximately 280

¾ A comprehensive salary survey for approximately 480 non-sworn and sworn

¾ A review of and recommendations for compensation/pay structures, pay

¾ Training on compensation study/job evaluation systems for an internal job

 Ensuring the program recognizes the internal value of jobs.

 Ensuring the compensation program is externally competitive with the appropriate

Classification Job Evaluation

Pricing Pay Delivery

The Guide Chart method is built on four key principles:

Hay Guide Chart®-Profile Method of Job Evaluation:

• Physical Effort: Handling of light, medium or heavy weight materials in normal to

• Environment: Exposure to objectionable or noxious conditions such as dirt, dust,

• Hazards: Exposure to mechanical, electrical, chemical, biological, or physical factors

• Sensory Attention: Requirements for concentrated levels of sensory attention,

6.1. Classification Phase

a. The Hay Group Job Evaluation methodology intrinsically serves as a

B. Compile and review background materials including organizational charts, budgets,

a. This is an essential piece of all projects Hay Group undertakes as it

a. This again is an essential piece of all projects Hay Group undertakes.

E. Design, distribute and collect appropriate job-related questionnaires to be

F. Perform training of an internal Classification Study Committee to enable them to

a. Hay Group job evaluation training is a primary component of this project

a. The approach described is typical of these types of engagements. Proper

a. Job Questionnaires provided in step “E” of this section can be utilized

J. Design and administer an employee classification review/appeals and final

a. Hay Group will create a template protocol to follow when employee

K. Prepare appropriate Council recommendations and study background and results

a. Consultant time can vary on this depending on the level of involvement in

6.2. Compensation Phase

a. Consultant time can vary significantly on this task depending on the

B. Complete development of appropriate pay ranges, including possible changes (e.g.,

C. Prepare and calculate implementation scenarios, related costs and maintenance

7.1. Planning and Data Gathering

• Develop Communication Strategies. Employees need to fully understand the

Step 3: Organizational Understanding / Data Gathering

Ensuring the program recognizes the internal value of jobs.

Ensuring the compensation program is externally competitive with the appropriate