CITY OF FERNDALE REQUEST FOR CITY COUNCIL ACTION

Agenda Item 7G CITY OF FERNDALE REQUEST FOR CITY COUNCIL ACTION FROM: Jenny Campos, Human Resources Director SUBJECT: Request for Rahmberg Stover & Associates to Conduct a Compensation and Benefits Analysis and for the Mayor to Execute the Engagement Letter SUMMARY & BACKGROUND: The City of Ferndale has worked in partnership with our Unions since 2008 to creatively balance the budget. This most often meant little to no pay increases, paired with other creative ways to provide some incentives. Because of our diligence and partnership, it is now time assess where the City of Ferndale sits as it relates to the market involving total compensation. The last time the City reviewed compensation (pay and benefits) was the late 1990 s. The City of Ferndale is competing for quality talent. While we feel we have a work environment that is appealing to many candidates, it is time to revisit and understand how our total compensation fits within the Southeast Michigan. As of late, we have been losing talent to other communities and within the DPW, to some private sector companies, as compensation is becoming more and more competitive. Total compensation includes not only salary, but also health care plan offerings, contributions towards premiums for health care, pension plans, retiree or lack of retiree health care, other various pays and allowances, vacation and sick accruals and any other item deemed pay or benefits (i.e. MiLife Health & Wellness Center, Paid Parental Leave, etc.). It is not an apples to apples comparison to simply look at a salary and make a determination as to whether a position in Ferndale pays more, less or equal to another in a neighboring community if we do not consider whether other pay and benefits align as well. For instance it is possible that a position pays more in Ferndale than another community, however, we offer a defined contribution pension plan versus the other community who still has a defined benefit plan or other unique benefits that make the package more attractive. Essentially, it is most effective to look at total compensation in order to accurately analyze where Ferndale sits within the market, and this comprehensive and detailed project is much needed as we consider factors such as upcoming contract negotiations, turnover, employee morale and satisfaction, etc. In preparation for this project, we attempted to obtain quotes from 3 companies qualified and highly regarded in performing such studies in a very timely manner. It seems as though many communities are moving in the same direction as Ferndale and many companies were booked out until 2017. Municipal Consulting indicated that they would not be able to even provide a quote for services until September, meaning the project timeline could easily take us into 2017. Michigan Municipal League came in with a quote around $15,000, they too could not begin this project until late fall. Jeff Rahmberg, of Rahmberg Stover & Associates, who provided us a quote of $20,000 to complete the project within a scope of approximately 12 weeks. This organization has been referred by multiple municipalities. What is also unique about this company is that they have access to private sector data which is important to review with some of our positions. They have

also put the City of Ferndale in the que to begin upon approval of City Council with deliverable data by the end of August. We are requesting approval from Council to engage Rahmberg Stover & Associates in the execution and completion of the project. ATTACHMENT: Proposal to Conduct a Compensation Review Engagement Letter COUNCIL AGENDA DATE: April 25, 2016 Regular Meeting CITY ATTORNEY REVIEW: FINANCE DIRECTOR REVIEW: CITY MANAGER REVIEW: April Lynch RECOMMENDED ACTION: Moved by, seconded by, to approve the execution of the Engagement Letter by the Mayor for Rahmberg Stover & Associates to perform a comprehensive Compensation and Benefits Study for City of Ferndale positions.

City of Ferndale Proposal to Conduct a Compensation Review April, 2016 For more information contact: Jeffrey C. Rahmberg, Partner Rahmberg, Stover & Associates, LLC Phone: 248.203.7710 Email: jeff.rahmberg@rahmbergstover.com Rahmberg, Stover & Associates, LLC

Proposal to Conduct a Compensation Review Table of Contents Page Project Approach and Work Plan... 1 RS&A Profile... 4 Project Staffing... 6 Project Timing and Fees... 7 Rahmberg, Stover & Associates, LLC

Project Approach and Work Plan Project Approach and Work Plan To assure that its compensation program is sufficiently competitive to enable the City of Ferndale to recruit, retain and motivate quality employees, the City is seeking to compare its salaries and benefits to the external market. This comparative analysis will encompass all positions in the City (estimated to be 47). We would propose carrying out the following project activities: 1. An initial meeting will be scheduled with representatives from the City of Ferndale to discuss and conclude upon a number of up-front matters necessary for a successful outcome. Topics to be addressed include: Review, and refine as needed, the project objectives, activities, timetable and deliverables Further explore the environment in which the City of Ferndale operates with particular consideration given to human resources strategies and the implications to the City s compensation programs Identify any particular areas of concern or challenge as they relate to compensation, including recruiting and retention experience in the City Explore the City s compensation philosophy, with particular attention given to needed/desired competitive position in the market and the identification of peer municipalities for comparative purposes Discuss project communication strategies (e.g., who needs to know what, when) 2. Collect and review information related to current salary structures, employee rosters/salary levels, and existing benefits provided to City employees. Other information that also would be relevant to understanding the total compensation picture includes collective bargaining agreements, job descriptions, organization charts, etc. Rahmberg, Stover & Associates, LLC 1

Project Approach and Work Plan 3. Develop an understanding of the job duties, responsibilities, and requirements of each position under study through a review of the job descriptions. This job analysis process will provide a basis for matching positions to the market and for completing an initial assessment of internal equity. 4. Supplement the job analysis with Department Head interviews and other interviews on an as-needed basis to gain a further understanding of the structure and function of job roles and to clarify any questions that may have arisen regarding responsibilities and requirements of the various positions. 5. Conduct market analysis by gathering and analyzing comparative pay data for the jobs under study. Because of the importance in obtaining objective, reliable and up-to-date data for comparative purposes, we are proposing that salary and benefit information be collected directly from a select group of municipalities though a survey tailored to the positions in the City of Ferndale. Additionally, we propose supplementing that information with published survey data covering the broader employer market for certain positions. The specific work steps in conducting the market analysis are as follows: a. Finalize the list of comparable municipalities who will be included in the survey process based upon key metrics (e.g., population, budget, taxable value, etc.). b. Develop a survey instrument to collect data on both salaries and benefits. This survey document would include written position summaries for the positions under study to enable the survey participants to match jobs based on content and not just job title. c. Follow-up activities will be conducted, as needed, to obtain an appropriate level of survey responses, and to clarify missing, incomplete or questionable responses that are received. d. Compile and tabulate the survey. Rahmberg, Stover & Associates, LLC 2

Project Approach and Work Plan e. Collect additional data from other public and private employers. Because RS&A consultants assist both public and private sector employers with compensation matters, we maintain an extensive library of published surveys which will greatly facilitate the completion of this task. 6. Evaluate the current compensation systems (including both salaries and benefits) with consideration given to factors such as: Overall market competitiveness of the City s current salaries and benefits Consistency with compensation philosophy Ability to differentiate positions from an internal equity perspective Compression issues (e.g., relationships between pay rates of supervisors and direct reports, new hires and existing employees, etc.) Ease of administration 7. Develop recommendations related to the City s salary structures, benefits and compensation program administration. 8. Document project findings and recommendations and provide a written final report. Present our findings and recommendations, as requested, to appropriate audience(s). Rahmberg, Stover & Associates, LLC 3

RS&A Profile RS&A Profile Rahmberg, Stover & Associates (RS&A) is a management consulting firm specializing in compensation and human resources. Established in January 2005, RS&A was formed to deliver the services previously provided by the Human Resources Consulting Group of Plante Moran. Its founders, Jeff Rahmberg and Karine Stover were previously partners at Plante Moran. Jeff directed the firm s management consulting practice for 20 years and Karine previously headed the HR consulting group of Plante Moran for 10 years. RS&A consultants have established a proven track record in delivering consistent, ethical, and quality performance on behalf of hundreds of employers, public and private, for over 30 years. Specifically, RS&A consultants are recognized experts in the field of compensation. The team proposed for this engagement has significant experience working with local units of government. At RS&A, we believe that people, not capital, machinery, or bricks and mortar, are the key to creating competitive advantage. In this knowledge age, people are the driving force behind organizational success. Our experienced team of consultants understands the importance of people to achieve results and the need to effectively focus, energize and reward employees to perform at their best. Grounded in leading practices and time-tested methodologies, RS&A helps clients succeed through: Employee Pay Incentive Compensation Executive Compensation Performance Management Human Resources Management Organizational Analysis Rahmberg, Stover & Associates, LLC 4

RS&A Profile Following is a list of municipal clients we have served over the years. Albion, City Ada Township Allen Park, City Alpena, City Antwerp Township Baldwin Public Library Benton Harbor/St. Joseph Water & Sewer Board Berrien County Branch County Brighton Township Calhoun County Canton Township Center Line, City Charlevoix County Clay Township Clinton Township Dearborn, City Dearborn Heights, City Delta Township Detroit, City Of Detroit Public Library Detroit Wayne Mental Health Authority East Bay Charter Township East Detroit, City Eastern Oklahoma District Library Elkhart Public Library Evansville Vanderburgh Public Library Ferguson, Missouri Fort Wright, Kentucky 46 th District Court Garfield Township Genesee County WWS Grand Blanc Township Greater Gratiot Chamber of Commerce Green Oak Charter Township Grosse Pointe/Clinton Refuse Authority Grosse Ile Township Hamburg Township Hammond Public Library Highland Township Holland, City of Holland Board of Public Works Huron Behavioral Health (County CMH Board) Huron County Hussey-Mayfield Public Library Indianapolis-Marion County Public Library Indiana Library Federation Ingham County Road Commission Ingham County Library Ionia County Isabella County MCF Johnson County Public Library Kalamazoo County Kalamazoo Township Kent District Library Kokomo-Howard County Public Library Lake County Leelanau County Lincoln Charter Township Livingston County Livingston-Washtenaw PIC Massachusetts Municipal Association Mason, City of Michigan Electric Cooperative Association Michigan Municipal League Michigan Townships Association Monroe County Drain Commission Muskegon Charter Twp. Northville Township Novi, City of Novi Public Library Oakland County Road Commission Orion Township Plymouth, Charter Township Of Plymouth, City of Redford Township Resources Recovery Recycling Association of Southern Oakland County Retirement Systems, City of Detroit Richmond, City Romulus, City Royal Oak, City Saginaw Circuit Court Saline District Library Scio Township South Bend, City Southfield, City Spring Lake, Village St. Clair County St. Clair County Road Commission St. Clair Shores, City Sterling Heights, City Trenton, City of Veteran's Memorial Library Waterford Township West Bloomfield Township West Bloomfield Parks & Recreation Commission Western Townships Utilities Authority Westland, City Whiting Public Library Wixom, City Wyandotte Municipal Service Rahmberg, Stover & Associates, LLC 5

Project Staffing Project Staffing Jeffrey C. Rahmberg, partner and co-founder of RS&A, would lead the project team and have overall responsibility for project outcomes. He has over 30 years of consulting experience, and devotes the majority of his professional practice to the public sector. Prior to forming RS&A, Jeff was the partner in charge of all consulting services for Plante & Moran. Of particular relevance, Jeff has extensive experience in developing and implementing compensation programs with municipal governments. He holds a bachelor s degree in electrical engineering and a master s degree in business administration from Washington University. Karine C. Stover, co-founder and partner of RS&A, will serve as advisor for the project. Prior to the formation of RS&A in 2005, Karine spent 18 years with Plante Moran, where she was a partner and leader of the firm s Human Resources Consulting Group. Karine has significant experience in compensation and has worked with numerous municipal and notfor-profit organizations. Her educational background includes a bachelor s degree in finance from Western Michigan University and a master s degree in business administration from the University of Michigan. She is a Certified Compensation Professional (CCP). Nada Smith is a consulting associate with RS&A and has been with the firm since its inception. Nada will provide support to the consulting team with the market surveys and data analysis. She has worked on many engagements similar to the one being proposed and is highly skilled in creating complex spreadsheets and templates for modeling. Nada holds a bachelor s degree in accounting from Walsh College. Rahmberg, Stover & Associates, LLC 6

Project Timing and Fees Project Timing and Fees We anticipate the project can be completed within 11 12 weeks depending upon the responsiveness of the survey participants. Assuming no change in project scope and receiving support from the City for appropriate tasks, the fees will be $20,000. Rahmberg, Stover & Associates, LLC 7

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April 5, 2016 Mayor Dave Coulter City of Ferndale 300 E. Nine Mile Road Ferndale, MI 48220 Dear Mayor Coulter: We are complimented by the selection of our firm to serve the City of Ferndale. We are sending this letter to confirm our understanding of the nature of the consulting services we will provide and the terms of our engagement. Our consulting services will include conducting a compensation review for all of the positions in the City of Ferndale. The work will be carried out consistent with our proposal dated April, 2016. Assuming no change in the project scope, our fees will not exceed $20,000. We bill monthly as work is completed. We appreciate the opportunity to be of service to you. If you agree with the terms of the engagement as described in this letter and our proposal dated April, 2016, please sign and return to us. Sincerely, RAHMBERG, STOVER & ASSOCIATES, LLC ACCEPTED: Jeffrey C. Rahmberg City of Ferndale Date 789 Vinewood Avenue Birmingham, MI 48009 248.203.7710 p 248.203.7712 p 248.498.6593 f rahmbergstover.com