Compensation Policy

Date Established: October 19, 2020
Date Last Updated: October 19, 2020

Purpose
To establish an orderly procedure for compensating employees upon their initial employment and changing statuses; and to attract, retain and motivate employees through payment of salaries within a structure that is market competitive and which recognizes the relative worth of jobs within the City organization.

Policy Statement
The City maintains two systems for compensating employees. One is based on merit, and the other is based on collectively bargained wage rates.

Objectives
The objectives of the City of Ames’ compensation systems are:

1. To establish a salary range for each job that is based on a systematic blending of the job’s internal worth to the City and the competitive labor market.
2. To provide for individual salary advancement reflecting increased value to the City. For merit employees, salary advancement is also based on job performance.
3. To establish systems that are fiscally sound, equitable and cost effective.
4. To provide a method for identifying individual employee development needs.
5. To provide compensation systems that are understood by employees.
6. To provide fairness with respect to other jobs in the City and with comparable jobs in other organizations.
7. To provide pay systems that can be easily administered and maintained.
8. To comply with federal, state and local laws.

Components of the Merit Employee Compensation Program
The compensation program for merit employees within the City of Ames is based on the following components:

1. Pay Grades
The salary structure which includes a series of pay grades corresponding to job evaluation points. Each grade is defined by a salary minimum, midpoint, and maximum. The pay for each employee will be within the salary range for the grade assigned to the employee’s job class, unless otherwise approved by the City Manager.

In certain specialized job classifications, private sector employees doing the same work are compensated substantially higher than the City’s pay scale allows (e.g., Electric Administration, Electric Engineering, and Power Plant Administration). In recognition of the highly competitive marketplace for competent professionals in these instances, the City Manager may apply a special series of pay grades, which result in higher pay for these classifications.

2. Job Evaluation
Job evaluation is the process of determining the relative worth of all jobs in the City of Ames. Each non-union regular position in the City is evaluated and placed in a grade level and accompanying salary range on the basis of that evaluation.

3. Performance Management and Merit Increases
The performance management system consists of a cycle incorporating planning, ongoing monitoring and feedback, performance appraisal, and employee development. Salary adjustments shall be based on individual performance appraisals in accordance with guidelines approved by the City Manager. See the Performance Evaluation and Improvement Policy for further details.

4. Administration
The administration of the pay program shall be under the direction of the Human Resources Director whose responsibilities will be to:
a. Monitor trends in compensation theory and practice and make recommendations regarding the City’s compensation policies and practices consistent with the City’s mission and organizational culture.
b. Evaluate existing and new job classes and submit the appropriate pay grade allocations for the City Manager’s approval.
c. Conduct periodic salary and benefit surveys.
d. Recommend salary structure adjustments and salary increase budgets.
e. Provide oversight of the performance management system, ensuring that performance appraisals are conducted as required, and providing training and guidance in the application of the performance management system.

The City Manager may authorize an adjustment to an individual’s compensation in order to correct a mistake in administration of the approved compensation system.

Adoption and Amendment
The Human Resources Director shall prepare annually a Pay Plan covering all classes in the City service to be submitted to the City Council for review. Thereafter, the City Manager may approve modifications to the Pay Plan upon the recommendation of the Human Resources Director. Modifications to the Pay Plan shall be in accordance with the stated policies, goals and objectives of the City’s compensation policy.

Administration and Maintenance
The Human Resources Director shall periodically conduct a comprehensive survey of market rates for a representative sample of classifications in the City service whose salaries are not determined through the labor negotiations process. In adjusting the pay structure, consideration shall be given to salaries in relevant employment markets for comparable classes under similar working conditions, current costs of living, the City’s compensation policy and other relevant factors.

Establishing Pay Upon Initial Appointment
These guidelines are intended to balance the internal consistency and equity of the merit pay system, while being responsive to the dynamics of the labor market.

1. The starting salary shall be at least the minimum of the salary range.

2. Candidates just meeting minimum qualifications are normally appointed at the range minimum.

3. Candidates whose qualifications exceed the minimum may receive a starting salary proportional to their qualifications, not to exceed the range mid-point. Starting salaries above the mid-point may be approved by the City Manager under exceptional circumstances.

4. The following factors may be considered in determining an appropriate starting salary:

a. Current salary rates for the specific classification in the relevant market.
b. The qualifications of the candidate relative to the needs of the position and the qualifications of other available candidates.
c. The relative success of the current recruitment, and relevant prior recruitment history for the classification.
d. Internal equity with current incumbents of the classification, with regard for qualifications and length of service.
e. For supervisory positions, the level of responsibility and salaries of subordinates. However, this will not be the sole determining factor, and it is not intended that the salary of a supervisor shall exceed that of all subordinates in every case.
f. The timing of the next scheduled merit pay increase.

5. The Human Resources Director will prepare a starting salary recommendation after reviewing the factors described above and consulting with the hiring department head.The recommendation must be submitted to the City Manager for approval prior to presenting an offer of employment to a candidate.

6. Hiring incentives, such as one-time bonus payments, may be authorized by the City Manager in advance of a recruitment for a hard-to-fill position.

Establishing Pay Upon Promotion
1. Upon promotion to a class in a pay grade with a higher maximum salary, an employee shall receive the minimum salary of the higher range or at least 5% over the employee’s current salary, whichever is more. The higher salary shall become effective on the date of the promotion.

2. An employee who is promoted more than one pay grade or rank may receive a promotional increase greater than 5%.

3. The guidelines outlined in paragraph 4 of the Establishing Pay Upon Initial Appointment section of this policy may also be considered in determining an appropriate salary upon promotion.

Reduction in Salary
Reductions in salary may be made to recognize the diminished value of a merit employee’s service to the organization. An employee’s salary may not be reduced below the minimum established for the class. Reductions in salary shall become effective immediately upon approval by the City Manager.

Demotion
A voluntary or involuntary demotion may be made to a vacant position in a class with a lower maximum salary in accordance with these Policies and Procedures. An employee who is voluntarily or involuntarily demoted must possess the minimum qualifications for the lower position.

A demoted employee’s salary shall be the employee’s current rate of pay or the maximum of the salary range for the lower class, whichever is lower, except that an employee who receives an involuntary demotion may also be subject to a salary reduction in accordance with the Reduction in Salary section of this policy. The City Manager may also authorize an alternative salary reduction for a voluntary demotion as warranted by a review of the situation. A demoted employee’s pay rate shall be effective with the first day that the employee assumes the duties of the lower class.

When a demotion is made for reasons other than disciplinary action, the City Manager may authorize continuation of a merit employee’s present salary rate, even if it is above the maximum for the new class. In such cases the employee shall not be eligible for pay increases until the scale maximum exceeds the employee’s salary.

Transfer
Except where limited by statute, a voluntary or involuntary transfer may be made to a vacant position in the same classification in the same department or in another department.

A transferred employee’s salary shall be the employee’s current rate of pay, except that an employee who receives an involuntary transfer may also be subject to a salary reduction in accordance with the Reduction in Salary section of these Policies and Procedures.

Reclassification
Reclassification may be made to a class with a higher, lower, or the same maximum rate of pay as the original class. An employee whose position has been reclassified to a classification with a higher maximum salary shall receive at least the minimum salary of the higher salary range or the salary received prior to reclassification, whichever is higher. In cases where the employee has performed the duties of the higher class for a period of time sufficient to demonstrate proficiency, a salary increase may be authorized. The salary guidelines for new hires and promotions shall be referred to in making such determinations. The effective date of such a pay increase will be as determined by the City Manager. In cases where an employee’s position has been reclassified to a classification with a lower maximum salary, the Demotion section shall apply.

Lateral Appointment
An employee who accepts a lateral appointment shall normally retain the rate of pay received in the previous position. In exceptional circumstances, the City Manager may authorize a salary increase using the guidelines outlined in section 4 of Establishing Pay Upon Initial Appointment. Eligibility for merit increases shall be as provided in the Merit Increases Policy.

Merit Increases

Regular Employees
Performance-based merit increases may be granted to regular full-time and part-time benefited employees. Merit increases shall become effective on July 1 of each year, except as otherwise provided in these Policies.

New Employees
Employees whose start of employment is from July 1 through December 31 shall be eligible for a merit increase on July 1 of the following fiscal year. Employees whose start of employment is from January 1 through June 30 shall not receive a merit increase on July 1, but shall be eligible for a merit increase upon completion of six months of service.

Employees who have completed or will complete six months of service prior to April 30 will be evaluated during the regular evaluation schedule, normally in early April. Those employees who will complete the six-month probationary period after April 30 shall be evaluated two weeks prior to completion of six months service. Performance appraisals will be conducted in accordance with standard City procedures. Evaluation forms will be forwarded to the Human Resources Department. The merit increase will be determined by the Director of Finance in accordance with the formula authorized for July 1 merit increases. The Human Resources Department will notify the department head, who will prepare the Payroll Change Form.

Promotions and Lateral Appointments
Employees who have received a promotion or lateral appointment shall be eligible for merit increases in the same manner as new hires.

Contact Information
Human Resources Director
hr@cityofames.org
515-239-5199

City Manager’s Office
515-239-5101