Consultant says Utilities Authority must address salary disparities, while some members want to tweak benefits
FORT PIERCE ― An outside consultant told the Fort Pierce Utilities Authority May 21 the Board must address disparities and other problems in its current pay scale or risk attracting and retaining qualified employees in the future.
Human Resources Manager, Lois Wolfe introduced Plantation-based consultant Ralph Parilla to the Board, detailing his lengthy human resources career with Motorola and other experiences that give him the expertise needed by the FPUA.
“He worked early in his career for Motorola, with over 6,000 employees and he was director of human resources as well as director of compensation and benefits both in the United States and abroad,” she said. “He most recently has a consulting service where does compensation plans and management training programs, and he’s taught for over 30 years at Florida Atlantic University on compensation and resource management programs.”
Mr. Parilla recently completed his second salary survey for the FPUA, comparing the utility’s salary ranges with those of 15 area organizations, ranging from St. Lucie County and the City of Stuart to Charlotte County and the Kissimmee Utility Authority.
“We looked at what their structures looked like, and what we found was your range minimums were 4.3 percent low when compared to the minimum salary ranges in all of those other organizations,” he said. “So, the recommendations that we’re making are to raise your ranges by 2 percent to keep up with the market and make sure that you don’t lose ground with the marketplace. We’re also recommending a 2 percent across the board cost-of-living adjustment for all of the employees.”
Prior to reviewing the results of the study, the consultant reminded FPUA members that the midpoint of a salary range was exactly halfway between the starting pay and the maximum pay for any particular position. Just as he had done after the previous survey conducted in 2016, Mr. Parilla planned to meet with each department head soon to determine the best salary range for each job category.
“During the study we took a look at where people fell in their salary ranges, and we found 81 percent of the employees working in the organization are below the midpoint of the grade,” he explained. “And the reason for this is the past practice of giving across the board adjustments and then giving everybody the exact same amount in a COLA increase.”
Those previous practices, coupled with another known as probationary period increases for promoted employees, have contributed to a problem with compression, which is the result of small differences in pay without regard to experience, skills, level or seniority. Mr. Parilla wants to implement a gradual remedy.
“So, if the range went up 2.5 percent, everybody got a 2.5 percent increase, but they never moved further into the range, and that creates a compression problem,” he added. “Compression problems I think are the biggest thing we’ve got to contend with. By granting salary increases to people who are low in the range and have been with the organization for a while and have good performance, we’re going to try and alleviate those compression issues over time. We can’t do it all at once, but over a several-year period we want to try to get the salaries up so that we wind up being closer to the midpoints in those grades.”
Mr. Parilla also wants to utilize merit increases to avoid the past practice of moving all employees up the scale simultaneously.
“We’re also looking for an additional 2 percent for merit increases or lump sum incentives as you did last year,” he said. “We would take a look at where somebody is in the salary range, and we would use that, plus their performance as the criteria, to determine whether they should get an increase to their salary or a lump sum incentive.”
The consultant believes eliminating the traditional 5 percent probationary period increases for promoted employees will also help eliminate the persistent salary inequities. Director of Utilities John Tompeck agreed.
“What happens in a lot of cases when we go to give them the 5 percent increase, because of the people in the same job that have been there a little bit longer, we come up bouncing up against their salaries, so it winds up the probationary increase is sometimes 2, 3 or 4 percent,” the latter said. “You’re bringing in somebody that’s not at the bottom of the bracket for a couple of bucks more, and then you give him a 5 percent and he’s bouncing up against the people who have been there two or three years. And that continues to be what we call our parody issue in our organization that is difficult to solve.”
Board Member Daniel Deiulio asked how the FPUA currently rewarded its above average employees, and Mr. Parilla emphasized the need for a real mechanism in order to do so.
“You’ve got a real problem because in the past we’ve had no real mechanism of rewarding that top-of-the-line employee in giving them above-average increases,” he explained. “A merit system allows you to do that and gives you more latitude, where somebody might get up to a 5 percent bump if they’re really a superstar.”
Authority Member Charley Frank Matthews bemoaned the fact the current salary scales failed to address the value of past experience.
“You’re talking about performance, but I’m also looking at the person who has great experience, a person who went on to get a better education,” he said. “Those people are being discriminated against compared to the system that we use now.”
Mr. Parilla believes his proposed measures will also address that issue.
“People have to see a future – they have to see the ability to grow in the job if they’re going to be satisfied and engaged in their job,” he said. “The more we can do that by recognizing achievement, the better off we’re going to be. In the past there’s been no way of rewarding that growth, and that’s what this new system is going to allow us to do over time.”
The FPUA and its consultant failed to come to an agreement, however, on how or whether to adjust the delicate balance between pay and benefits. Vice Chairwoman Glynda Cavalcanti expressed frustration that neither the 2016 nor the present salary assessment had compared the utility’s benefits package with that of the 15 other entities, and the consultant insisted too many variables would cloud the results.
“I’ve gone through that several times, and everybody calculates benefits differently, so to get an apples-to-apples comparison is really hard,” Mr. Parilla said.
For her part, the vice-chairwoman believes tweaking the package will help attract and retain more millennials who tend to view pay more importantly than long-term benefits such as the FPUA’s lucrative 3 percent multiplier on its retirement accounts.
“I’m not trying to take away anything from anybody who’s currently working here, but I think we’ve got to make plans to attract people with more cash and less benefits,” she insisted. “Would it not be advantageous to get off of the defined benefit plan… moving forward [so] that millennials have a better amount of money coming in their paychecks [and] a 403B Plan instead of the defined benefit plan?”
Ms. Wolfe, who’s striven to capture the experience of older workers by shortening the retirement program’s vesting period, admitted it’s a tough balancing act.
“It’s a real challenge when you’re talking to candidates because [with] the older applicant, the talk about benefits captures their attention,” she said. “Those entering the workforce now and your millennials and Gen Xers don’t even want to hear about benefits. They’re really not concerned and not thinking in the retirement mode.”
Chairman Darryl Thomas-Bey insisted the Board and its consultant promptly address what he called “a paradigm shift in the marketplace.”
“We’re starting get a younger workforce where the emphasis is not so much on retirement as it is trying to make some money,” he said. “I think our challenge is going to be to come up with a plan that’s flexible enough to meet every group.”
City Manager Nick Mimms then addressed the Board, admitting that luring younger workers with the FPUA’s current pay/benefits package would be “a tough sell,” but cautioned its members from impulsively tweaking it.
“If there is a change in the retirement plan, you could then jeopardize your defined benefit plan as you have it today,” he insisted. “We have one of the strongest plans in the State of Florida, and that’s because everybody in the organization and the UA is part of that plan.”
At the direction of Board members and Mr. Tompeck, Mr. Parilla will return with more detailed benefits package information on the other entities for comparative purposes before the FPUA makes a final decision on adjusting the salary structures.