After five years of modifications to the way it pays its nonunion, nonexecutive employees, City Utilities' salaries for workers are in line with the average for similar-sized utility providers.
That's the verdict from Seattle-based actuarial and consulting firm Milliman Inc., which presented the findings of its salary survey to the Board of Public Utilities during an Oct. 30 meeting.
Milliman conducted a survey comparing CU to 16 comparable utilities, including Associated Electric Cooperative Inc. and Empire District Electric Co., as well as utilities in Colorado, Nebraska, Tennessee and Alabama, and then offered CU recommendations on how to meet the utility's stated goal of keeping employee salaries near the market median.
The 2008 Milliman survey found that base pay rates for nonunion, nonexecutive employees of the Springfield utility fall right in line with the 50th percentile of comparable utilities. Total compensation, including benefits, for CU employees is at the 55th percentile.
CU has 445 nonunion, nonexecutive employees on its 982-member staff, according to CU officials.
John Hankerson, strategic rewards practice leader for Milliman, told the CU board that its numbers match up well with the utility's stated objectives.
"We believe your salaries are very well-aligned with the market," Hankerson said during the meeting. "You don't really have any problems - there are a couple of little nuances, but that's what you'd expect in a market that is so unpredictable. Your people have done a very good job."
Meeting the goal
Keeping employee salaries in line with the average - called "paying market" - has been a five-year process for CU, according to Human Resources Director Lisa Turner. She said Milliman conducted its first survey of the utility in 2003.
That survey found that CU was paying well above the median for many positions, leading to several decisions that were somewhat painful for employees, including a switch to a pay-for-performance system from the previous time-in-grade system and requiring employees to work with the company longer to accrue more vacation.
Another result of the 2003 survey was leaving 33 open positions unfilled, at an estimated savings to the utility of $2.3 million.
Marketing and Communications Director Mark Viguet said streamlining employment ranks is an ongoing effort for the utility.
"When a position is vacated, either voluntarily or because of retirement, we don't automatically fill those jobs," he said. "There's a prescribed protocol that managers and supervisors have to go through to see if the position needs to be filled at all, and then, when does it need to be filled?"
He added that all of the changes made five years ago were an effort to balance employee satisfaction with manageable costs, always a big challenge for a municipally owned utility.
"Employees were affected, to some extent, by all the changes, and initially that stings a little bit," Viguet said. "But as you get further from the point where the change has been made and it becomes the norm, our employees have understood why the changes needed to be made, and they've taken to the new processes."
Looking ahead
Having a benefits package slightly above the norm is another goal of CU's board, Turner said, because retaining quality employees fosters efficiency and helps CU maintain low utility rates.
"We want to be able to continue to attract and retain quality employees, and we think there's a correlation between that and our low rates," Turner said. "If you look at total remuneration, we're a little above the 50th percentile, which is exactly where our strategy says we should be."
Despite the utility's seeming success in meeting its objectives, Milliman did make a few recommendations to the utility to tweak its salary structure.
They include allowing new hires and promotions with pay in the bottom quarter of the national average to be eligible for a six-month pay adjustment tied to performance, and setting salary ranges to adjust at mid-year instead of at the beginning of the year to help with budgeting.
The main priority, according to board members, will be to keep employee salaries where they are in comparison to the other utilities.
"I think what's happened here is exactly what we wanted to happen," board member Virginia Fry said at the meeting. "But at that time there was a lot of uncertainty, because we were switching to a new system. If you look at ... where we are, I think we did a good job of hitting the target."[[In-content Ad]]
