6c supp SandB
ITEM NO: 6c _supp MEETING DATE: November 10, 2015 2016 Salary and Benefits Resolution First Reading Topics Resolution Background Resolution Changes for 2016 Standard Work, Non-represented range structure New Performance Pay plan New Parental Leave plan Update Pay Equity Review Performance Pay plan non-financial goals Topics to be covered Background RCW 53.08.170 specifies Commission must authorize pay and benefits Resolution has become lengthy and complex Resolution includes program authorization as well as considerable program detail 2016 Resolution is streamlined and simplified Resolution has become a long and detailed document Recommended Changes for 2016 Preamble Adding a reference to RCW 53.08.170 Section I - Definitions Editing definitions to remove details found in Port policies or program guides Section II Jobs and Pay Reorganized for a more logical flow Updating standard workweek to 40 hours Increasing pay ranges by 2% Focus on authorizing Total Rewards programs Recommended Changes for 2016 Section III Performance Pay New Section Authorizes a new annual lump sum Performance Pay plan Self-funding plan Rewards Port performance, financial and non- financial Employee performance ratings inform individual performance awards Performance Pay reinforces Paying for Performance Performance Pay Business Case A Performance Pay program Is consistent with high performance, results oriented organization Will help the Port compete with private sector employers for talent Supports employee retention Connects employees to Port goals Sets us apart from other Public Sector agencies we compete with for talent Performance Pay makes good business sense Performance Pay Market Competitive 2015 Performance Pay Plans Industry % of Employers Offering Public Sector 42% Public & Private Sector Transportation 94% All Industry 93% Source: Aon Hewitt National Payout Averages All Industry = 19.4% Public/Private Sector Transportation Industry = 18.2% Public Administration = 7.7% Performance Based Pay Plan offered by 38.5% of responding airports (ACI survey) Performance Pay is a market competitive practice Performance Pay Funding 50% Financial performance The net positive variance, if any, of: Port-wide non-aeronautical revenue (total Port revenue excluding aeronautical) vs. budget + total Port expense vs. budget X 50% = Payout Pool 50% Non-financial performance 2 goals, each worth 25%, paid only if Payout Pool meets minimum threshold Financial and Non-Financial Goals = Balanced Approach Performance Pay Funding Example Goal Met = Pool Sufficient for Minimum Payout 2016 Budget 2016 Actual* Variance Non-Aeronautical Revenue $325.6m $335.6m $10.0m Total Port Expense $335.4m $325.4m $10.0m Total Variance $20.0m x 50% to the Payout Pool $10.0m * Actual is an example only Goal Met Portion Payout Funded Payout Pool Financial 50% $5.0M Non-Financial #1 25% $2.5M Non-Financial #2 25% $2.5M Total Payout 100% $10.0M Positive budget variance funds pool, multiple goals determine payout Performance Pay - Payouts Based on employees performance review rating Performance Payout Example #1 Example #2 Example #3 Rating Factor Minimum Payout 1 No Payout 0% 0% 0% 2 1 X Payout 1% 3% 5% 3 2 X Payout 2% 6% 10% 4 3 X Payout 3% 9% 15% 5 4 X Payout 4% 12% 20% Average Payout 2.35% 7.05% 11.75% Cost to Fund $2.242M $6.727M $11.212M Positive Variance Needed $4.484M $13.454M $22.424M Individual payouts vary by employee performance Recommended Changes for 2016 Section IV Employee Benefits Reorganized for better flow Eligibility and other administrative details moved to policy or program guide documents Adding new Paid Parental Leave program 4 weeks of paid leave during the first 12 months after birth, adoption or foster care placement of a new child Mothers and fathers are eligible New Paid Parental Leave program added Recommended Changes for 2016 Section V Benefits for Retirees Section is reorganized for a better flow Adding free airport parking for retirees Section VI Benefits for Commissioners Section is reorganized for a better flow Reimbursement of healthcare premiums paid to another entity removed due to possible ACA and tax implications Sections reorganized for easier use Recommended Changes for 2016 Section VII Notification Adding a commitment to notify the Commission in advance of material changes to administrative details of programs authorized in the Resolution Advance Commission notification added Pay Equity Pay programs for non-represented employees designed to provide fair and equitable pay An Office of Federal Contract Compliance Programs audit in 2011 showed no evidence of gender pay discrimination High level internal analysis in August 2015 showed no pattern of discrimination In the past 5 years no employee complaints based on gender pay equity Thorough gender pay equity analysis scheduled for first quarter 2016 Pay equity an important component of pay programs Conclusion Salary and Benefits Resolution changes fall into 2 categories Streamlining and simplifying Changes to programs or plans authorized Sections are reorganized to be easier to use Added, deleted or changed programs are consistent with the Port's Total Rewards Philosophy and pay for performance focus Updated programs and easier to use Resolution Performance Pay Non-Financial Goals Environment/Energy: Create and adopt a Port-wide strategy to move all operations toward an energy portfolio that reduces GHG emission by X% per year, and helps meet future load growth through conservation and renewable energy sources. Social Responsibility: Increase Small Business contracting participation across the Port to 35%. Social Responsibility/Economic Development: Increase employment and training opportunities related to middle class jobs by increasing internship positions by 50% over 2015. Performance Pay Non-Financial Goals Social Responsibility/Economic Development: Ensure success of the Port's newly established Small Business Incubator/Accelerator Program by developing an action plan for incorporating each division in the ongoing execution of the program. Safety: Achieve excellence in safety and further reduce workforce injuries by achieving a 95% or better score on the Annual Safety Evaluation.
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