Below is text from an OMES Press Release issued today in conjunction with the release of the remuneration study. It does contain some recommendations from the study.
Total employee compensation study concluded Study provides ideas to improve state employee compensation practices
OKLAHOMA CITY —Consultants retained by the Office of Management and Enterprise Services (OMES) have concluded a comprehensive state employee compensation study for policymakers to use as a resource in future employee compensation policy development.
The study shows the monetary value of total state employee compensation – pay and benefits combined – is even with comparable state governments. However, pay for Oklahoma state employees is below public and private sector averages while benefits are significantly more generous. The study suggests that the mix between pay and benefits be altered to reflect employee preferences for more pay and aid in employee recruitment by aligning total compensation packages more closely with those in the private sector.
“This study gives the state a starting point for a productive, fact-based discussion about redesigning the employee compensation system so Oklahoma can recruit, reward and retain a quality workforce to serve its citizens,” said OMES Director Preston L. Doerflinger. “It will be a useful resource as work begins with the Legislature to determine what initial steps can be taken next fiscal year and in the years to come.”
Gov. Mary Fallin and legislative leaders this past legislative session requested a comprehensive review of employee compensation. OMES commissioned two independent entities, Kenning Consulting and Hay Group, to perform the study under the guidance of a working group comprised of officials from the governor’s office, Legislature, state agencies and Oklahoma Public Employees Association.
“Oklahoma has a great compensation plan for the 1980s. Naturally, it’s not a plan that is suited well for today,” said Neville Kenning, president of Kenning Consulting. “Recognizing that no magic wand exists to fix the system overnight, we recommend a multiyear process for Oklahoma policymakers to consider as a way to redesign the state’s compensation system to better meet the needs of future state workers.”
Hay Group’s data analysis determined how pay and benefits for 141 benchmark positions representing 10,082 state employees compare to similar public and private sectors jobs. Among the key findings of Hay Group’s data analysis, presented in the aggregate:
Total employee compensation – salary and benefits combined – is even with comparable state governments and 7.4 percent below theprivate market; Benefits are24.3 percent above comparable state governments and 18 percent above the private market; Salaries are 6.4 percent below comparable state governments and 21.7 percent below the private market; The state spends a far higher percentage of the total cost of an employee’s compensation on benefits than comparable private and state government employers. In addition, OMES analysis indicates approximately 11,600 of the state’s 33,000 executive branch state agency employees received salary increases last year for reasons such as market adjustments, performance adjustments, minimum wage increases and promotions.
Kenning Consulting recommended a five-year plan for reforming the state’s compensation system. The key recommendations are:
- Explore ways to reinvest benefits resources in employee pay and encourage more benefits cost sharing between the employer and employee by developing changes to the employee benefits allowance;
- Remove all salaries, except elected officials, and pay band authority from state statutes to allow for consistent application of sound compensation policies;
- Do not legislatively mandate across-the-board pay increases for all employees; For Fiscal Year 2015, appropriate an additional $41.1 million, or 3 percent, for employee pay, with $27.4 million, or 2 percent, being applied to employees who meet legislatively-determined standards for a statewide market adjustment, and $13.7 million, or 1 percent, being applied to employees who meet legislatively-determined standards for performance and equity adjustments;
- For future years, develop and implement a pay adjustment formula for employees that, subject to available funding, sets employee pay based on an employee’s performance and the employee’s current salary relative to comparable market positions;
- Consider modifying longevity pay by: Rolling longevity pay into the base salary and ending it; retaining longevity pay for current employees and ending it for new employees; or changing payments to be based on non-tenure criteria, such as performance.
“The state has a broken compensation system with an out-of-whack pay-to-benefits mix that causes pay to lag in some cases,” Doerflinger said. “I’m pleased the study recognized that we can’t have a discussion about pay without talking about benefits and other compensation matters, too, as they are all the same, single issue.”
The study does not require any action of state agencies, nor does it grant agencies additional authority to adjust employee compensation. The study is available on the OMES website:http://www.ok.gov/OSF/documents/TotalRemunerationStudy.pdf]]>