Consultant suggests changes in ND state worker pay, linking performance to salary increases

Consultant suggests changes in ND state worker pay

BISMARCK, N.D. — Pay raises for North Dakota state workers should be more closely linked to the quality of their work, says a consultant who presented lawmakers with suggestions on Thursday for improving state government’s compensation system.

Neville Kenning, a vice president for the Hay Group management consultancy, said the North Dakota Legislature should also adopt a framework for making employee pay decisions. The “compensation philosophy statement” could be used in determining competitive pay for state jobs, he said.

“As legislators come and go … you’ll have something that is set in law as to what the guiding principles are for the No. 1 expenditure that a state has, which is its employee payroll,” Kenning said.

Kenning spoke to a North Dakota legislative committee that hired his company to study the state’s methods of paying its employees and classifying their jobs. Job classifications help determine what a state worker is paid. Kenning said that process is protracted and complex, and needs to be simplified.

State agency administrators also should consider a method of calculating employee salary increases that accounts for whether their pay is lagging what they could get in private industry, and whether their work meets supervisors’ expectations, Kenning said.

For example, a state worker who is paid as well as someone in a comparable private job but does not meet agency work standards would not qualify for a pay rise, according to the report’s suggestions. The employee would get a salary increase if he or she met those expectations, and receive a larger raise if he or she exceeded them.

When crafting the state’s budget, North Dakota lawmakers should also avoid using percentages to describe the amounts of money included for pay increases, Kenning said.

For years, legislators and the governor have described employee salary proposals as an annual percentage increase in state government’s payroll.

The 2009 Legislature’s state worker pay package was labeled a “five and five,” meaning that there was enough money to finance a 5 percent state worker pay increase in July 2009 and July 2010. Most state workers got the 5 percent raises, even though the Legislature did not require that the money be distributed across the board.

By describing funds set aside for pay raises as a specific amount of money instead of as a percentage increase, lawmakers will dampen employees’ expectations for an across-the-board pay rise, Kenning said.

Rep. Al Carlson, R-Fargo, the House majority leader, said state employee benefits should be included in discussions of whether their salaries match up well with private business.

The Hay Group report concludes state employees’ average pay is about 12 percent behind comparable private-sector wages, but benefits are not included in the calculation. Most state government worker benefits, such as health insurance, are competitive with what large employers offer, the report says.

“Are we truly comparing what the total package is, and the total cost to the state?” Carlson said. “We can’t lose sight of the fact that the state is different than the private sector.”

Kenning will present the committee next month with a plan for implementing the report’s recommendations and estimated costs for doing so.