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COMPENSATION PLAN DEVELOPMENT <br />AND RECOMMENDATIONS <br />Development of the Compensation Plan <br />A basic element in any human resources management program is adequate and equitable <br />employee compensation. A Compensation Plan of this nature is essential if qualified employees <br />are to be recruited and retained. To achieve this goal, there must be a reasonable and widely <br />accepted model of Job Factors upon which the Compensation Plan rests. Application of this <br />model was the purpose of the Job Evaluation aspect of this Study. The Plan presented in this <br />report is designed to accomplish the Study goals by: <br />1)Providing for equal compensation for work of equivalent job content and <br />responsibility. <br />2)Facilitating adjustments to compensation levels based on changing economic and <br />employment conditions that impact these interrelationships. <br />3)Establishing compensation ranges that compare favorably with those of other <br />equivalentcommunitieswithin the appropriate labor market. <br />In preparing this Plan, the Study only looked at base compensation. The compensation <br />associated with longevity or other fringe benefits was not analyzed or factored into the <br />Compensation Plan. <br />Eqorgpucvkqp"Rncp"Qrvkqpu"hqt"vjg"Ekv{Ҁu"Eqpukfgtcvkqp <br />One of the purposes of this Study was to provide an updated Compensation Plan that relates to <br />the external market and is internally equitable. Below is a detailed explanation of three (3) <br />different Compensation Plans: <br />1)Defined Step Increment Plan: This is a Compensation Plan that has salary ranges <br />with a minimum and a maximum with defined percentage increments (e.g., 3%) in <br />between. If an employee has a satisfactory performance evaluation, they <br />systematically advance through the compensation range. The performance <br />evaluation and resulting salary increment increase occurannually. <br />2)Open Range Merit Plan: This is a Compensation Plan that also has salary ranges with <br />minimums and maximums, but without defined percentage increments in between. <br />Employees are advanced through the compensation range based on an annual <br />satisfactory performance evaluation, with the percentage of their increase <br />determined annually by CityAdministration. <br />3)Blended Merit Plan: This is a Compensation Plan that uses techniques from both a <br />Defined Increment Plan and an Open Range Merit Plan. <br />In considering which Plan to use, it is important to understand that employees at various levels <br />of responsibility may react differently toward and be motivated differently by the Compensation <br />Plan they work under. Management personnel whoare goal-oriented may have a higher <br />acceptance of the Open Range Merit Plan, and thus tend to be more comfortable with this <br />method of compensation. Mid to lower-level positions may want the assurance of a defined <br />salary increase based on satisfactory performance. <br />City of Centerville, MN| May 2026 <br />9 <br />CLASSIFICATION, COMPENSATION, AND PAY EQUITY <br />15 <br />REPORT <br /> <br />