WINTON – Pay hikes are on the way to employees of Hertford County local government.

Following a lengthy discussion and a 5-0 vote here last week, the Hertford County Board of Commissioners opted to adopt County Manager Loria Williams’ two-prong plan developed on the heels of a salary study.

At a work session in December, the commissioners directed Williams and her staff to address the salary issues of county employees, who were fresh off a three percent cost of living adjustment in July of last year.

Williams said several meetings among senior staff and department heads have been conducted to date on that directive.

“Looking at our salary schedule as it currently exists and looking at those we would consider as our direct competition for employees (other entities of local government), we lag considerably behind our counterparts as it relates to hiring range and the salary range itself,” Williams said. “When we look further at that we found we were six to 10 percent off the market. From there we began talking about did Hertford County want to lag the market, match the market or lead the market. It was your charge to lead the market and we were directed to find ways to become more competitive, not only to attract good people but to retain good people; treat them as competitively as we can in regards to salaries.”

Williams added that the turnover rate (12 percent) was high among county employees due to the current salary structure.

“There are costs associated with turnover as well,” Williams noted.

Another downside to the current salary scale was what Williams termed as “compression” – a lack of meaningful salary increases over a certain period of time, thus not being able to increase the overall scale. She said of the county’s 200 employees, 187 are below mid-point of the salary range.

“We feel that is perhaps the cause of our high turnover rate,” she stated.

As directed by the commissioners, Williams and senior staff members proposed solutions for two issues – the hiring rate and salary competitiveness. The group is now working on developing a plan for a third issue – how to maintain a schedule of pay raises.

“Our department heads are behind this, they agree with this,” Williams said. “Not only did we increase the scale on July 1 by three percent, as part of this study we are recommending to increase the scale by three percent once again effective Jan. 1. That means the scale will be adjusted by six percent in one fiscal year which gets us close to addressing how we are lagging the market as it relates to how we are bringing people in.”

Williams said there are 29 county workers (those who have been employed from 2 months to 26 months, or not on the payroll long enough to become “compressed”) currently “right at minimum.” They would benefit from the three percent pay hike at a combined cost of $22,500.

“Everyone is not on minimum, mid-point or maximum (pay scale); this only affects those who are right at minimum,” Williams explained.

For those exceeding the mid-point (11 employees), Williams said it was necessary to continue to create distinction and separation, not compression. She said they would be eligible for a one percent salary increase at a combined cost of $4,000.

Dealing with 187 county workers below mid-point, Williams said, “We found employees in that range that were compressed by as much as 25 percent,” she said. “They’ve been stuck. The more compressed you are, the higher percentage (of a pay raise) you get. We need to have meaningful increases if we are to lead the market in how we recruit employees.”

That proposal is as follows:

25 percent & over below midpoint are eligible for a 5 percent pay hike;

20-24.99 percent below midpoint (4% raise);

15-19.99 percent below midpoint (3% raise);

5-14.99 percent below midpoint (2% raise); and

0.1-4.99 percent below midpoint (1.5% raise).

The combined cost for this proposal is $130,000 (not including FICA and retirement).

“I hear your terminology; I see your methodology, but how do you differentiate between the disparity in the gaps between the salaries that is causing the compression,” asked Commissioner Ronald Gatling. “You are using percentages; how do you move them from one (pay) grade to the next?”

“Your question is actually the third part of this component,” Williams replied. “We looked at actual salary and where they fell on the range. It’s a one-time fix, but it goes to the base (salary).

“The third part of this is how do we maintain,” she continued. “We don’t want to make this investment and then not maintain it. We need to move our employees along all the time. How do we do that – by (pay) grade or their overall years of service to the county? We need to create a process of how to adjust (salaries). That’s when we need to begin to talk about longevity to the base, merit base pay, and cost of living increases. We’re asking for a little bit more time (to devise the best solution). My senior staff is a bit divided on what the best process is. It took 20 years to get to this stage of compression, we can’t reverse that in one year…more like two-to-four years. We can do it in one year, but the cost will be astronomical.”

Williams said part three of this proposal will hopefully be ready by the time the commissioners begin the chore of discussing the 2013-14 fiscal year budget. Currently, longevity awards (roughly $100,000) are given through bonuses, not to the salary base.

“We’re still talking about percentages; any time you use a percentages you will create gaps because the lower man will get less, the higher person will get more,” Gatling said. “My question is how are you going to keep those gaps from spreading by giving percentages, unless you are giving a greater percentage for the lower grade. We can’t keep moving the top without creating wider gaps.”

“We accelerate the mid-point and de-accelerate the max,” Williams answered. “We create a dividing line where some may get a higher percentage cost of living adjustment while others get less. Again, that’s the part we’re working on. I would urge you not just to look at the separation (of salaries), but also at the requirements of the job and the impact that job has on the overall organization.”

Getting back to the two issues at hand, Commissioner Howard Hunter III said the proposed increases total roughly $157,000 (nearly $200,000 by adding in FICA and retirement).

“Where are we getting this money from,” he asked.

“If we do this starting in January, then that’s only six months (until the start of the new fiscal year in July) so we’re talking $100,000 total that can come from fund balance,” Williams said. “Come July 1, we’re on the dime for $200,000 that we’ve got to find somewhere.”

“I’m in favor of this plan, starting now,” Hunter said. “As far as longevity, I’d prefer to do it at the end of the year like we’re doing now.”

“I support all of our employees, but I’m concerned right now with those with low paying positions,” said Commission Chairman Curtis Freeman. “We’ve got some employees below $20,000 (annually).”

“Whatever salary administration policy we put in place is going to be for 200 employees,” Williams reminded the board. “We have to deal fairly with all, but you do it through percentages…some on one end will receive one percent while others will receive three to five percent.”

Hunter motioned to approve the three percent raise for the 29 workers as well as giving the green light to Phase 2 – pay hikes in percentages as outlined in the compression aspect (below midpoint). Commissioner Johnnie Ray Farmer offered a second and the motion was approved without objection.