Total employee compensation study concluded
Study provides ideas to improve state employee compensation practices
NOTE: The description of the "private market" has been corrected to read: "Oklahoma employment market, including public and private sector employers."
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
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 the Oklahoma employment market, including public and private sector employers;
- Benefits are 24.3 percent above comparable state governments and 18 percent above the Oklahoma employment market;
- Salaries are 6.4
percent below comparable state governments and 21.7 percent below the Oklahoma employment 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
- 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
- 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
- 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
The study is available on the OMES website: http://www.ok.gov/OSF/documents/TotalRemunerationStudy.pdf
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About the Office of Management and Enterprise Services
The Office of Management and Enterprise Services provides financial, property, purchasing, human resources and information technology services to all state agencies, and assists the Governor’s Office on budgetary policy matters. Our mission: To lead, support, and serve. For more information, visit OMES.OK.gov.