CITYWIDE: PERFORMANCE-BASED BONUS PROGRAM

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CITYWIDE: PERFORMANCE-BASED BONUS PROGRAM

Problem Identification:
Compensation packages for public sector executives rarely approach those available in the private sector. This disparity, coupled with the limited job security that accompanies being a political appointee, limits the appeal of public sector management positions and reduces the pool of management talent from which the City can draw.

Recommended Action:
Develop a program making the City’s top managers eligible for annual bonuses based upon the performance of their department or organizational unit.

Classification:
Cost Savings, Organizational, Revenue Enhancement,
Service Improvement

Functional/Operational Area:
Citywide

Estimated Annual Impact:
Cannot be Estimated

Estimated Implementation Costs:
Not Determined

Barriers to Implementation:
Compensation levels for the City’s top managers are traditionally a hot-button issue with municipal labor unions and the media.

Projected Implementation:
60 days

Next Steps:
Convene a small task force of business leaders with expertise in executive compensation and task them with developing guidelines for a performance-based bonus program. These guidelines should include establishing the ranges for bonus awards and setting performance criteria where the awarding of bonuses is appropriate.

Analysis:
If the City’s 25 most important non-elected managers were eligible for a maximum annual performance-based bonus of $10,000, the total cost of the program’should every manager met the award criteria’would not exceed $250,000. If the awarding of performance-based bonuses were linked to achieving cost savings or revenue enhancement benefits at a minimum of a 10-1 ratio, $250,000 in performance-based bonus awards would only occur after the generation of $2,500,000 in quantifiable benefits for the City. The financial impact and implementation cost of the recommendation is dependent upon the number of managers allowed to participate in the program, the monetary range of financial rewards, and the establishment of guidelines specifying the level of financial or service benefits that need to be generated to qualify for a performance-based award.