Compensation Setting Analysis

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Objective

To identify indications of bias, based on career-service employees’ gender or race and ethnicity, that may exist in the City and County of Denver’s processes for setting employee salaries and allocating merit increases.

Background

The Office of Human Resources is responsible for ensuring the city complies with Career Service Rules. Career Service Rule 9 outlines the pay factors the city uses to determine employee salary such as prior work experience, education, professional certifications, and level of responsibility. Career Service Rule 13 outlines the city’s merit increasing process. Each year the city determines whether to award merit increases to eligible employees based on their performance and other factors. For example, due to the COVID-19 pandemic’s effect on the city’s budget, the city declined to award merit increases for 2020.

Why this matters

 The Office of Human Resources is responsible for ensuring the city complies with Career Service Rules. Career Service Rule 9 outlines the pay factors the city uses to determine employee salary such as prior work experience, education, professional certifications, and level of responsibility. Career Service Rule 13 outlines the city’s merit increasing process. Each year the city determines whether to award merit increases to eligible employees based on their performance and other factors. For example, due to the COVID-19 pandemic’s effect on the city’s budget, the city declined to award merit increases for 2020.

Findings

The Office of Human Resources Does Not Require Agencies to Fill Out or Update Their Employees’ Career Profiles in the City’s System of Record

The limited data in the city’s system of record prevents an analysis of the city’s entire population of employees using all relevant pay factor information without having to collect the data manually from individual employee personnel files.

The Office of Human Resources Should Strengthen Its Review of How Agencies Allocate Merit Increases to Ensure They Comply with City Rules

Without adequate review, some employees may receive an incorrect merit increase.

Recommendations

1.1 Collect Complete Employee Data – The Office of Human Resources’ Director of Technology, Innovation, and Employee Records should work with city agencies to ensure employees input all data related to the employee Workday career profile.

Agency Response: Agree, Implementation Date – Dec. 31, 2021

2.1 Require That Agency Merit Allocation Methodologies Are Submitted and Reviewed – The Office of Human Resources’ Director of Classification and Compensation should require city agencies to submit their allocation methodologies during the merit increase review process to ensure that agencies are complying with Human Resources’ merit allocation review guidelines and Career Service Rule 13. At a minimum this review should include:

  • Verifying that the city agency allocation methodology was applied consistently across all eligible agency employees.

  • Verifying that the proration calculations were performed correctly using the Office of Human Resources’ formula.

  • Verifying that lump-sum payments were assigned appropriately and that they equal the correct amount according to the city agency’s allocation methodology.

Agency Response: Agree, Implementation Date – Jan. 31, 2022, contingent upon the city having a merit program in 2022 or any subsequent year.

 

Auditor's Letter

February 18, 2021


Our objective in this audit was to identify indications of bias, based on career-service employees’ gender or race and ethnicity, that may exist in the City and County of Denver’s processes for setting employee salaries and allocating merit increases.

We found that the Office of Human Resources does not collect all relevant employee data in its system of record and does not adequately review how city agencies award merit increases.

By implementing recommendations for more comprehensive data collection and for stronger reviews of merit increases, the Office of Human Resources will be better equipped to allow for more complete internal and external reviews of equity in salary and merit increases and ensure merit increases are applied consistently.

This performance audit is authorized pursuant to the City and County of Denver Charter, Article V, Part 2, Section 1, “General Powers and Duties of Auditor.” We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

We extend our appreciation to the personnel at the Office of Human Resources who assisted and cooperated with us during the audit. For any questions, please feel free to contact me at 720-913-5000.

Denver Auditor,

Auditor's Signature
Timothy O'Brien, CPA

Follow-up

A follow-up report is forthcoming.


 


 

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AUDITOR TIMOTHY O'BRIEN, CPA
Denver Auditor



Denver Auditor´s Office

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Emailauditor@denvergov.org 
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