Doing away with Colorado Springs Utilities' $9 million annual bonus program won't have much impact on workers after all.
Consider Bruce McCormick, Colorado Springs Utilities' chief water services officer. Last year, he knocked down $230,090 in pay — $205,650 in salary and $24,441 in an annual bonus. This year, with no bonus program, he'll still make $228,271.
Colorado Springs City Council dumped the pay-for-performance program last year after news of it triggered outrage that employees of the city-owned utility for years had collected bonus payouts in addition to their salaries.
But Councilor Randy Purvis says he and his colleagues needed to offset the loss somehow.
"The history of the program was, base pay was cut and pay-at-risk instituted," he says. "So, now you're eliminating the pay-at-risk and restoring some but not all of the bonus pay [through base pay raises]. The goal was to eliminate the pay-at-risk program and still adequately compensate the employees."
Hence, Council adopted a new plan that fixes compensation at the 50th percentile, instead of the 60th as in the past, meaning Colorado Springs Utilities pay is middle-of-the-road when compared to similar jobs at utility companies and other businesses regionally and nationally that hire similar positions. (Emphasis here is placed on municipal utilities and the Pikes Peak region.)
But reaching the 50th percentile meant significantly boosting the pay for some jobs; without bonuses, they fell below that level, Utilities spokesman Steve Berry says.
Councilor Tom Gallagher doesn't like the new system, saying he didn't intend for employees to get raises in lieu of bonuses.
"No bonuses means no bonuses," he says. "I was looking to take that [$9 million] to the bottom line so that rates would have a lesser impact on our ratepayer owners. This is a shell game."
Under the new pay plan, hourly workers' raises range up to 11 percent, salaried workers up to 14 percent, and management folks up to 17 percent. CEO Jerry Forte will get as much or as little as City Council sees fit.
Berry says although there are exceptions, most employees will be paid less money this year without the bonuses than last year with the bonuses. He'll make $74,810 this year, $1,153 less than he did in 2009 with his bonus.
Overall, Utilities' payroll will decline by $2.95 million this year compared to 2009. And Berry predicts that after the raises are given this year, wage growth will slow.
"There's 95 percent chance [that] most of those merit pay adjustments in the future won't be as big as this year," he says. "In isolated cases there was a considerable raise in some job classes. But it's not true across the board. People are taking home less."
A senior project engineer, for example, last year was paid $95,079 — $87,298 in salary and $7,782 in bonus. This year, that engineer will be paid $92,468.
Berry notes that raises this year averaged 6.5 percent, compared to an average bonus last year of 7.8 percent of annual pay, the point being that most employees will be paid less this year. And according to Berry, few workers are likely to complain about it.
"I'm fortunate to have a job," he says. "I tell everyone that. I have a friend who's been unemployed for a year. I think most of our employees understand that."