Wausau could revamp discretionary incentive program for city employees

Damakant Jayshi

Wausau could revisit a cash incentive program for city employees, potentially replacing the initiative with a one-time bonus or other form of appreciation after the human resources director said the current policy is unfair and unsustainable.

Members of Wausau Human Resources Committee on Monday held a robust discussion about department heads giving discretionary performance incentive to their employees. Human Resources Director James Henderson said there is no budget for the program, as he sought direction from the committee and City Council.

Some departments use vacancy savings for discretionary performance incentives, or DPI, but Henderson said that method is not fair when some departments are notably larger than others. For example, the HR department has just three staff, while the Department of Public Works has more than 100.

Henderson referred to what he called a “statistical anomaly” in one department, in which 95 percent of employees have “exceeds,” which means they exceeded their performance goals. The supervisor in that department, Henderson later told Wausau Pilot, is Public Works Director Eric Lindman. Henderson said Lindman, when asked about the number, told the HR director that he did “not want to be the reason an employee does not receive” the discretionary pay.

During Monday’s meting, Henderson avoided naming Lindman even while referring to him on several occasions. That prompted Dist. 9 Alder Victoria Tierney to remark that “it sounds like there’s department that may be abusing this.”

This newspaper has reached out to Lindman by email, asking him how he evaluated the performance of his employees and how many of them “exceeded” their performance. He did not respond to questions.

In the past, Lindman, as director of the city’s utility, sparred with Henderson over pay increases related to employees of the utility.

DPI’s impact on employee compensation

Employees “exceeding” their performance become eligible to a raise of up to 4.5 percent, which is tied to their base pay.

In his memo, Henderson cited an example to illustrate how the DPI program is “ineffective.” He wrote: “…if an employee receives a 4.5 % DPI, they will also receive the annual [cost of living adjustment,] which is usually around 3% and their step increase of 1.5%. With a possible 9% increase plus newly approved certification pay for [the Department of Public Works,] which is a possible $1.50 per hour benefit, the city will not be able to sustain wage growth at this rate.”

Henderson said the practice is unfair compared to wage growth in other departments and hampers internal equity as well. He said the program is out of control, referring to a stack of DPI recommendations, 95 percent of which is from a single department.

The HR director confirmed that he was referring to the DPW but clarified that he was using a “ballpark” figure.

Henderson said that at least one department does not like the city’s compensation system, “so this is their way to get even.” He also said that “they don’t like our compensation system, and this is what they use to settle scores.” He confirmed to this newspaper again that he was referring to Lindman.

At a joint HR Committee-Water Commission meeting in January, Henderson said the DPW head refused to participate in the compensation evaluation study by Gallagher and instead engaged in a different wage study by Baker Tilly. This evaluation was approved by the Wausau Water Works Commission, the utility’s oversight body.

Alders agreed DPI program broken and needs reforms, but differ on remedy

In its current state, the program cannot continue, the HR director said.

“Do we need to revamp it? Do we take another look at it again? Or do we take it out of the employee handbook?” Henderson asked.

All five alders on the HR Committee agreed that the DPI, in its current form, needs a revamp but differed on alternatives. Some alders want to leave it to the department heads, perhaps with a lower raise; others said leaving the matter to department heads alone would make it very subjective in the absence of any uniform standards. Henderson agreed, saying the program depended on a director’s subjective evaluation.

Alders Gary Gisselman and Michael Martens said they are against discontinuing the incentive program in its entirety and want to preserve it in some form.

“I think we want to reward exceptional service,” Gisselman said. He suggested recognition could come in the form of any of the rewards mentioned in the employee handbook: a one-time cash bonus, paid time off, tuition reimbursement, gift cards or other incentives.

Martens said that if there is no incentive pay, it might affect morale. But he agreed the current program is not sustainable. He also spoke about giving a lump sum “bonus pot” to departments, though with major variances in department size, that could also be complicated.

Alder Tierney said that while she agrees with Martens on the question of morale, she pointed out another scenario: If a hard-working employee going “above and beyond” their regular work sees the same compensation as those who merely do their work, the morale of the employee doing the exemplary work will suffer.

Alder Terry Kilian said the incentive program is not viable for the city the way it is set up now. Kilian is calling for setting up specific guidelines and developing uniform standards for evaluation. She also said that cash incentives could be replaced with some other form of recognition.

HR Committee Chair Becky McElhaney said that performance evaluation should ideally be based on objective data but most performance evaluations are not data-driven. She said there should be a clear line between regular work that all employees are expected to complete and performance that goes above and beyond that scope.

Martens, who chairs the Finance Committee, offered a compromise, saying performance-related incentives should not be tied to base pay.

“If we get away from the steps and base-building, I’m totally fine with it. I don’t want to trash the program completely,” Martens said.

He suggested developing a bonus structure and tying it to some rules to help identify employees who are really doing exemplary work and thus be eligible for a one-time bonus.

Henderson, at the committee’s request, said he will work on possibilities and come back with recommendations in the future.