Ann Arbor Transit Authority Response

Michigan Capitol Confidential did a story about employee compensation, focusing on the Ann Arbor Transit Authority. The following is a response from AATA CEO Michael Ford.

The short answer is that we have developed a very systematic approach to employee compensation that takes several factors into account. AATA competes, not only with other transit systems, but with all businesses and organizations within southeast Michigan.  We analyze every employee’s performance on a yearly basis and compare their compensation package with similar sized organizations in Southeast Michigan so as to ensure we are able to attract and retain top talent in the region.

The long answer is that our salary administration plan was originally developed in the early 1990’s by an independent consulting firm and has been updated at least bi-annually ever since.  Our salary plan is designed to compete with organizations that are within the following parameters:

• That are in the non-manufacturing sector
• That have employment between 100 and 500 employees
• That are located in Southeast Michigan

AATA is committed to the design, development, and maintenance of compensations programs, including salary and benefits, which compare competitively with those of similar companies within southeast Michigan for equivalent work.  It is AATA’s objective to provide a salary program that enables the organization to:

• Attract and retain high caliber employees
• Recognize and compensate employees for varying degrees of job responsibilities
• Reward individual employee contributions and motivate employees to improve their level of job performance.

We use a merit system that rewards employees based on individual performance, financial condition of the Authority, competitive job market, and general economic conditions. Each employee’s job is then carefully analyzed and ranked by against the following 14 criteria:

• Knowledge required for the position
• Internal contacts made in the course of work
• External contacts made in the course of work
• Impact of decisions made
• Effects of errors
• Confidentiality required
• Level of self-direction
• Judgment and problem solving needs and abilities
• Physical conditions under which the employee works
• Social conditions of the position
• Psychological conditions of the position
• Supervision responsibility
• Supervision complexity
• Project and/or Team responsibilities

The results of these scorings and rankings are then compared to similar studies conducted throughout southeast Michigan for comparable positions in order to establish a system of salary ranges and grade levels.  All non-union positions are evaluated annually to determine the need for salary range adjustments to keep them competitive within southeast Michigan. 

Individual performance reviews are held annually to determine merit increases within those ranges.  All non-union positions have been segregated into one of 10 salary grade levels based upon the job evaluation points determined by their job analysis.  As jobs grow and change over time, new job analyses are made to determine if the position’s job evaluation point total (i.e. the responsibilities associated with the job) has changed enough to justify movement to another grade level.

The object of this analysis and annual adjustments is to have a salary program that compensates employees at what is known as the “midpoint” range for similar salaries within southeast Michigan.  Over the last 12 years, AATA’s salaries have moved from being substantially below their midpoint range to being much closer to the midpoint. In 2010, AATA salaries were 98.6% of their midpoint salary range.

The positions in question occupy salary grade levels 8, 9, and 10.  The Chief Executive Officer is the only official in Grade 10 while the Assistant Executive Director is the sole occupant of Grade 9.  The remaining positions are in Grade 8 and are all AATA department managers. 

The eight employees, who make over $90,000, have an average of 18.5 years with AATA and an average of 32.2 years in their field, (transit management, fleet maintenance, information technology, human resources and accounting).  Five have over 14 years with AATA, including three with over 30 years with AATA.

I hope this information has shed some more light on our approach to employee compensation.