RD634 - 2020 Annual Report Comparing Compensation between the Commonwealth’s Classified Workforce and the Public and Private Sectors – October 1, 2020

Executive Summary:

The attached report is pursuant to § 2.2-1202 of the Code of Virginia, Review of employee compensation; biennial report on employee recruitment and retention.

The Department of Human Resource Management (DHRM), with assistance from Deloitte Consulting LLP (“Deloitte"), has compared the compensation of classified Commonwealth employees to benchmark compensation data representing the public and private sectors and in response developed a methodology that can be used to determine (i) the amount of funding that should be appropriated for state employee salary increases each year and (ii) how to distribute that funding to address state agencies' most significant workforce challenges.

Due in part to unpredictable employee increases, it is estimated that average base salaries are 17% and 10% below market median for general industry and government data, respectively. Total compensation approximates the market median and is 7% below the market median for general industry and government data, respectively. Lack of consistent pay increases and perceived inequities in pay have continuously been cited as being a major driver of recruitment and retention challenges.

As noted as recommendations within this report in order to properly align the pay and benefits of the statewide workforce and support agencies in addressing recruitment and retention challenges, the Commonwealth of Virginia must commit to consistent pay increases that align with market data, promote pay for performance in the Commonwealth’s compensation program and offer decentralized agency mechanisms to address recruitment and retention challenges.

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/s/ Emily S. Elliott