FYI: Why in these difficult budget times do upper level employees receive performance bonuses?

PC:  That’s a question I am asked quite often and there is a great deal of misinformation about the department’s pay for performance system.

First let me explain that bonuses, which can provide a one-time lump sum payment to employees at the top of their pay level, are prohibited and have been prohibited since 2002.

However, there are 163 Group 4 and SES (Senior Executive Service) employees who are only eligible for salary adjustments based on performance. The Group 4 and SES employees include wardens, deputy wardens, deputy directors, regional administrators, regional prison administrators, SEMAs (senior executive management assistants) and business managers among others.

These positions are not eligible for automatic step raises as other employees are.

So if they are not at the top of their pay level, they have no way to achieve a pay increase except through this system.

For three years (2002-2004) no one in this category received a salary adjustment other than the cost of living increase implemented each October 1 that all state employees receive.

While it’s often referred to as a bonus, that is not really a good description of the system because, in simple terms, it is an adjustment to salary much like a step increase to employees not at the top of their salary scale.

One additional difference in the case of Group 4 and SES employees, is that the increase has to be earned based on satisfactory completion of their performance factors. Plus if an employee in this category is at the top of their pay level, they are no longer eligible for the pay increase. Of the 163 Group 4 employees, 118 were eligible and 106 received increases in 2005.

The total increases paid to those staff in 2005 was $201,775.

In addition, 42 SES employees are two-year limited contract employees. This means they each have a contract that must be renewed every two years if they are to maintain their employment.Pay for performance first started in March 1996.  In 2002, the DOC imposed its own restriction due to the $55 million in cuts made to the DOC budget. During 2003 and 2004 Governor Granholm imposed a restriction and increases to these eligible employees were not issued.

For 2005, pay for performance was reinstated for those not at the top of their pay level. Bonuses have not been reinstated.

For more details refer to the Civil Service Compensation Plan at www.michigan.gov/mdcs.

Michigan Department of Corrections FYI 070606