MEMO 1 Assignment 1: Longevity Payment Policy Change Memo George Delgado Department of Public Administration, University of Illinois-Springfield PAD 506-B Public Policy for Managers Dr. A.S Kriz 06 February 2022 MEMO 2 To: The City Manager From: The Local Government Assistant Manager RE: Longevity Pay Policy Issues Involved in Changing the City’s Longevity Pay Policy The longevity pay policy is a significant issue for most senior employees in public offices including city workers. From the perception of senior city employees, longevity payments are considered part of their incomes and a means to encourage the senior employees to retain their positions (Lawrence Journal-World, 2018). Other city employees could retain their positions with the hopes of eventually getting longevity pay in their income. This means that any efforts to change the city’s longevity pay policy will be met by significant opposition from the city employees. Most employees will suggest the longevity payments be maintained or be increased, possibly from the perspective that longevity pay shows appreciation for the years of service the city employees have dedicated to the job. From the perspectives of the City Commission, longevity pay represents an expense and political challenge. Longevity payments are an addition to the employees’ incomes, suggesting they are a bonus to their payment. While the payments are valued by employees, they cost the city hundreds of thousands of dollars that could be used in better places. Human resource studies suggest that longevity payments do not have the effect of promoting effective and efficient services and the financial resources used for the payments would be best used in giving employees market compensations or providing specific benefits that all employees are eligible for (Lawrence Journal-World, 2018). This means that the City Commission would have to find benefits for all employees or make their regular wages more competitive. MEMO 3 The political challenge that may arise from the City Commission perspective is the opposition of voting members due to the political implications of eliminating longevity pay. Despite the research confirming the ineffectiveness of longevity pay, some of the members of the commission may oppose the changing of longevity pay policy. However, policies need to be made using analytical, rational, and scientific methods without being impacted by the irrationalities of politics (Stone, 2012). This could pose a significant issue since the city would be making payments that do not improve its services, while the employees would keep receiving payments that do not encourage them to perform better. From a pragmatism perspective, the actions that should be taken are those that work, and not others based on philosophies or ideologies (Peters, 2019). Advantages and Disadvantages of Longevity Pay Policy Change There are several advantages of making changes to the longevity pay policy. First, eliminating the policy for all future employees will leave room for the establishment of different payment policies that target all employees instead of eligible ones only. This will mean that the workplace will be more equitable across the city. Another advantage is that the city is left with an option to use the funds for other payments that research has found to increase employee performance and retention. Evidence-based recommendations on where the funds can be used will assist in improving employee satisfaction and retention based on competitive remuneration. Another advantage is that amending the longevity payment policy would result in improved pay for new employees, which may attract more persons to work for the city. The disadvantage of changing the policy would be the opposition from city employees who perceive the payments as part of their incomes. The employees may feel demotivated from perceiving a pay reduction. This can however be resolved by identifying that the longevity MEMO 4 payments would be used in improving the regular payments and benefits for all employees, hence still being retained in their payments. Who Would Gain and Who Would Lose? Amending the longevity pay policy would result in no losses for any party. As the human resource research suggests, the longevity pay policy is not effective in promoting effective and efficient services, which means they are not of any benefit for the city or the employees. The city would gain by getting the chance to invest the financial resources in policies that improve the efficiency and effectiveness of services. The city would gain by getting insight on better methods to motivate their employees which results in improvements in their service and operations. The employees may initially perceive themselves as the ones who lose after the policy change because it would mean a reduction of their income. While this may be initially true, the financial resources meant for the longevity payments could be used to make the regular wages of the city’s employees more competitive. The employees would still gain improved regular wages or other benefits that are applicable to all employees. Employees who did not qualify for the longevity payments would also benefit from getting wage increases without having to wait for the given years to gain benefits and bonuses. Fairness and Equitability to Employees Changing the longevity pay policy and eliminating it to be used for improving the employees’ regular wages is a fair and equitable chance for the employees. The change would mean that after the implementation of the new policy, all the new employees would be given fair and equitable remunerations based on elements that impact their performance and retention. The employees who were already receiving the payments could continue to do so, but with significant cuts since they would also benefit from the pay increase from diverted financial MEMO 5 resources. It would be fair to give employees bonuses and benefits based on their performance compared to their longevity, which can be compensated in other types of bonuses. Implementation of Changes The changes would have to be made immediately but would have to consider the employees who are currently receiving the longevity payments. This means that the most effective way would be to cut the payments for all new employees being hired after the implementation of the policy, but still retain the payments for those already receiving them. For those who receive the payments, the pay would be downsized by up to 50% so that the financial resources can be used for other uses. The downsizing would also be implemented after the implementation of the policy. Additionally, it would be important to conduct research and find better methods of remuneration compared to longevity payments so that the funds are still received by the city’s employees. The ideal remunerations affected would be those that are applicable to all employees such as their regular wages or allowances and those that directly impact the efficiency and effectiveness of city services and operations. After finding the right place to direct the financial resources, the program would be implemented for a given amount of time, presumably 5 years before it is completely eliminated, and no longevity pay policy would be used. Broader Implications For the employees, better regular wages and equitable bonuses and benefits would significantly improve their motivation and retention. HR would also be positively impacted by getting better incentives for the employees, while also attracting better talent from competitive remunerations. This would subsequently lead to improved efficiency and effectiveness in the city’s operations and services. MEMO 6 References Lawrence Journal-World. (2018). City Leaders Vote To Eliminate Longevity Bonuses For Future Employees, Decrease Amounts for Existing Employees. Peters, B.G. (2019). American Public Policy: Promise and Performance, 11th edition, Sage/CQ Press, ISBN: 9781506399584 Stone, D. (2012). Policy Paradox: The Art of Political Decision Making, 3rd edition, Norton, ISBN: 978-0-393-91272-2.