Keeping Faith

At its June 10, 2013 meeting the Council will take up a proposed 13% salary increase for our city manager, Jeff Maltbie. This stems from his recently-completed performance review, which involved an in-depth discussion between him and the Council (it took place in closed session because it’s a personnel matter).

While the proposed increase is significant, I support it. Here’s why.

Jeff was hired as our regular city manager several years ago as the result of a competitive interview process. However, because he’d never been a city manager he was offered a less than market contract in terms of salary and severance provisions. This is not unusual; I had a similar experience when I was hired into my first private sector executive position. But it pushes the envelope because compensation should reflect the job you’re required to do and how well you do it, not your seniority. It’s understood that if you perform at or above expectations your contract will be adjusted to market.

That’s what’s happening here. Jeff has exceeded the Council’s expectations, fully demonstrating he was the right choice. Based on a salary survey, his revised compensation would put him at the median of city manager salaries from comparable nearby cities.

The Council is not obligated to make this adjustment. But given his performance and commitment it would be breaking faith with him if it doesn’t. Because of what he has done and can do, I believe it is in San Carlos’ interest to retain Jeff’s services for our community.

But while it’s Jeff’s contract we’re addressing, the consequences of what the Council does can affect the entire organization. Breaking faith with employees is a sure-fire way to wreck morale. Who wants to work for a leadership which doesn’t understand the importance of repaying trust? Leaderships which make that mistake quickly find all their talented people leaving for greener pastures.

The severance package for our city manager does not apply if he or she is fired for cause (e.g., breaking the law, violating the City’s code of conduct, documented consistent poor performance). If paid, it also shields the community from wrongful termination lawsuits (i.e., acceptance of a severance payout requires the city manager to waive any and all rights to challenge his or her termination).

Some people dislike severance packages, believing employment should always and only be at will. But even in the private sector they’re quite common at senior levels, particularly for CEOs, which is what the city manager is. They’re offered because it’s not in the company’s interest for the CEO to be looking for a new job every time there’s a bump in the relationship between him or her and the board. CEOs and city managers also typically work for a boss whose makeup can change unexpectedly, through shareholder action or an election. Severance packages help maintain a strong focus on meeting the customer’s, or community’s, needs even when the ultimate leadership changes.

The kind of city manager I want for San Carlos is one who is talented, hard-working, and committed to our community. In my experience Jeff easily meets these criteria. But so far as commitment to the community is concerned, it’s worth noting this is Jeff’s second full review since he was hired as our city manager. He chose not to ask for the compensation adjustment at his earlier review because the city’s financial situation was somewhat precarious. Instead, he demonstrated his commitment to San Carlos by deferring the request, and kept working hard on our behalf. Now that we can, it’s only fair we, in turn, fulfill our commitment to him.

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