20170215Murray Rebuttal.pdf

Ronald L. Williams, ISB No. 3034
Williams Bradbury, P.C.
1015 W. Hays St.
Boise,ID 83702
Telephone: [phone]
Email : [e-mail]
Attorneys for Intermountain Gas Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
INTERMOI.INTAIN GAS COMPANY FOR
THE AUTHORITY TO CHANGE ITS RATES
AND CHARGES FOR NATURAL GAS
SERVICE TO NATURAL GAS CUSTOMERS
IN THE STATE OF IDAHO
CaseNo. INT-G-16-02
REBUTTAL TESTIMONY OF LINDA MURRAY
FOR INTERMOUNTAIN GAS COMPANY
February 15,2017
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Please state your name, position and business address.
My name is Linda L. Munay. Human Resources Director. My business address is
555 S Cole Rd, Boise,ID 83709.
Would you please describe your educational and professional background?
I am the Director of Human Resources and have worked in this role since joining
the Company in2007. I am responsible for all disciplines in the Human Resources
(HR) arena for Intermountain Gas Company and Cascade Natural Gas Corporation.
I am a certified HR professional through The Society for Human Resource
Management (SHRM) as Senior Certified Professional (SCP) and through Human
Resource Certification Institute (HRCD as Senior Professional in Human Resources
(SPHR). Prior to joining Intermountain Gas Company, I worked at Weyerhaeuser
in a Regional Human Resource Manager role from 2000 to 2006, Trust Joist
Corporation as the Manager, Compensation Services from 1995 to 2000 and prior to
that held various Human Resource positions with US Bank and Albertsons Inc.
What is the purpose of your rebuttal testimony?
The purpose of this testimony is to (1) to discuss why the use of Bureau of Labor
Statistics ("BLS") survey data should not be used as proposed by Staffwitness
T.rry; and (2) further clariS the purpose of the Company's use of nationally
recognized independent salary surveys and the use ofthe survey data to establish
salary ranges.
Does the Company agree with Mr. Terry's recommendation that BLS data for
the state be equally weighted to the national surveys the Company uses?
No. The Company believes it currently uses accepted practices in determining
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compensation. The Occupational Employment Statistical Survey (OES) used by the
BLS encompasses a large number of organizations so the questions and job
descriptions used in the survey are very broad. The broad scope of the OES survey
does not provide the level of accuracy, job match and company size that the surveys
we use provide.
Can you explain what you mean by broad scope?
Yes. To illustrate this point, I will review the Occupation code 51-4121 "Welders,
Cutters, Solderers, ardBrazers" listed on Mr. Terry's Exhibit 104 (See Exhibit No.
36, page 16.) As you can see, several jobs are grouped into one. When an
employer responds to the survey, it marks down the headcount in the column for
which employees' salaries reside. As you can see, not only is the employer forced
to place employees into descriptions grouped with other jobs, but there is a lack of
clear identification of the wage being paid. For instance, look at column "G" on
Exhibit No. 36. The Annual Salary range is $62, 920 - $80,079. This is a broad
range and the Company is not able to use actual salaries as it would when
participating in the surveys it uses. You can compare this description to our job
description for welder, as shown in Exhibit No. 37. As you can see, there are
requirements in our job that would not be included in the descriptions for a welder
working in a machine shop. Our welders must complete test welds that pass state
and federal code requirements. They are required to pass Operator Qualification
(OQ) tests and have the skills to respond to gas-related emergencies. (A similar
comparison can be made using Exhibit 36,p9.4 Occupational Codes lI-1021
"General and Operations Managers" to Exhibit 38 "Mgr, District Ops").
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Do you have other concerns with the use of BLS data as Mr. Terry suggests?
Yes. There is a lag in the data the BLS uses. The most current survey data
available was published in June of 2016 for May of 2015. The surveys we use have
more current data. Also, as stated earlier, we need to be able to compete in our
labor market for skills and experience; especially today in our regulated
environment. Idaho is a rural state and the OES survey includes a large number of
non-metropolitan areas that lowers the statewide survey data. The use of this data
goups the Company in with a labor market that would not meet Intermountain's
minimum job qualifications. An illustration of the variance can be found by
looking at some of the metropolitan surveys. The Logan, UT Metropolitan
Statistical area which I understand to be made up of Idaho employees in Franklin
County which includes several small towns and the difference is22% below the
national level. Compare this to the Pocatello Metropolitan Statistical arca which is
not far away which is only l2Yobelow the national level. This only shows the
differences between metropolitan surveys in our state. Intermountain cannot
determine how much these non-metropolitan areas further bring down the
Company's state numbers. Using the BLS data twice to balance the surveys the
Company uses furthers the gap of accurate data. To include survey data with a
labor pool that does not meet the minimum requirements for a majority of our jobs
with no way to determine the size and scope of the survey participants (these are
kept confidential by the BLS) would diminish the integrity of our compensation
practices, and if the Company were to lower its standards, it could have a direct
impact on the safety and wellbeing of our customers.
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Does the Company consider its use of market survey data to be sound and
consistent with other utilities and employers of similar size and scope?
Yes. Intermountain Gas Company makes every attempt to use commonly accepted
practices to ensure we are competitive in our industry and also in the labor markets
in which we compete. The markets for the employees with the skills and
experience required by our industry is quite competitive. For that reason, the
compensation we offer must provide the same general pay levels and components in
its total remuneration package as are included in the packages provided by the
Company's competitors for labor.
What is the practice that Intermountain uses to determine salaries?
It is Intermountain's standard practice to market price jobs using national general
industry, as well as utility specific, data. This practice is consistent in the utility
industry. We support this approach for non-utility specific roles at Intermountain,
given that the Company recruits from, and loses talent to, general industry for these
roles.
Are there other factors that the Company considers besides market data?
Yes. Intermountain does consider local markets and participates in surveys for jobs
that are recruited locally. lntermountain also has a union workforce which feeds
some of our professional positions. The Company also faces intemal pay
compression issues that must be balanced when trying to attract some of our most
talented field employees into professional positions. This is common in all
industries where employees receive overtime and later transition to exempt roles.
Many of our union employees are required to provide emergency response so
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overtime for emergencies and pay for standby can be significant. Most employees
actually take a pay cut to move into professional roles and the Company must
balance the financial impact of such an event as much as possible without paying
above a market based salary.
Do you have additional processes in place to ensure that the Company is not
paying more than the minimum necessary to attract and retain a qualified
workforce?
Yes. Periodically the Company contracts with an outside independent consultant to
review compensation programs and practices. For instance, in20l3, the Company
contracted with Aon Hewitt, a recognized leader in human resource solutions, to
provide a third-party review of base compensation and incentive compensation. A
copy of this report was provided in Response to StaffProduction Request No.66.
This review will be performed againin2}l7.
What was the result of the 2013 Aon Hewitt survey?
The report issued by Aon Hewitt indicated that Intermountain's compensation
programs are well designed and utilize high quality and established external survey
sources to ensure the Company's programs align well with other utilities and
industries that compete for the same types of employees. It was suggested that the
Company consider moving salary structures slightly more aggressively than in the
past to keep the Company from falling below market competitive levels. It was
determined in the study that Intermountain's salary structure midpoints when
compared to market was at 0.94 (i.e. slightly below market), which is considered
well-placed for our market.
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I Q. \ilhen Intermountain recruits external candidates, does the Company find that
salaries are higher than the labor market that you recruit from?
A. No. Internally, we have a desire to hire at a competitive wage below the midpoint
of the industry salary ranges. We have found that often we need to hire near the
midpoint; which suggests we are either equal to or lagging the labor market.
Recently we did a three-year look back at the external hires for our non-union
positions. The average comp-ratio for those employees that we hired at was 0.94,
again - slightly below the market mid-point. We also analyzed our current non-
union workforce as a whole and the average tenure of our employees is 13 years
and the average comp-ratio is 0.98. This helps to validate that we are not paying
above market even when our workforce is well seasoned and established.
a. Does the Company take any other measures to ensure that compensation does
not exceed market average?
A. Yes. In addition to periodic third-party reviews, Human Resources reviews
standard benchmark jobs in the corporation annually, including job "families" such
as engineers, construction supervisors, finance, human resources and system
analysts. The Company's total compensation package for benchmark jobs are
compared to market average compensation for comparable positions to ensure that
the Company is compensating employees at the appropriate pay grade and range.
Human Resources also reviews positions on an o'as needed" basis throughout the
year to ensure it is competitively compensating within the established pay ranges.
a. How does the Company determine the market average when it determines the
appropriate pay grade and range.
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When we market price a position within the organization, [ntermountain pulls data
from all of our survey and/or online sources. The Company uses many reputable
industry surveys when determining base pay levels, including the American Gas
Association, Mercer Benchmark, Milliman, Towers Watson, World at Work and
Compensation Analyst, among others. The first step in determining market average
base pay for a particular position is to review the requirements of the positions
listed in our surveys and online sources against the job description we have
completed. Once we have determined at least a 70Yo match, we then use the 50th
percentile pricing associated with that position to determine where our job will fit in
our pay grade structure. We look at this by taking cuts of data based on geography,
industry, and organization size. This 50th percentile wage level then becomes the
Company's market pay level or "grade" associated with the job. To be clear, our
pay grade is set at the middle of the market range of pay, as indicated by these
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sources.
a. Do you have any concluding thoughts that you would like to share?
A. Yes I do. Intermountain Gas Company takes pride in being a lean, innovative
Company. We have very a knowledgeable, hard-working and giving staff of
employees that contribute to the success of our communities and Company. We
want to be sure that they are fairly compensated and recognized for their
contributions.
a. Does this conclude your testimony?
A. Yes, it does.22