HomeMy WebLinkAboutC09-003 Smith AdvisorsCONSULTING AGREEMENT This Consulting Agreement ("Agreement") dated as of this ~._ day of January , 2009, is between the County of Eagle, State of Colorado, a body corporate and politic, by and through its Board of County Commissioners ("County"), and Smith Advisors, Inc. a consulting firm with a mailing address of P.O. Box 797, Avon, Colorado 81620 ("Consultant"). WHEREAS, the County is in need of a consultant to provide the services outlined in Section 1.1 hereunder; and WHEREAS, Consultant has represented that it has the experience and knowledge in the subject matter necessary to carry out the services outlined in Section 1.1 hereunder; and WHEREAS, County wishes to hire Consultant to perform the tasks associated with such services; and WHEREAS, County and Consultant intend by this Agreement to set forth the scope of the responsibilities of the Consultant in connection with the services and related terms and conditions to govern the relationship between Consultant and County in connection with the services. Agreement Therefore, based upon the representations by Consultant set forth in the foregoing recitals, for good and valuable consideration, including the promises set forth herein, the parties agree to the following: 1. Services Provided: 1.1 The Consultant will provide the consulting services as more particularly set forth in the proposal attached hereto as Exhibit "A" and incorporated herein by this reference (hereinafter called "Consulting Services"). The Consulting Services are generally described as assessing and making recommendations regarding the County's compensation and performance management systems, assisting the County on a to be determined basis in the execution and monitoring of any adopted recommendations, and assisting in the recruitment and selection of the new I-IIZ director and county manager. To the extent the terms and conditions of this agreement may conflict with Exhibit "A", the terms and conditions of this agreement shall control. 1.2 The Consultant is authorized to begin those services identified as Phase 1 in the proposal upon the execution of this Agreement. The scope of services and fees associated with those services identified in Phases 2 and 3 shall be determined upon the completion of Phase 1. Phase 2 and 3 services and costs shall be set forth in a written addendum to this Agreement. Consultant shall not be paid for any such services until the parties execute said addendum. 1.3 The Consultant is authorized to begin those services identified as the Recruitment, Selection and Orientation of the HR Director and County Manager upon the execution of this Agreement. Consultant shall work with County to refine these services and costs throughout the term of this Agreement. 1.4 Consultant has given the County a proposal for performing the Services and represented that it has the expertise and personnel necessary to properly and timely perform the Services. 2. Term of Agreement: 2.1 This Agreement shall commence on January 1, 2009 and, subject to the provisions of Section 2.2 hereof, shall continue in full force and effect until the deliverables are completed. 2.2 This Agreement, or any phase of the scope of services, may be terminated by either party for any other reason at any time, with or without cause, and without penalty whatsoever therefore. 2.3 In the event of any termination of this Agreement, Consultant shall be compensated for all hours of work then completed, plus approved expenses. 3. Independent Contractor: 3.1 With respect to the provision of the Consulting Services hereunder, Consultant acknowledges that Consultant is an independent contractor providing Consulting Services to the County. Nothing in this Agreement shall be deemed to make Consultant an agent, employee, partner or representative of County. 3.2 The Consultant shall not have the authority to, and will not make any commitments or enter into any agreement with any party on behalf of County without the written consent of the Board of County Commissioners. 3.3 The Consultant will maintain liability, unemployment and workman's compensation insurance on his/her behalf, as necessary. 4. Remuneration: 4.1 For the Consulting Services provided hereunder, County shall pay to the Consultant a lump sum fee of between $39,000.00 and $50,000.00 for the Phase 1 scope of services. Consultant anticipates the Phase 1 deliverables to be completed within the $39,000 sum, but cannot accurately predict additional work that may be necessary to produce the deliverables at this time. Within a reasonable time upon commencement of Phase 1 services, Consultant will provide County with any anticipated additional costs to complete Phase 1, but in nor event shall such additional costs bring the total fees for Phase 1 above $50,000. 4.2 Fees for Phase 2 and 3 services, if any, will be determined mutually by the parties at a later date. Fees for those services associated with the Recruitment, Selection and Orientation of the HR Director and County Manger shall be $250/hour plus approved expenses. 4.3 Fees for Phase 1 services will be paid in three (3) installments. $13,000 will be paid within ten (10) days of mutual execution of this Agreement, $13,000 will be paid upon fifty percent (50%) completion, and the remainder will be paid upon satisfactory completion. All other fees will be paid within thirty (30) days of receipt of a proper and accurate invoice from Consultant respecting Consulting Services actually performed prior to the invoice. The invoice shall include a detailed description of services performed. Upon request, Consultant shall provide County with such other supporting information as County may request. 4.4 County will not withhold any taxes from monies paid to the Consultant hereunder and Consultant agrees to be solely responsible for the accurate reporting and payment of any taxes related to payments made pursuant to the terms of this Agreement. 4.5 Notwithstanding anything to the contrary contained in this Agreement, no charges shall be made to the County nor shall any payment be made to the Consultant in excess of the amount for any work done without the written approval in accordance with a budget adopted by the Board in accordance with provisions of the Colorado Revised Statutes. Moreover, the parties agree that the County is a governmental entity and that all obligations beyond the current fiscal year are subject to funds being budgeted and appropriated. 5. Ownership of Documents: 5.1 All documents (including electronic files) which are obtained during or prepared in the performance of the Services shall remain the property of the County and are to be delivered to County before final payment is made to Consultant or upon earlier termination of this Agreement. 6. Indemnif cation: 6.1 Within the limits allowed by law, Consultant shall indemnify County for, and hold and defend the County and its officials, boards, officers, principals and employees harmless from, all costs, claims and expenses, including reasonable attorney's fees, arising from claims of any nature whatsoever made by any person in connection with the grossly negligent acts or omissions of, or presentations by, the Consultant in violation of the terms and conditions of this Agreement. This indemnification shall not apply to claims by third parties against the County to the extent that the County is liable to such third party for such claim without regard to the involvement of the Consultant. 7. Consultant's Professional Level of Care: 7.1 Consultant shall be responsible for the completeness and accuracy of the Consulting Services, including all supporting data and other documents prepared or compiled in performance of the Services, and shall correct, at its sole expense, all significant errors and omissions therein. The fact that the County has accepted or approved the Consulting Services shall not relieve Consultant of any of its responsibilities. Consultant shall perform the Consulting Services in a skillful, professional and competent manner and in accordance with the standard of care, skill and diligence applicable to consultants, with respect to similar services, in this area at this time. 8. No Assignment: 8.1 The parties to this Agreement recognize that the Consulting Services to be provided pursuant to this Agreement are professional in nature and that in entering into this Agreement County is relying upon the professional services and reputation of Consultant and its approved subcontractors. Therefore, neither Consultant nor its subcontractors may assign its interest in this Agreement or in its subcontract, including the assignment of any rights or delegation of any obligations provided therein, without the prior written consent of County, which consent County may withhold in its sole discretion. Except as so provided, this Agreement shall be binding on and inure to the benefit of the parties hereto, and their respective successors and assigns, and shall not be deemed to be for the benefit of or enforceable by any third party. Unless specifically stated to the contrary in any written consent to an assignment, no assignment will release or discharge the assignor from any duty or responsibility under the Agreement. 9. Notices: 9.1 Any notice and all written communications required under this Agreement shall be given in writing by personal delivery, facsimile or U.S. Mail to the other party at the following addresses: (a) Keith Montag, Acting Eagle County Manager 500 Broadway PO Box 850 Eagle, CO 81631 with a copy to: Eagle County Attorney's Office 500 Broadway PO Box 850 Eagle, CO 81631 (b) Smith Advisors, Inc. P.O. Box 797 Avon, Colorado 81620 9.2 Notices shall be deemed given on the date of delivery; on the date the facsimile is transmitted and confirmed received or, if transmitted after normal business hours, on the next business day after transmission, provided that a paper copy is mailed the same date; or three days after the date of deposit, first class postage prepaid, in an official depository of the U.S. Postal Service. 10. Jurisdiction and Confidentiality: 4 10.1 This Agreement shall be interpreted in accordance with the laws of the State of Colorado and the parties hereby agree to submit to the jurisdiction of the courts thereof. Venue shall be in the Fifth Judicial District for the State of Colorado. 10.2 The Consultant and County acknowledge that, during the term of this Agreement and in the course of the Consultant rendering the Consulting Services, the Consultant may acquire knowledge of the business operations of County, method of doing business, the and other aspects of the business affairs of County that are not generally known and the Consultant shall not disclose, use, publish or otherwise reveal, either directly or through another, to any person, firm or corporation, any knowledge, information or facts concerning any of the past or then business operations of County and shall retain all knowledge and information which he has acquired as the result of this Agreement in trust in a fiduciary capacity for the sole benefit of County, its successors and assigns during the term of this Agreement, and for a period of five (5) years following termination of this Agreement. 11. Miscellaneous: 11.1 This Agreement constitutes the entire Agreement between the parties related to its subject matter. It supersedes all prior proposals, agreements and understandings. 11.2 This Agreement is personal to the Consultant and may not be assigned by Consultant. 11.3 This Agreement does not and shall not be deemed to confer upon or grant to any third party any right enforceable at law or equity arising out of any term, covenant, or condition herein or the breach thereof. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written COUNTY OF EAGLE, STATE OF COLORADO, By and Through Its ATTEST: BOARD OF COUNTY COMMISSIONERS ~, _ ~~ ~ .- Jerk to the oard of ~otoR~-~° Sara Fisher, ~ y~~ ass ; u,cJ~z,C 1~5 ~ : > ~ Smith Advisors, Inc. 10.1 This Agreement shall be interpreted in accordance with the laws of the State of Colorado and the parties hereby agree to submit to the jurisdiction of the courts thereof. Venue shall be in the Fifth Judicial District for the State of Colorado. 10.2 The Consultant and County acknowledge that, during the term of this Agreement and in the course of the Consultant rendering the Consulting Services, the Consultant may acquire knowledge of the business operations of County, method of doing business, the and other aspect`s of the business affairs of County that are not generally lrnown and the Consultant shall not disclose, use, publish or otherwise reveal, either directly or through another, to any person, firm or corporation, any knowledge, information or facts concerning any of the past or then business operations of County and shall retain all knowledge and information which he has acquired as the result of this Agreement in trust in a fiduciary capacity for the sole benefit of County, its successors and assigns during the term of this Agreement, and for a period of five (5) years following terniination of this Agreement. 11. Miscellaneous: 11.1 This Agreement constitutes the entire Agreement between the parties related to its subject matter. It supersedes all prior proposals, agreements and understandings. 112 This Agreement is personal to the Consultant and may not be assigned by Consultant. 113 This Agreement does not and shall not be deemed to confer upon or grant to any third party any right enforceable at law or equity arising out of any term, covenant, or condition herein or the breach thereof. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written ATTEST: COUNTY OF EAGLE, STATE OF COLORADO, By and Through Its BOARD OF COUNTY COMMISSIONERS Clerk to the Board of Sara. Fisher, Chairman Smith Advisors, Inc. j Ri mith a :~~';~~ > ~ ~ °':, Proposal for Services For Eagle County Government December 18, 2008 Per the Eagle County Board of Commissioner's Request b~~ i~q ~» .."f ~"~t.~~ac~~~i of S~~r~r~f'e~ ~,~,i~ Cv~~~~~y ~:~r~~°ee~r~~~r~t - flns~~€i=r~ Services Introduction: This proposal is a recommendation and estimate of Smith Advisor's support services based on conversations with the Eagle County Commissioners; Arn Menconi, Peter Runyon, Sara Fisher and Commissioner Elect Jon Stavney. The County Commissioners requested that I draft a proposal that outline my support in the assessment of the County's current compensation and performance management systems as well as support in the recruiting, selection and orientation of the HR Director and County Manager. More recently I have also been requested to evaluate the recruiting and selection process. Our assessment would include an evaluation of strengths and weaknesses of the aforementioned systems relative to "best practices". Additionally, the assessment will include recommendations of improvement actions and a plan to achieve buy-in and ownership from key stakeholders for effective implementation of those actions. A cautionary,ni~fie"-~ rhany organizations i~equest.tsto coime iri,an irr~rnefii'eljt begirt;.. " " . "fixing issues". I realize.,there .is buifd'rhg pressure to itnme~iafiely" atficlress tfi~ .a . .. ~. compensation (sues;." Hciwever, you will se~.that our a~proac,~ ~rs# emphasizes;"" " ; ,. objectively assessing"zthe situation first before wire tiegiriyrecommeriding ~mprcaverrient " .: .initiatives. You must diagn©,sis b~fore,presc~ibing. '; ~ . , : - e j j ~7 (~ y~j ()tp~ }/~ (~,yr~]~l/~ e~ y~/~(~( ~y~ „~ j }~ p /+~ ~~jw~+ { (] yyt ;~ f~ k 5 ~ ;~y~'{~.y~ jl, ~yn ~l /~f/~i./ ~~ t17l~trfiVV iV 1~7ViY~i G ~fVNR ~fI i" ~ ~YM~M7 V~~~l[ ~~~~//!~4 ~i17 i/l/~~i;~~3fitl/~I/~ ~i/Li ~._ Albe~' Etnsteln.' '.. .. .; . ,, This document is meant to serve as a first "draft" of recommendations on approach and deliverables that will provide a foundation for further discussion and clarification. There are many components that make up comprehensive Compensation, Performance Management and Recruiting and Selection systems and there are many elements of both systems that need to link effectively to each other (e.g. performance appraisal and bonus programs that are aligned to performance goals). The continuum relative to these systems is also very broad, from what we call "base" compensation and performance management systems to very sophisticated systems. These systems must be customized to fit the culture (vision, values, beliefs, etc.) of the organization and a realistic assessment of the amount of time, energy and focus the leaders are willing to devote to these systems must be determined. To clarify this point, Jack Welch was personally committed and drove a very sophisticated and enormously 2 . ~~~~ ~'~~f.>~ra5:~l flf ~~rvic~~ ~~6~ C.;c~t~r~s~.y (.it~~~r'r~~~a~r~~ -- ~:c~~;s~sltin S~~uices time consuming performance management system at General Electric. We have worked with other CEO's that simply did not believe that the cost/benefit of such sophisticated systems was worth it and elected a more "scaled-down" version. Many organizations make a conscience decision not to adopt a "best practice" model after they come to the reality that their organization (or them) may not be ready and/or willing to invest the time, focus and energy and instead decide to adopt more of a base approach and that's o.k. Even well executed base systems can have a significant impact on organizational performance and culture. We feel it's more important to implement systems that will "stick" and become institutionalized and receive strong management support, rather than attempt to integrate systems into an organization that are felt to be "too much" and therefore not receive the required management support and ultimately fail, resulting in the "program of the month" attitude. The importance of this point is to emphasize that we will present the full spectrum of best practices in the compensation, performance management and recruiting areas and ensure the selection of specific practices to be implemented in Eagle County is grounded in solid due diligence about what will stick and become part of the fabric of the culture. There are a number of very important, high-impact systems that must be in place to drive and sustain a high performance organization and an effective, fair and well understood and administered compensation system is one of them, as well as a complementary performance management system. In fact many organizations feel and manage both systems as one, with the compensation component being a sub set of an overall performance management system. The argument is really more academic, the important point is that the two are well integrated and aligned with each other and to the organization's purpose, vision, values and strategy. The importance of selecting high-impact drivers in the overall performance management system, moreover in ahigh-performance culture, is critically important and has been well document in ground-breaking research conducted by the Corporate Leadership Council. The research identifies106 performance management strategies than were then grouped into 7 Keys to High Performance. The research divides the 106 strategies into four levels (A, B, C and D) based on their magnitude of impact on individual performance. Certain performance management strategies are clearly more important to performance improvement than others, and selection of the right (or wrong) strategy can have significant consequences for overall pertormance of the workforce. For example, A-level strategies improved performance by a remarkable 25.0 percent or more, while D-level 3 °'~ i~'~ ~~~aos~i o~ Serv=.c ~~: ~~1 ~~ur~tty ~u~r~~~~en; __ ~r~st~~tir~w 5rvsc~s strategies can actually have a negative impact on employee performance. The key is to effectively implement the correct, high-impact levers. The 7 Keys to High Performance Relevant Background: As a result of discussions with the County Commissioners over the last couple of weeks issues and concerns have surfaced regarding the County's overall compensation system. Specific concerns have been voice relative to compensation philosophy, the approvals and protocols used to grant salary increases, the use of out-of-cycle salary increases, compression and bonus and merit pay. On the other hand I have also seen documents that look to begin to discuss many of these issues: • Compensation Compression Options - MSEC • Administrative Regulation 2008, Compensation Planning -DRAFT o Outlining the purpose, policy, procedure of compensation planning • Eagle County Market and Salary Range Analysis Methodology o Addressing salary surrey approach, salary structure, position evaluation and annual updates • Situation, Action, Outcome Document (no date, looks like sometime in 2008) o Addressing many of the issues previously discussed o States that, "Department Heads draft the mechanics for Commissioner review and approval prior to the adoption of the '09 budget". What were the results of this work? • Sample Total Compensation Philosophy o Outlining 7 different options • Eagle County Directors' Retreat -conducted by Caroline Fisher and Chris Moffet 4 ~,E:~ac~s~~ ~f ~et"tti~:~s ~:~~;~ Cc,t~~~~y c~v~~r~~~n~nt - t~n~ultis~ Services o What great organizations do regarding Compensation Programs o Identify what the County is trying to do accomplish with the Compensation Plan and tying that back to Purpose. o Pieces that go into the plan and how they fit together o Creating a funding strategy o Create a commitment to the plan o Compression discussion Additionally, concerns have been raised about the performance management system- how effective goals cascade down through the organization and are linked to the compensation system, vis-a-vis how effectively employee's merit pay and ratings (and bonus where applicable) are tied to performance against goals. An effective, comprehensive performance management system is one of the key levers in driving a high-performance organization and diligence in selecting the "right" components will be important. I have also seen and heard of some exceptional work relative to laying out a very impressive, comprehensive and sophisticated vision for the future of the County with the Sustainable Communities 2010 initiative, Mission, Vision and Values. Excellent work was also seen at the Department Head level with the goal setting work, Getting to Great. I also heard that work was done years ago at the Department Head level creating Key Results Areas (KRA's) outlining critical areas of performance in each job throughout the County. However, it's unclear at this point if the KRA are still being effectively used. Caroline Fisher also shared with me that excellent work has been accomplished over the last couple of years at the department head level relative to tearing down the old silos that existed between departments and that now the respective departments are working much better together. In fact, a meeting has been organized where each department head is reporting out to the full group on their department's progress and successes. Caroline's team has also conducted extensive, top-shelf Leadership Workshops throughout the organization. Despite all the good work that has been done in the county around goal setting and performance feedback, dissatisfaction remains around the overall effectiveness of the performance management process. ~~~~~~~~ ~,-< <~~l~ ~..~ui"i~~f c~;,rer~~r~~e~ft-C:i~r~sa~ltir~~ S~rviees ,Eagle County Government" is not mane in .its dissatisfaction of their pei#orrrianc~ management system, Iri a survey, "r~nduc#ed by the Adersan Hui~a~ Capital ~ra~ap, only ~ percelnt of managers were eery satisfied with their company's performance . management process and aniy ZQ°~~ of employees say: their organizatlcari "provides" good;.. feedback, coaching and goal•seting. : ,t Overview of Our Approach: It is important to first understand what the current state of the organization is before any recommendations for improvement are offered or suggested. As Stephen Covey states in his 7 Habits of Effective People, one must "Seek First to Understand Before You Are Understood" -our approach intends to do just that with a comprehensive assessment of the current situation. ~:~~.E w .€; ,L~. „,.„ verify wiitinge~ Deuelnp plan iar stint Qbjeetive{y assesa t#te sitttetit~t ''"~ f~erify yttar ~tt~tis rt Deliverables: Phase 1 -Assessment 1. Conduct an objective and accurate assessment of the current situation Based on the background material I mentioned above, it appears that a lot of good work has started in the Compensation, Performance Management systems. The assessment will uncover what the root and attributing causes of the on-going dissatisfaction is in these areas, as well as an assessment of the strengths and weaknesses of these systems. Given the complexities of these systems I think it advisable to evaluate the recruiting system after these two systems have been evaluated. I will also learn important information about the current recruiting system by 6 ,.• ~~,~" ~?~;i~ ~:~ut€ty c~~~~r~~r~~~~~t-Curts~a6tirt; S~r~ie~s facilitating the search, selection and orientation of the HR Director and County Manager if selected to do so. Our approach is to conduct 1 - 1 1/2 hour (probably more with senior leaders), one on one, structured interviews with across-section of approximately 40 - 50 staff. This provides a large enough sample to validate themes. I will also request back up documentation (e.g. goal documents, competitive analysis on base salary, bonus, COLA, health benefits and vacation, performance appraisals, merit and bonus increase analysis, compression analysis, etc.) in order to verify the assessment feedback and develop recommendations. 2. Recommendations The assessment will outline recommendations and a plan for success going forward with specific options outlining: a total pay philosophy, competitive positioning, compression, salary increase approval process and protocols, and critical, high- leverage performance management strategies, including a communication, buy-in and education plan for key stakeholders. 3. Assessment of willingness and ability to implement An objective assessment of the organization's ability and willingness to effectively implement the AGREED TO plan going forward and what "must happen" in order to maximize the chance of success. 4. Presentation of findings and recommendations A facilitated discussion with the Commissioners (and other key stakeholders as the Commissioners feel appropriate) to review the assessment findings, recommendations and to brainstorm and decide on a critical path, focusing on how to achieve input and buy-in from the organization, keeping the following axiom in mind - "What is imposed is opposed". Phase 2 -Execution Plan the details of executing the improvement actions agreed to in step 4. At this point we clarify our (Smith Advisors) role in the design and implementation of specific improvement processes and systems. Some of our clients feel that they have the required internal resources and expertise to design the systems and want us to play more of a "coaching/facilitation" role. Other clients conclude that they either don't have the expertise Q ~~ ~ ~ ~ ' ~ z ~ ~~~ > ~,,;s C$~~ar~ty ~~:<v~e ~~rt~~~rtt - CwarFE.~~ltir~~ Servies and/or time to design and implement the improvement actions and request that we design and help facilitate execution. Phase 3 -Monitor and Adjust A critical phase to ensure programs and systems are effectively implemented, updated, road blocks removed, adjustments made and an on-going communication plan instituted to keep the organization appraised on progress. Deliberate and conscience links back to the Vision, Values and Communities 2010 (and any other foundational documents) will be important at this point. It is important here that leadership assertively communicates progress being made. Employees like to be a part of successful and winning organizations that say what they're going to do and then say what they've done. Recruitment, Selection and Orientation and Assimilation of the new HR Director and County Manager Specific deliverables would be: • Design and facilitate a selection process that results in ownership and buy-in with critical stakeholders (including Department Heads) of the selection of these positions (unless you already have a process you like). • Facilitation of our PDP Job Model, Applicant Screening, Job Matching and Candidate Interview tools to assist in the selection. These tools develop an "ideal" personality profile for the position and then employ an on-line assessment which the prospective candidate completes. The candidate assessment is then compared to the ideal profile for each job and a % job match report is generated explaining how effectively each candidate compares to the ideal profile. Then a list of interview questions is generated to explore any significant variations from the ideal. • Design and facilitate an assimilation process that orients the new hires around the history and legacy of the organization, an overview of the organizations current strengths and weaknesses (Caroline's perspective would be invaluable here), how the BoCC wishes to work with the new hires (likes, dislikes, key priorities, hot spots etc) and facilitate a new leader assimilation meeting with the new hires and their direct reports. The purpose of this process is to cut down the amount of time it typically takes a new boss and their subordinates to "break the ice". This process allows the new leader to quickly establish their values, standards and how they like to work, which can take 2-6 months in some cases. 8 ~~°=wp~~~~ t~;~~~=,~iee~ ~:•~,~E' ~r(~3:.~€"~?3f ~aC~ttt~i'[1a~1~'!1~ --~.t?l1SUP$.It't~ S~i"VS~~"'S Professional Fees: • Phase 1 ~, . ~~ ~~~~ Fees for phase 1 would be a minimum of $39,000 and a maximum of $50,000 including expenses for travel and copying. • Phase 2 & 3 Fees will be developed and presented after the specific success plan going forward is discussed and agreed to. • Recruitment, Selection and Orientation of HR Director and County Manager $250/hour plus expenses Thank you for your consideration of this proposal and I am excited to help you take Eagle County Government to the next level. I look forward to further discussions. Sincerely, Rick Smith President Smith Advisors 9