TO: Honorable Mayor and Members of the City Council
ATTENTION: Ryan Smoot, City Manager
FROM: Dana Hang, Human Resources and Risk Manager
SUBJECT: Consideration and possible action to award a contract to Gallagher Benefit Services, Inc., to conduct a Comprehensive City -wide Classification and Compensation Study and authorize the City Manager to execute Agreement File No. 1122 in a form approved by the City Attorney.
Date: February 9, 2026
EXECUTIVE SUMMARY
The Human Resources and Risk Manager is seeking approval from the City Council to authorize the City Manager to execute Agreement File No. 1122 , in a form approved by the City Attorney, with Gallagher Benefit Services, Inc., to conduct a city-wide classification and compensation study.
RECOMMENDATION TO CITY COUNCIL
1) Authorize the City Manager to execute Agreement File No. 1122 with Gallagher Benefit Services, Inc., in a form approved by the City Attorney; or
2) Alternatively, discuss and take other action related to this item.
FISCAL IMPACT
Funding for Classification and Compensation Study in the amount of $154,800 is included in the approved budget for fiscal years 2025-2027 under Account No. 010-42054-1350.
DISCUSSION
As part of the FY 2025-27 Adopted Budget and Strategic Plan, the City Council set identified its desire to conduct a Classification and Compensation Study to identify ways in which the City can strengthen employee recruitment and retention efforts and enhance service delivery to the community.
The City’s Strategic Plan, Goal 3, Continue Investing in a High -Performing and Efficient Team at City Hall emphasizes the City’s commitment to building and maintaining a strong, effective workforce. Objective 3.5 specifically calls for the City to conduct a full classification and compensation study.
15-C
Staff Report – Award of Contract for Comprehensive Classification & Compensation Study February 9, 2026
DISCUSSION – Continued
The City’s last comprehensive classification study was completed in 2015 by Koff and Associates (the predecessor to Gallagher). Given the competitive labor market and evolving workforce expectations, and changes in labor regulations over the last ten years, a comprehensive review of the City’s existing classification descriptions and compensation structure is both timely and warranted. Such studies are essential for understanding the City’s current classification structure, identifying outdated or misaligned job specifications, and developing strategies to support long-term workforce stability. The study also provides a foundation for competitive compensation practices that help attract and retain qualified employees. Additionally, the study will create transparency for the public regarding the roles and responsibilities of employees.
To initiate the study, the City consulted with representatives of the City’s labor groups, and after incorporating their feedback, issued a Request for Proposals (RFP) on December 30, 2025, with a submission deadline of January 15, 2026. The City received seven proposals from qualified consulting firms. The Human Resources and Risk Manger reviewed all proposals, including methodology, qualifications, municipal experience, and cost. Following the review, staff negotiated with Gallagher Benefit Services, Inc. to refine the scope of work and overall cost. Gallagher submitted a revised proposal reflecting a $43,500 reduction from their original cost estimate, resulting in a more cost -effective and competitive proposal. The Human Resources and Risk Manger recommends that the City Council award a contract to Gallagher Benefit Services, Inc. (formerly Koff and Associates) as the best overall choice based on their extensive experience, in-depth knowledge, understanding of compensation standards, and quality of work.
The classification and compensation study will be a comprehensive, multi -phase effort involving data collection, employee and labor group engagement, position review, and market analysis. Given the depth of work required, the process is expected to span approximately ten to eleven months. Staff anticipates that Gallagher will conduct its analysis throughout 2026, with a final report delivered toward the end of the calendar year. This timeline will allow the City to incorporate the study’s findings into futu re budget planning and ensure that any recommended updates to the City’s classification and compensation structure are thoughtfully evaluated and strategically implemented.
The study can also assist the City with salary and benefit negotiations, as the City’s current Memorandum of Understanding (MOU) with its employee groups expires on June 30, 2027. The formal study would only advise the City on its standing with similar cities and propose salary changes for consideration. The City Council has the ultimate authority to modify the City’s resolution.
©2025 Arthur J. Gallagher & Co
City of Bellflower
Classification and Compensation Study
Cost Proposal No. 001
January 28, 2026
Mr. Georg S. Krammer
Managing Director | Public Sector
2121 N. California Boulevard, Suite 350
Walnut Creek, CA 94596
510.658.5633 | [email protected]
Gallagher Benefit Services, Inc. | ajg.com
©2026 Arthur J. Gallagher & Co The Gallagher Way. Since 1927.
Table of Contents
Cover Letter ..................................................................................................................................................................................... 1 Cost Proposal .................................................................................................................................................................................. 2
1 | ©2026 Arthur J. Gallagher & Co The Gallagher Way. Since 1927.
Cover Letter
January 28, 2026
Ms. Dana Hang
Human Resources and Risk Manager
16600 Civic Center Drive
Bellflower, CA 90706
Dear Ms. Hang:
We appreciate the opportunity to present this proposal regarding the services Gallagher’s Human Resources & Compensation Consulting practice can offer the City of Bellflower (City). Gallagher is highly capable and qualified to work with the City based on our extensive experience with public sector organizations across the country, including the City itself for many years. We would consider it a privilege to serve the City in this capacity.
It is our understanding that the City is seeking a comprehensive classification and total compensation study.
We believe we will provide the City with the most diversely experienced project team of any consulting practice in the country, which enhances the solutions and recommendations we will provide on this engagement. The questions and perspective provided by our team ensure we anticipate any issues the City may face throughout this project, as well as the ongoing management of the updated classification and compensation system.
We have prepared the following proposal in response to your request. We appreciate having the opportunity to submit this proposal and look forward to assisting the City of Bellflower in this engagement.
Sincerely,
Georg S. Krammer
Managing Director
2121 N. California Boulevard, Suite 350
Walnut Creek, CA 94596
510.658.5633 | [email protected]
2 | ©2026 Arthur J. Gallagher & Co
Cost Proposal
We believe that our methodology and implementation success rate is attributable to the significantly greater level of contact we have with employees, employee representation, management, and the governing body. The time we commit to working with employees (orientations and briefings, meetings with employees via personal interviews, sharing of compensation survey data, etc.) results in significantly greater buy-in throughout the process.
It has been our experience that the time, money, and resources invested in stakeholder communication throughout the study are time, money, and resources saved during implementation. Our goal is to conduct each study the right way the first time.
To create efficiency and cost savings for our clients, as well as operating as green an organization as possible, we often conduct our studies virtually. Our cost proposal assumes that all meetings and presentations will be conducted virtually/remotely and no onsite travel to the City offices will occur. Should the City desire onsite meetings, our per diem cost for onsite meetings based on travel time and market rate travel cost are outlined below. Our fees to conduct the study outlined above (including out-of-pocket expenses) will be $154,800. The cost proposal is a fixed fee and will be billed in six equal instalments of $25,800 based on agreed-upon milestone completion. The first installment invoice for $25,800 will be sent after contract execution.
The table below outlines the price per phase.
Phase I: Classification Study Fees
Ongoing Project Status Meetings throughout the Study
Milestone A: Project Kickoff Meetings, Orientations, and Initial Documentation Review Includes virtual meetings and ongoing project management meetings throughout.
On-site meetings are available at an additional cost*
$8,400
Milestone B: Collection and Review of PDQs and Employee/Supervisor/Manager Interviews $27,600
Milestone C: Classification Concept, Preliminary Allocation, and Draft Class Description Development $43,200
Milestone D: Facilitation of Draft Class Description Review, Finalization of Classification Plan, and Draft of Interim Report and Final Report
$13,200
TOTAL COST (Including all tasks) for Phase I will not exceed: $92,400
Phase II: Total Compensation Study Fees
Milestone A: Determination of Survey Elements and Market Survey Delivery (this assumes up to 15 comparators, up to 42 benchmark classifications, and total compensation including benefits)
Includes virtual meetings and ongoing project management meetings throughout.
On-site meetings are available at an additional cost*
$43,200
Milestone B: Draft Compensation Findings/Stakeholder Review and Feedback $10,800
3 | ©2026 Arthur J. Gallagher & Co
Milestone C: Development of Recommendations, Final Reports, and Presentations $8,400 TOTAL COST (Including all tasks) for Phase II will not exceed: $62,400 TOTAL PROJECT COST FOR PHASE I & II (Including all tasks) will not exceed: $154,800 *On-site meetings are available at an additional cost.
Our cost proposal does not include time to support the City during any labor negotiations that may follow this study. If we are needed for this work, our composite hourly rate will apply and we will charge on a time-and-materials basis.
Our study costs are directly derived from estimating the number of hours needed to perform the work and the level of the consultant charged with performing the work. Gallagher typically bills monthly up to the maximum of each deliverable. Please note, as phases sometimes run concurrently, a phase may not be completed at the time it is billed. All expenses are included in this quote.
Should the City wish to have additional on-site presentation days or meetings, the estimated cost would be $2,000-$4,000 per day, depending on which level of consultant is required and for how long. Any change to the scope of the assignment (beyond what is described above) as well as other work requested beyond this assignment will be billed based on our hourly rates unless we mutually agree on a fixed fee for the additional work.
Hourly Rates:
For projects with an estimated budget of $10,000 or less, the following is our rate schedule:
$310 per hour for Managing Director
$280 per hour for Project Manager
$260 per hour for Senior Consultant
$240 per hour for Consultant
$230 per hour for Associate Consultant
$215 per hour for Support Specialist
$145 per hour for Support Assistant
$120 per hour for Office Assistant
For projects with an estimated budget of more than $10,000, our composite hourly rate of $240/hour will apply.
3-Year Composite Rate Table:
Composite Rate Year 1 Year 2 Year 3
$240 $255 $270
3-Year Hourly Rate Table by Classification:
Role Year 1 Year 2 Year 3
Managing Director $310 $330 $350
Project Manager $280 $295 $310
Senior Consultant $260 $275 $290
Consultant $240 $255 $270
Associate Consultant $230 $245 $260
Support Specialist $215 $225 $235
Support Assistant $145 $155 $165
Office Assistant $120 $130 $140
* We reserve the right to increase our hourly rates on an annual basis based on our regular rate adjustment schedule.
4 | ©2026 Arthur J. Gallagher & Co
Signature Page
Gallagher Benefit Services, Inc. intends to adhere to all of the provisions described.
This proposal is valid for 90 days.
Respectfully submitted,
By: GALLAGHER BENEFIT SERVICES, INC.
State of California
Georg S. Krammer January 28, 2026
Managing Director, Compensation and Rewards Consulting
©2026 Arthur J. Gallagher & Co
Gallagher is pleased to submit this proposal to you. While this proposal is not meant to constitute a formal offer, acceptanc e, or contract, notwithstanding anything to the contrary contained in the proposal, Gallagher is submitting this proposal with the understanding the parties would negotiate and sign a contract containing terms and conditions that are mutually acceptable to both parties.
This material was created to provide accurate and reliable information on the subjects covered by should not be regarded as a complete analysis of these subjects. It is not to provide specific legal, tax or other professional advice. The services of a n appropriate professional should be sought regarding your individual situation.
Consulting and insurance brokerage services to be provided by Gallagher Benefit Services, Inc. and/or its affiliate Gallagher Benefit Services (Canada) Group Inc. Gallagher Benefit Services, Inc., a non-investment firm and subsidiary of Arthur J. Gallagher & Co., is a licensed insurance agency that does business in California as “Gallagher Benefit Services of California Insurance Services” a nd in Massachusetts as “Gallagher Benefit Insurance Services. ajg.com The Gallagher Way. Since 1927.