Staff Report
City Council
Item No. 5.A
Meeting Date: August 12, 2026
From: Asusena H. Soren, Human Resources Manager
Title: Approve a Professional Services Agreement with Gallagher Benefit Services, Inc. to conduct a Citywide Classification and Compensation Study
RECOMMENDATION:
To approve a professional services agreement with Gallagher Benefit Services, Inc. for classification and services and authorize the City Manager to execute the services agreement.
BACKGROUND:
Employees are the City's most valuable resource in delivering quality public services to the community. Maintaining an effective classification and compensation system is critical to attracting, retaining, and developing a highly qualified workforce.
Over time, organizational needs, technology, regulations, and service delivery expectations have evolved, resulting in changes to employee duties and responsibilities. Additionally, the public sector labor market has become increasingly competitive, making it more difficult to recruit and retain qualified employees. The City’s current classification and compensation structure has not undergone a comprehensive citywide review. As the labor market continues to evolve and recruitment and retention challenges persist throughout local government, it is important to ensure the City’s classification system accurately reflects employee duties and responsibilities while maintaining a compensation program that is equitable, competitive, fiscally responsible, and legally defensible.
Recognizing these challenges, the City issued a Request for Proposal (RFP) seeking qualified consulting firms to conduct a first ever comprehensive Citywide Classification and Compensation Study. The RFP garnered ten (10) responses, and of those three (3) were considered. Gallagher was selected as the most qualified to meet the City’s needs.
Gallagher will provide an independent evaluation of the City's classification and compensation system and recommend improvements based on industry best practices. The study is expected to include, but is not limited to, the following:
Review and analyze of all current classification specifications. Conduct position analysis through questionnaires and employee interviews. Evaluate essential duties and responsibilities.
Review the City's organizational structure.
Internal equity analysis.
External market compensation survey using comparable public agencies. Review of salary structures and pay ranges.
Review the City’s fringe benefits program, including health and welfare benefits, retirement benefits, leave programs, and other employer-provided benefits, and comparison of those benefits with comparable public agencies to assess overall market competitiveness. Review premium pays, incentives, specialty pays, and other compensation practices, as appropriate.
Identify salary compression, internal equity, and compensation alignment issues. Recommendations for classification revisions.
Recommendations for salary adjustments, salary schedules, and implementation strategies. Develop cost estimates for implementation.
Present findings to the Human Resources Manager.
DISCUSSION:
For the three proposals evaluated of the ten (10) proposals received from qualified consulting firms with demonstrated experience conducting classification and compensation studies for California public agencies, the evaluation scores are provided below:
RFP Respondent Average Score
Gallagher Benefit Services, Inc. 94.87
Transforming Consulting 70.50
CPS HR Consulting 70.92
Following an evaluation of qualifications, experience, project approach, references, and cost, staff recommends awarding the contract to Gallagher.
Gallagher was selected based on several factors, including:
More than 40 years experience performing classification and compensation studies for California municipalities.
Knowledge of California labor laws and public sector compensation practices. Proven methodology emphasizing employee participation, transparency, and defensible classification analyses.
Ability to complete the project within the City's desired timeline.
Gallagher is a full-spectrum, public-sector human resources services firm. They have been assisting cities, counties, special districts, joint powers associations, courts, educational institutions, and other public agencies with their human resources needs for over 40 years and have offices throughout California, the Western Region, as well as across the nation.
The study will involve significant collaboration among employees, supervisors, department directors, and executive management as well as recognized employee organizations throughout the process.
Gallagher Benefit Services, Inc. will conduct interviews, review position questionnaires, analyze organizational relationships, evaluate compensation data from comparable agencies, and develop recommendations supported by objective analysis.
The recommendations resulting from the study will assist the City in:
Improving recruitment and retention,
Ensuring classifications accurately reflect current work performed Promoting internal equity,
Maintaining external market competitiveness,
Supporting succession planning,
Enhancing organizational efficiency,
Reducing potential classification and compensation disputes, and Providing a legally defensible compensation system.
Implementation of any recommended salary adjustments or classification changes will return to the City Council for future consideration during the budget process or through separate Council action, as applicable. Approval of this agreement does not obligate the City Council to implement any future recommendations.
FISCAL IMPACT:
DESCRIPTION GENERAL
LEDGER
ACCOUNT
CODES
PROJECT
CODE
AMOUNT ONE TIME or
ONGOING
2026-2027
Classification and
Compensation
Study
100-100-130-
132-8600-8602 N/A 200,000 ONE TIME
FIVE-YEAR STRATEGIC PLAN:
Goal A – SERVE THE COMMUNITY WITH PRIDE AND DEDICATION
Objective: Through diversity, equity, and inclusion-driven employee programs and experiences, Cathedral City is the employer of choice with a workforce that is engaged, motivated, and respected public stewards.
ATTACHMENTS:
1. Professional Services Agreement
2. Proposal
3. Score Sheet