Segal audit finds slow reclassification process, recommends market-based pay strategy for Montgomery County

The Montgomery County Council Audit Committee on Oct. 14 heard a presentation of an independent classification and compensation audit ordered by the Merit System Protection Board and conducted by Segal. The audit found outdated job specifications, long delays in handling reclassification requests and a compensation system that is internally consistent but insufficiently tied to external market conditions.

The audit, contracted in 2023 and performed over calendar year 2024, examined classification and compensation processes, an employee survey, market comparisons for 77 classifications, pay-equity metrics and the county’s Qualitative Evaluation System (QES). Paula Singer of the Segal Group summarized the work and initial recommendations. “We think that the processes should be redesigned and shortened in order to give employees responses in a timely fashion,” Singer said.

Segal reported that managers and employees lack consistent access to job documentation: only about 33% of managers knew how to request reclassifications and 65% of employees knew where to find their job descriptions. For reclassification files Segal requested, the average time to complete an individual classification review was 321 days; average occupational requests took 140 days. Segal noted typical studies should take “no longer than 30 days.” The audit also found that roughly 77% of county class specifications had not been reviewed in more than 10 years and only about 22% had been converted to a new class-specification template introduced after the 2018 review.

On compensation, Segal found the county’s base pay generally near market (about 101% of market on average), no evidence of systemic pay bias by gender or race in their point-in-time analysis, but substantial pay compression: roughly 60% of employees were paid near or above their pay-grade maximum and there were more than 200 instances where an employee was paid more than their immediate supervisor. Andrew Kaczynski of Segal said the Qualitative Evaluation System “is effective in grading positions relative to each other within the county, it doesn't account for external market conditions,” and recommended pairing QES with an external market assessment and developing a county compensation philosophy to guide future studies.

Edward Hentflang Jr., executive director of the Merit System Protection Board, told the committee the board was concerned that recommendations from a 2018 audit had not been substantially implemented and urged ongoing oversight. The board recommended that the county personnel regulations be amended so that the Office of Human Resources provides the board with quarterly progress updates and an annual progress report on implementation; OHR proposed limiting updates to every two years. “We want to make sure incoming administrations are on notice that corrections do need to be made,” Hentflang said.

Tracy Anderson, director of the Office of Human Resources, said OHR shares MSPB’s goals and is building staff capacity. “When I joined the staff, there were perhaps two classification analysts and two compensation analysts. The county has been intentional about changing that,” Anderson said, describing efforts to hire staff, improve training and integrate market information. Anderson said the 321-day average “is no longer the case” and that OHR has changed how it communicates and manages reclassification requests, though she asked for resources to complete the work.

Council members asked Segal and county staff about the audit’s scope and possible follow-up work. Segal said its study was a “point in time” review of FY 2019–2024 compensation actions and that while it looked at every employee for pay-equity regressions within the project scope, a longitudinal study of workforce demographics and promotion pathways would be a recommended follow-up to examine historical trends in pay and promotions. Council Vice President Jiwanda and others raised the potential for technology (including AI) and for a clarified, measurable standard to keep future administrations accountable for implementation. Segal recommended repeating audits every three to five years depending on market dynamics.

The committee did not take formal votes during the presentation. MSPB and OHR agreed to continue the conversation and provide follow-up materials; MSPB said it may press for more frequent reporting from OHR so the board has evidence of implementation and a record should future boards seek to delay audits.

The audit and ensuing discussion center on personnel processes that affect thousands of county employees and will inform budget and policy discussions as OHR seeks funds and authority to update class specifications, redesign pay ranges and execute a comprehensive market study.

Segal’s full report and the committee packet include detailed appendices and OHR responses.