Segal audit finds lengthy reclassification delays and recommends market study, new compensation philosophy

Consultants from the Segal Group told the Montgomery County Council Audit Committee that Montgomery County's classification and compensation systems largely work but show notable weaknesses that risk pay inequities, long delays for employees seeking reclassification and operational strain.

The Segal team summarized a multi‑part audit that combined employee survey results, reviews of study files, a pay equity analysis and a market assessment. "We found that the overall, the county was market competitive, paying at 101% of the market," Andrew of Segal said, reporting that the firm examined a sample of 77 classifications and reviewed compensation actions from 2019 to 2024.

Why it matters: the county's classification structure affects tens of thousands of employees, promotion pathways and compensation budgeting. Segal told the committee that long delays in reclassification reviews create morale and potential liability concerns when employees are effectively working out of class for extended periods.

Key findings and evidence: Segal reported an average duration of 321 days for the individual classification study files it received and an average of 440 days for occupational requests. The consultants found that roughly 77% of class specifications reviewed had not been updated in more than 10 years and only 22% had been converted to the post‑2018 template. A compression review of roughly 12,500 employees showed nearly 60% paid close to or above their pay‑range maximums; the review also identified instances in which employees were paid at or above the pay level of their direct supervisors.

Recommendations and next steps: Segal urged the county to adopt a written compensation philosophy to define whether Montgomery County intends to lead, match or lag the market and to direct selection of peer organizations for benchmarking. The consultants recommended pairing the county's Qualitative Evaluation System (QES) with a comprehensive market assessment, updating job specifications on a rolling basis, shortening and redesigning classification processes to reduce average review time, improving communications and training for managers and employees, and instituting routine pay‑gap analyses.

MSPB and OHR responses: Ed, speaking for the Merit System Protection Board, praised the audit but said many 2018 recommendations were not implemented and urged recurring implementation updates so progress 'is not lost with administration changes. The board recommended recurring progress reports so MSPB and the public can track implementation. "We want to make sure these corrections and recommendations aren't punted down the road," Ed said.

Tracy Anderson, Director of the Office of Human Resources, acknowledged the classification plan was long neglected and described steps to rebuild internal capacity, noting a strategic roadmap for fiscal years 2025–27 that lists classification and compensation as priorities. Anderson supported a biennial reporting cadence to allow time to collect data and show measurable change but said OHR will cooperate with MSPB and the council on information requests.

Council reaction and follow up: Council members pressed for a longitudinal workforce analysis to detect promotion and classification disparities over time. Segal said the audit was a "picture in time" and recommended a follow‑up longitudinal study. Committee members also discussed the tradeoff between more frequent progress updates and giving OHR time to demonstrate substantive changes. The audit committee indicated it may write a letter or otherwise recommend that the county executive consider changes to the personnel regulations to institutionalize reporting and follow‑up.

What happens next: Segal offered to return for follow‑up briefings. MSPB, OHR and the council discussed options for periodic reporting and additional studies; no formal vote was taken at the Audit Committee meeting.