In 1993, the Arlington Water Utilities Department reorganized a major operating division and opted to change the method of salary compensation for the division. The objective was to meet changing workforce needs and allow the utility to continue providing cost-competitive services for a rapidly growing population that, at that time, exceeded 290,000. By the end of fiscal year 2002, the Skill Based Pay (SBP) program had been in place for eight years. During this time, the program continued to evolve to meet the challenges of changing work demands and a growing population, now more than 350,000. Based on predetermined performance indicators, the financial and productivity gains realized through this program have saved Arlington ratepayers millions of dollars. Includes table, figures.