An "Employee Continuity Strategy" was adopted by the City Council as a goal 2007. The goal was to ensure the City is able to retain and attract qualified employees to take the place of the people expected to retire. The first step towards achieving that goal was to evaluate our current situation žu thus the need for a Class and Compensation Study. Funds to conduct the study were allocated during last year's budget process.
Three years ago the City was facing a high level of employee turnover. At that time - before the recession really hit -- we were expecting to lose 20% of our workforce in less than five years. There were positions we had trouble filling with qualified people. For some positions the city was able to fill the vacancy yet the employee left after a short period of time. This is costly. The City invests in recruitment and training expenses and it can take as much as a year to recoup costs spent on training, certification etc. In one position, we had four different people fill the job in only five years.
There are two problems with turnover.
1) It costs money to hire people. For some positions, the cost might be modest, but for some jobs, it can be very expensive.
2) While the job is vacant, the work does not get done.
With the recession, turnover everywhere has slowed down - including at the City, but it's still a factor for jobs the City needs to fill and will be even more of a factor when the recession ends.
A Class and Compensation Study is done to determine the labor market value for similar jobs in similar environments. Potential employees are recruited from a certain geographic area - the labor market. The actual boundary of a labor market varies depending on the type of job, the organization and the industry. The study shows that some City of Ashland employees are underpaid and other employees are overpaid in our labor market. The challenge is to get those salaries in line with the relevant labor market.
Some of the work the City does is fairly ordinary and the positions could possibly be compared to positions in the private sector. The majority of the positions requires technical expertise and cannot be compared to the private sector because those jobs don't exist in the private sector žu water and wastewater treatment, search and rescue, civil and electrical engineering, expertise in State and Federal law, and more.
The City must be prepared to offer competitive salaries in order to hire the most qualified people who want to be in Ashland for the long-term. The goal is to pay public employees as much as is needed - and no more - to keep quality employees who are technically competent at their jobs. When the same positions are paid more by our competitors we risk loosing those employees and recruiting new employees. As the market changes so does the availability of qualified employees and salary levels. The longer the City waits to bring the salaries into alignment with our labor market, the further behind we fall and the greater the risk of retaining and recruiting qualified employees. The citizens of Ashland depend on the City to supply services not provided by the private sector and those services require qualified employees.
A word on benefits. Public employee benefits and salary increases are established, in large part, through negotiations with union groups. The pay and benefits for the non-represented group, primarily support staff, and middle and senior management are meant to be in step with these rates to maintain internal equity. Historically Oregon has been a "union" state and very supportive of the labor force. Historically, public sector jobs paid less and had better benefits and private sector positions have better pay with lesser benefits.
The gap is starting to narrow. Governments, including the City of Ashland, are working hard to bring down the costs of public employee benefits. This is very challenging and is much larger issue than can be solved with a study comparing public employee benefits with private employee benefits.
Finally, a word on timing. The two year study began before the recession. The study was completed after the recession was in full swing. Should we have waited to release the information once the recession had started to improve? Maybe. It may have been better to wait or it may have been worse to wait. Releasing the information now, means we can begin to take steps to remedy the issue. Waiting to release the information means we would have been that much further behind and it would take it longer to for us to bring us into alignment.
Key Points
Turnover
- Since 2004, the City's turnover rate has averaged more than 16% per year in regular non-seasonal employees. That number is expected to increase as more retirements occur.
- Since 1998, the City has replaced the following management positions: City Administrator four times, Police Chief twice, Public Works Director, IT Director, City Attorney twice, Assistant City Attorney four times, Community Development Director three times and currently the City is without an Electric Utility Director. The direct costs are approximately $30,000 for each recruitment and relocation expenses. The indirect costs are loss of productivity, loss of institutional knowledge, training and education specific to the field, understanding of the political dynamics of Ashland and the City infrastructure.
Previous Studies
- A similar class and compensation study with similar results was conducted in 1999. The study was never implemented.
- No evidence exists that a study was conducted prior to 1999. Most public employers, including universities, conduct a class and compensation study every 5-10 years to ensure they are competitive in their labor market.
Comparables and Competition
- The City of Ashland competes directly with Medford, Jackson County and Grants Pass for qualified skilled local public employees. The City competes nationally for upper management positions.
- Cities used as comparables in the study were selected for different reasons. Even though Medford and Jackson County are larger than Ashland, they, including, Grants Pass are Ashland's direct competition for the local skilled labor market. Forest Grove, Lake Oswego and McMinnville are of a similar size (but provide fewer services). Corvallis and Aracta have university and have similar demographics. Klamath Falls has a similar population and offer similar services.
- The majority of the comparable cities used in the study provided cost of living increases during the recession years. Most anticipate providing a COLA this upcoming year. Medford provided a 3% increase this past year and is scheduled to give 2.8% for the upcoming year. Ashland provided 0% last year.
- Ashland offers numerous services that cities of a similar size do not offer including water, wastewater, electric, emergency medical services, broadband, all of which require skilled and technically trained employees.
Impacts
- The study shows 70 positions that are underpaid.
- The study shows 30 positions are overpaid and should not receive cost of living increases.
- Waiting to bring positions up to market means the positions fall further behind as much as 25% to 30% rather than the current 10%.
- A majority of City positions in the study have not had a wage increase since July 1, 2008.
Timing
- Whether the study was released now during the recession or later, when the recession starts to the recover the information is the same.
- The longer we wait to bring the salaries into the market (whether it is an increase in salary or a salary freeze) the further behind we fall and the greater we'll have to make up.
