HomeMy WebLinkAbout11122019 City Council Laydown - 2 Messmer Study / Q ► ► I Z & l) LaAjdovivi
2 (w4&4-)
Questions concerns about wage study.
1. The study differed from what was stated in the intent of the RFP, could the
firm show results showing the cities on the peninsula alone to see if there is
a difference?
2. The data points the firm scored were dealing with the city's income and
population. Absent was factors related to cost of living such as cost of
groceries, fuel and rent.
3. The figure $130,000 has been told to me was set aside to cover potential
costs of wage study. This amount would equal approximately $1500 per
employee for the year which is not enough to cover the new deductible for
their medical insurance if they have a family. ($2000) Not to mention the
higher out of pocket expenses such as prescription costs lowered dental
benefit etc.
4. The city saved $470,000 on health insurance for the employees. That is a
reduction to the employee's overall compensation package. The ways
employees are compensated are wages, leave, healthcare and retirement.
By reducing the health care benefit, if you don't increase the wages to
match the increased cost the employees are essentially getting a pay cut.
5. The city has had a 38%turnover rate in the last year and it was worse in
previous years. The police department has turned over 15 positions since
2015. Turnover is costly due to training costs, overtime, and loss of
productivity. For example, it costs $46,000 dollars to train a police officer.
6. The employees had their pay frozen for 3 years from 2015 to 2017.
7. The $5 an hour flat raise the police officers received in 2017 costs the city
approximately $100,000 dollars. That raise has had a significant impact on
the lives of the officers and has helped the department attract and new
officers and retrain our current officers. We are very grateful to council and
the citizens of Seward for that. That change affected 9 positions affected
the city has over 80 positions. $100,000 will not cover the changes that
need to happen to reduce turn over and hence reduce training costs,
overtime costs, and costs related to productivity.
8. The IBEW recently received a 3% pay raise for their employees as well as an
additional $1 an hour put into their retirement account by the city. They
are receiving CPI wage increases in the following 2 years.
9. The city manager was hired at $140,000 while the last permanent manager
left at $126,000 that is approximately a 10% pay raise.
10. If would also be nice to cover cost of living increases for 2020 and 2021.
Wage growth this year nationally was 3%.
11. Simply put, setting aside $100,000 to $130,000 is not going to be enough
to accomplish the goal of making pay competitive and helping employees
cover the increased out of pocket costs of the new health care plan.
Employees would be moving backwards, and we will experience more
people leaving the city.
12.1 would humbly ask on behalf of the SPEA employees that if there is any
way possible for you to set aside $300,000 for upcoming negotiations
between the city and SPEA. This amount still leaves the city with a $170,000
savings from the health care change and it does more to make the
employees whole after the loss of better health care coverage.
13.Thank you very much for your consideration.
OM*
CITY OF SEWARD
REQUEST FOR PROPOSALS (RFP)
COMPENSATION, POSITION CLASSIFICATION, AND LEAVE STUDY
INTENT AND GENERAL INFORMATION
The City of Seward solicits proposals from qualified consulting firms to conduct a compensation,
position classification, and annual leave study. The purpose of the requested studyis to provide
recommendations the City of Seward to ensure the City's compensation, position classification,
and annual leave provisions are consistent with other municipal employers on the Kenai Peninsula
Ad private employers in the Seward area.
SSION AND DEADLINE
4 a
Consultants responding to this Request for Proposals are hereby notified that all proposals
submitted and information contained therein and attached thereto will not become pu
information until selection of the successful Consultant.
Except as otherwise provided above, no trade secrets or commercial or financial information shall
be accepted in confidence unless, and then only to the extent, the City specifically agrees in writing:(
to the contrary.
All proposals must be received mailed or hand-delivered by 3:00 p.m. Friday, March 8, 2019. Six
1 .: 6) original hard copies and one electronic cony (flash drive or disc_' shall he submitted try
CITY OF SEWARD,ALASKA
Top Comparables
(Score of 50 or Higher)
Municipality Prim. Gov. Max. Sales Max. Property Max. Total Taxable Max. Median HH Max. Population I Max. Total
Exp. Points Taxes Points Taxes Points Property Value Points Income Points Points Points
(millions) (millions) (millions) (millions)
Seward $54.6 25 $5.2 15 $1.2 10 $367.9 20 $70,000 15 2,768 15 100
Cordova S30.7 18 $3.2 11 $2.3 8 $195.8 15 $107,771 11 2,302 15 78
Valdez $73.8 25 $0.0 0 55.2 0 $270.0 20 580,357 15 4,032 15 75
Palmer $18.4 6 $7.0 15 $1.3 10 S438.3 20 $59,718 15 6,053 7 73
Unalaska' $65.2 25 $11.3 7 $6.2 0 $590.5 15 $92,083 15 4,689 11 73
Kodiak $33.8 18 $10.9 7 $1.1 10 $662.5 15 $67,571 15 6,124 7 72
Nome' $16.5 0 $5.1 15 $3.1 2 $317.2 20 $78,507 15 3.659 15 67
North Pole $12.0 0 $4.0 15 $0.4 2 S251.6 20 $69,806 15 2,145 15 67
Dillingham' $12.6 0 $2.9 11 52.3 8 $195.8 15 571,146 15 2,395 15 64
Wrangell $20.0 6 52.6 11 S1.7 10 $147.1 5 S52,986 15 2,458 15 62
Homer' $23.8 12 $7.9 11 $3.5 2 $759.6 10 $57,471 15 5,136 11 61
Ketchikan $81.9 25 $11.3 7 $5.7 0 $776.3 10 $53,937 15 8,191 3 60
Soldotna $16.1 0 $7.1 15 $0.3 0 $572.5 15 $67,434 15 4,311 11 56
Kenai $25.8 12 $6.7 15 $3.9 0 $816.7 10 $58,732 15 7,098 3 55
Sitka $65.8 25 S11.0 7 $6.2 0 $1,074.0 5 $70,160 15 9,039 0 52
Prepared by GovHR USA
11/11/2019 Companies Need To Know The Dollar Cost Of Employee Turnover
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40,905 views I Aug 12,2018,07:00am
Companies Need To Know The Dollar
Cost Of Employee Turnover
0 Bill Conerly Contributor o
Leadership Strategy
I connect the dots between the economy...and business!
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I would roll my eyes when I heard that a company should know the cost of employee
turnover. Okay, I thought, for a particular business the cost is $14.3 million. What wou
anyone ever do with that figure?
An economist wants something a bit different: How much would the cost increase if
turnover worsened by one percentage point a year? How much would the cost fall if
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11/11/2019 Companies Need To Know The Dollar Cost Of Employee Turnover
turnover were improved by one percentage point? Now we have data for a profit-
maximizing decision: how much is it worth spending to improve turnover?
Turnover is generally considered bad, but McDonalds has built a business on high
employee turnover. They have optimized their systems to train employees to do a good
job and then leave in less than a year.
High turnover is not the right decision for every company, though. Costco believes that
its low employee turnover is a great benefit.
Today In: Leadership v
Whichever strategy a business pursues, it should always be looking for cheap ways to
improve turnover. Take the local McDonalds, good at training workers. A person with
six months on the job is still more productive than someone is the first month of work.
McDonald's can get another month from its workers before they leave, then the
productivity difference is huge.
Key to improving employee retention is knowing turnover costs. Before embarking on
big programs, or even small programs, it's worth knowing how much benefit will accru
Those costs estimates need to be owned by operations managers and finance.
Operations people will implement the changes in first-level supervision that will
produce results. To motivate them, costs need to be something they have worked to
understand rather than figures given to them by outsiders. Finance personnel need to
believe the numbers and support spending money that will save even more money in
turnover costs.
Employee turnover is not just an issue for the human resources department. Operating
units feel the pain of turnover in productivity, product quality and customer service. Bi
the calculations are difficult, so finance personnel are probably best qualified. I suggest
team
incorporating people fr
om g p p HR, finance and operations. Where there are many
other people employed, like maybe a sales department, someone familiar with those
activities should contribute to the effort.
Human resources costs are the tip of the iceberg, so let's look at them first. When an
employee leaves, there's an exit interview and processing of the termination, including
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11/11/2019 Companies Need To Know The Dollar Cost Of Employee Turnover
data to be entered into the benefits system.
Then the open position may be advertised, resumes reviewed and interviews arranged.
In conjunction with the hiring manager, HR may work up an offer. HR or a training
department may conduct an orientation training, along with enrollment in benefits
programs. So far, these costs can be estimated fairly easily, especially if one doesn't
expect an answer accurate to the penny.
The bigger part of the iceberg is outside of HR, in the work units where the new
employee will land.
Before the new employee is hired, though, the open position will probably be covered b
other
e employees, diverting them from their regular work or requiring overtime. Or
activity is simply not done. If it's a sales position, that's a direct hit to the top line.
Longer lead times on products could be costly as well. Thrown in a bit of stress to the
employees near the vacant seat.
Once the new worker is hired, there will be on-the-job training. The manager will sperm
time guiding and supervising the new person. Co-workers will probably help by
answering questions, lowering their own productivity. And the new worker's
productivity—both output and quality—will almost always be lower than that of
experienced employees. Measuring these costs is difficult, but a clever analyst will corn
up with rough estimates. Don't expect perfection, and don't assign to the task a person
who is overly ust not
� possible.
III
Thinking about these costs—productivity, supervision of new workers, and maintaining
quality—points to the importance of operations people in the assessment. The
complexity of the analysis points to having a good finance analyst on the team.
Off-the-shelf estimates are available, which might set the cost of an entry-level positior
turningover at opercent of salary;5 mid-level at 125 percent of salary; and senior
executive over 200 percent of salary. There are also calculators that you can find onlinE
to help you with the arithmetic, including the well-known Bliss-Gately spreadsheet.
However you estimate your own costs, it's imperative that both operations and finance
people come to own the estimate. They need to believe it is real. For the operations
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11/11/2019 Companies Need To Know The Dollar Cost Of Employee Turnover
people, lower productivity and higher supervision costs are direct impacts on their
performance. The finance people won't cheap-shot employee retention efforts when di(
have seen the real dollars and cents costs of employee turnover.
Follow me on Twitter. Check out my website.
ii• Bill Conerly
I decided to become an economist at age 16, but I also started reading my grandmother's used
copies of Forbes. After degrees including a Ph.D. from Duke and three years ... Read More
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