workforce trends presentation 4-20-2011

1

Workforce Trends in Coconino County “Then and Now”

A Presentation to the Coconino County Board of Supervisors

April 12, 2011

Presentation Overview

Financial Planning Trends and Status Workforce Trends Influencing Coconino

County County Workforce Characteristics Benefit Costs Workforce Indicators (i.e. Turnover and Vacancy

Rates) 2007 4-Phase Compensation Strategy

Plan Review and Status Update Present and Future Compensation Strategy Trends Where do we go from here?

Financial Planning Trends

Many of the messages from 2007still ring true today!

County’s Financial Flexibility is Restricted and Constrained

Growth in Mandated Expenditures Due to Funding Cuts

Rising Benefits and Retirement Costs Combined with frozen merit increases = Decreasing net pay

for employees Long-Term Plan is Necessary Focus on “Mission Critical” areas:

People and Infrastructure are essential to delivering service Trends Continuing in FY12 and Beyond

Coconino County Workforce Trends

Employee Characteristics Years of Service Years to Retirement Age Diversity


Years of Service County Wide (Total 985 Employees)

0100200300400500600

0 to 5Years

5.1 to 10Years

10.1 to 15Years

15.1 to 20Years

20.1 to 25Years

25.1 +Years

2007 20112007 2011Less than 1 Year 220 1021 - 2 Years 142 612 - 3 Years 74 953 - 4 Years 61 1174 - 5 Years 49 77

55%

46%

22% 25%

10%

15%

6% 8% 5% 4% 2% 2%

Retirement Eligibility

0

50

100

150

200

250

300

25+ 21-24 16-20 11-15 6-10 0-5 NOW

Years Remaining until Retirement

Nu

mb

er

of

Em

plo

ye

es

2007 (All retirement systems)2011 ASRS2011 PSPRS2011 CORP



Employees by Age Group Comparison 2007 & 2010

0

50

100

150

200

250

300

350

16 to 19 20 to 24 25 to 34 35 to 44 45 to 54 55 to 64 65 to 74 75 andover

2007 2010

Employment Projections by Age Group

05,000

10,00015,00020,00025,00030,00035,00040,000

16 to 24 25 to 34 35 to 44 45 to 54 55 to 64 65 andolder

1988 1998 2008 2018

Workforce Trends-US Labor Force

Group

Level Change

1988 1998 2008 2018 1988-981998-2008

2008-18

16 to 24 22,536 21,894 22,032 21,131 -642 138 -901

25 to 34 35,503 32,813 33,332 36,814 -2,690 519 3,482

35 to 44 29,435 37,536 35,061 34,787 8,101 -2,475 -274

45 to 54 19,104 28,368 36,003 34,343 9,264 7,635 -1,660

55 to 64 11,808 13,215 21,615 28,754 1,407 8,400 7,139

65 and older 3,285 3,847 6,243 11,082 562 2,396 4,839

Table 3.4 Civilian U.S. labor force by age-1988, 1998, 2008 and projected 2018 [Numbers in thousands]

Workforce Trends-US Labor Force

0100200300400500600700800

Black White Hispanic Asian AmericanIndian

Males Females


Diversity – Ethnicity & Gender

1%

74%

13%1%

11%

Benefit Costs

NAPEBT Health PremiumTrend versus National Health Premium Trend

$0

$100

$200

$300

$400

$500

$600

95-96

96-97

97-98

98-99

99-00

00-01

01-02

02-03

03-04

04-05

05-06

06-07

07-08

08-09

09-10

10-11

Plan Year

Mo

nth

ly E

mp

loye

e R

ate

NationalTrendNAPEBT

Benefit Costs

Northern Arizona Public Employees Benefit TrustHistorical Expenses and Budgets - Medical/Pharmacy

$2

5,9

34

,04

5

$2

4,0

77

,02

7

$2

2,6

34

,24

7

$2

0,0

22

,67

7

$25,230,167$25,746,105$23,219,887

$24,825,241

-$500,000

$4,500,000

$9,500,000

$14,500,000

$19,500,000

$24,500,000

2006-2007 2007-2008 2008-2009 2009-2010

Net Medical/Rx Claims Admin/Stop Loss/Other

IBNR Reserve Change Trust Contributions

Benefit Costs

Retirement Contribution Rates-Employer

0.00%5.00%

10.00%15.00%20.00%

25.00%30.00%35.00%40.00%

FY 05 FY 06 FY 07 FY 08 FY09 FY10 FY11 FY12

ASRS PSPRS CORP EORP AOC

Benefit Costs

Retirement Contribution Rates-Employee

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

11.00%

12.00%

FY 05 FY 06 FY 07 FY 08 FY09 FY10 FY11 FY12

ASRS PSPRS EORP CORP/AOC

Benefit Costs

FY1210.75

%

FY119.85

%

FY109.40

%

FY099.45

%

FY089.60

%

FY079.10

%

ASRS Contribution Rates-Projected

8.00%

8.50%

9.00%

9.50%

10.00%

10.50%

11.00%

11.50%

12.00%

ASRS Rate ASRS Rate (Projected)

Key Workforce Indicators/Measures

Vacancy Rate Turnover Rate Turnover Rate Comparisons Employee Reasons for Leaving Costs of Turnover Impacts of Turnover


Coconino County Vacancy Rate History

9% 9%

12%

9%

0%

2%

4%

6%

8%

10%

12%

14%

FY08 FY09 FY10 FY11*Hiring chill/ Vacancy Review Board


0%

5%

10%

15%

20%

25%

30%

35%

Calendar Turnover Rate

1998

2000

2002

2004

2006

2007

2008

2009

2010

Coconino County Turnover History


Turnover Trends: FY08 - Present

0%1%2%3%4%5%6%7%

RecessionPay Plan

FY09

FY10

0.00%

5.00%

10.00%

15.00%

20.00%

City of Flagstaff - Excludes Retirements

Northern Arizona University

Coconino County

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

CY2009

State of Arizona (Census)

Coconino County (Census)

Coconino County


Local Turnover Rate Comparisons

Actual Turnover by Category

0

50

100

150

200

LAYOFFS 10 3 10 0

INVOLUNTARY 10 19 8 12

RETIREMENT 11 27 12 29

VOLUNTARY 154 119 74 95

CY07 CY08 CY09 CY10


WHY ARE EMPLOYEES LEAVING? 2007 Top Reasons for Leaving: 1) Taking

Another Job in the Same Market; 2) Personal Reasons; 3) Cost of Living Over 66% Rated Compensation “Poor” or

“Fair”

2010 Top Reasons for Leaving: 1) Job Opportunity; 2) Cost of Living/Moving out of Area 82% rated compensation as “Fair” or “Poor”


The Costs of Turnover

2007 Annual Turnover Cost: $6.5 million Based on Median Annual County Salary

of $37,000

2010 Annual Turnover Cost: $4.6 million Based on Median Annual County

Salary: $39,938

Turnover Cost: Between 75% and 125% of Annual SalaryConservative Estimate Using 75% of Median Annual Salary


Impacts of Turnover

Reduces Customer Service Hurts Employee Morale Reduces Efficiency Hurts Performance Lowers Effectiveness


Market Information

-50%

-30%

-10%

10%

30%

50%

0 5 10 15 20

% of Market Median 2007 Median

Distribution of Employee Salaries Compared to Market

Employee Salaries Compared to Market as of 1/1/07

-40%

-30%

-20%

-10%

0%

10%

20%

30%

-5 0 5 10 15 20 25 30 35 40 45

Years of Service

% B

elo

w /

Ab

ove

mar

ket

Market Information

Market Information

-50%

-40%-30%

-20%-10%

0%

10%20%

30%40%

50%

0 5 10 15 20 25 30 35 40

Years of Service

% B

elo

w /

Ab

ove

Mar

ket

Employee Salaries Compared to Market as of 1/1/2011

National Workforce Trends

Labor force not meeting job market needs 2011 median base salary projected to increase

2.8%(2010 Hay Salary Survey) 98% of companies say they plan to award base pay

increases in 2011 (Mercer 2010-2011 US Compensation Planning Survey)

Private industry growth in earnings (2009) = 2.2%

SHRM-recommended top initiatives for 2011: Focus on Succession Planning and Talent

Acquisition Lift Pay Freezes Find Innovative Approaches/Non-Monetary Rewards

Workforce Trends Summary

Our Reality: The Cost of Living in Coconino County

Continues to be a challenge 27% more expensive than Phoenix 15.1% higher than national average

The Workforce Age Population in Coconino County Continues to Decrease Shrinking labor pool combined with loss of

knowledge retention

Workforce Trends Summary

Key Issues in 2007 – Same Going Forward

High Turnover Turnover high in comparison to our market Turnover is expensive

Compensation is Below Market Higher Health Care and Retirement

Costs Affect Employer and Employee

County Compensation Strategy

Goals: Improve Service to the Public Strengthen the Overall Workforce Reduce Wasted Costs of Turnover

“Quality People = Quality Service”


COCONINO COUNTY EMPLOYEE COMPENSATION STRATEGY PLAN Status – FY11

Phase One: Movement Towards a Market Competitive Salary Structure

Phase Two: Review Job Classifications and Continue Movement Toward Market

Phase Three: Remain Competitive, Become Performance-Based

Ongoing Maintenance of Market Competitive Salary Structure

1. Revise the Salary Structure Four Steps: - Adjust Salary Structure - Increase Salaries to New Minimums - Increase Salaries Based on Tenure - Increase Salaries for Current Market

Movement

2. Continue to implement the 2.5% increase on an employee’s anniversary date.

3. Identify and Adjust Temporary “Market Premium” Job Classifications

4. Establish Compensation System Performance Measures

1. Continue Salary Structure

Movement - Raise Salary Ranges Toward

Market Target - Identify and Adjust Temporary

“Market Premium” Job Classifications

- Evaluate Systems Performance 2. Review and Update Job

Classifications and Evaluate all Incumbent’s Duties

90% complete – Present for approval by BOS as part of FY12 Budget

3. Develop and Implement Employee Performance Management System

1st year pilot completed 4. Examine Other Causes of Turnover

Beyond Salary

Ongoing (See below**) 5. Explore Alternative Labor Pools

Ongoing (job sharing and part-time opportunities; under-filling)

1. Develop and Adopt Pay

Delivery System To Provide For Systemic Movement within the Salary Range (show how pay will move as skills, competency and performance improves over time) Included as part of

Performance Management Program

2. Continue Employee Performance Management System Ongoing

3. Develop and Distribute Information on Total Compensation, Including Salary and Benefits

4. Continue Salary Structure Movement

- Evaluate System Performance - Identify and Adjust For “Market

Premium” Job Classifications Ongoing (Nursing; Sheriff’s

Office)

Continue Salary

Structure Movement Raise Salary Ranges

Toward Market Provide Performance-

Based Increases Identify and Adjust

Temporary “Market Premium” Job Classifications

Evaluate System

Performance

** Implemented Premier Employer Committee to develop recruitment and retention strategies; enhanced recruitment process and training; implemented 1-year recruitment and retention survey; criteria-based promotional opportunities.


Salary adjustments based on merit, market & tenure provided July 1, 2007 (FY08).

Increased market placement 2.5% merit increases built

into County base budget Provided in FY09

Market premium compensation plans developed for Sheriff’s Office, Nursing classifications and County Attorney

Performance Measures Vacancy & Turnover Rates Exit Interview Questionnaire

Results Market Survey

Phase One: Movement Towards a Market Competitive Salary Structure

1. Revise the Salary StructureFour Steps:- Adjust Salary Structure- Increase Salaries to New Minimums- Increase Salaries Based on Tenure- Increase Salaries for Current Market Movement

2. Continue to implement the 2.5% increase on an employee’s anniversary date.

3. Identify and Adjust Temporary “Market Premium” Job Classifications (Nursing; Public Safety)

4. Establish Compensation System Performance Measures


Merit Increases provided in FY09 – Frozen in FY10 and FY11

Pending Hay Study Implementation - Salary range maximums lifted

Hay Study began FY09 to present day: All classifications reviewed

and placed in new, proposed structure

Classification specifications revised and new ones developed where necessary

Final classification and proposed salary plan to be presented to BOS for consideration as part of FY12 Budget.


1. Continue Salary Structure Movement2.5% merit increases built into base budgetProvided in FY09 prior to being frozen in FY10 and FY11. Pending Hay Study Implementation - salary range maximums lifted

2. Review and Update Job Classifications and Evaluate all Incumbent’s Duties90% complete – Present for consideration by BOS as part of FY12 Budget


1st year pilot completed

4. Examine Other Causes of Turnover Beyond Salary Ongoing (See below**)

5. Explore Alternative Labor Pools



New Performance Management Program developed and piloted in Health Department. Feedback received and

revisions being made Working with IT to improve

automation 2nd pilot opened to entire

organization in 2011 Continually monitor turnover

data and trends Premier Employer Committee

developed to focus on retention

Continually looking for flexible and innovative ways to meet staffing needs Part-time; job sharing;

underfilling; phased retirement, return retirees.


1. Continue Salary Structure Movement2.5% merit increases built into base budgetProvided in FY09 prior to being frozen in FY10 and FY11. Pending Hay Study Implementation - salary range maximums lifted

2. Review and Update Job Classifications and Evaluate all Incumbent’s Duties90% complete – Present for approval by BOS as part of FY12 Budget


1st year pilot completed

4. Examine Other Causes of Turnover Beyond Salary Ongoing (Creation of PEC)

5. Explore Alternative Labor Pools



Performance Management Program geared to provide for salary increases based on core competencies; performance. Dependent on budget

capacity Next steps for Performance

Management Program 2nd year pilot Training Handbook/Training Manual

Development Not complete:

Total Compensation Information

Salary structure frozen since FY10.

Phase Three: Remain Competitive, Become Performance-Based

1. Develop and Adopt Pay Delivery System To Provide For Systemic Movement within the Salary Range (show how pay will move as skills, competency and performance improves over time) Included as part of Performance Management Program

2. Continue Employee Performance Management SystemOngoing

3. Develop and Distribute Information on Total Compensation, Including Salary and Benefits

4. Continue Salary Structure Movement


All items in Phase 4 entail ongoing maintenance of a competitive and successful compensation strategy.

Revisions/additions will be made as necessary based on trend evaluation.

Ongoing Maintenance of Market Competitive Salary Structure

Continue Salary Structure MovementRaise Salary Ranges Toward MarketProvide Performance-Based IncreasesIdentify and Adjust Temporary “Market Premium” Job ClassificationsEvaluate System Performance

Moving Forward

Learning from history Decisions we make today will affect our future

Just as in 2007 Loss of intellectual capital/institutional knowledge Increased cost for recruiting and turnover Reduced employee morale

Doing more with less/Reduced net pay 2011 and beyond

Impacts from State Labor Shortages Changing labor force Lasting effects of economy

Moving Forward

Using Workforce Trend Data to Deliver a Multi-Faceted Approach Hiring “Chill” vs. “Freeze” Personal Day Purchase Program

$ saved to date $426K Phased Retirement with smartworksplus, inc. Budget Reduction & Layoff “Triage” Strategy EGAD Focus PEC Focus

workforce trends presentation 4-20-2011

Documents

workforce eligible

national workforce

workforce transitions

negative workforce trends

employees ages

exiting employees

regular status employees

number of employees