2017-054 Recruitment & Retention of Construction WorkersDate: August 4, 2017 Report No. 2017-054
INFORMAL STAFF REPORT
TO MAYOR AND CITY COUNCIL
SUBJECT:
Concerns with recruitment and retention of Field Service Workers and Heavy Equipment
Operators and recommended solutions
BACKGROUND:
The construction boom in Dallas-Fort Worth is making it difficult to recruit and retain qualified
equipment operators and other skilled trade positions for construction crews. A story about this
issue aired on NBC 5 on June 12, 2017. Below are some excerpts from the story that describe the
current challenges:
"We need 20,000 more construction workers in the DFW area," said Phil Crone, with the Dallas
Builders Association. "There's a big 'help wanted' sign on this industry right now." Crone says
it's not just homes, but multi-family buildings and commercial projects are also impacted.
“In fact, the group says the labor shortage in North Texas is worse than in any other part of the
nation.”
“Wages, the association says, have increased over the past three years. Laborers can make
approximately $15 an hour, while licensed sub-contractors can make around $90,000 a year.”
(Building Boom, Worker Bust: 20,000 Construction Workers Needed in DFW. Maria
Guerrero. June 12, 2017)
These challenges have resulted in substantial employee turnover for construction crews in Water,
Wastewater, Streets, and Drainage during the last year. The turnover rate is particularly high for
workers who have a Commercial Driver’s License (CDL). Managers are experiencing difficulties
and delays in filling vacant positions, and are also experiencing losses of employees as soon as the
employee obtains a CDL.
DISCUSSION:
Management staff have been working on solutions to improve the ability to recruit and retain
employees for construction crews. As the issue was evaluated, it was determined that some
departments have been hiring at minimum levels of pay scales of the new compensation plan that
was implemented October 2016. However, this compensation plan defines “market value” as
representing the average salary for similar positions in similar organizations, and establishes
market value as being between the 25th and 50th percentile of the compensation range for the
position. Because hiring had been done at the minimum of the compensation range, it is not
surprising that salaries were not competitive and turnover increased. Other problems identified
included hiring by other departments in the City for a lateral job transfer and paying the transferred
employee at a higher rate, and the inability to move an employee to a higher job grade when the
employee developed additional skills and obtained a CDL. To address these problems,
management staff developed the following solutions:
Date: August 4, 2017 Report No. 2017-054
Hire employees at the appropriate percentile level in their respective pay grades. Staff
believes that the 10th percentile (P10) will help increase competitiveness. Adjust exiting
employee pay that is currently below P10 to P10 resolve any equity issues within and
between departments.
Move Heavy Equipment Operators I’s (HEOI’s) from pay grade 5 to 6, adjust pay grade
percentiles, and resolve any equity issues within and between departments by adjustment
to P10.
Hire Heavy Equipment Operator II’s (HEOII’s) at appropriate levels in pay grade 7, and
resolve any internal equity issues within and between departments by generally adjusting
to P10.
Allow promotion of HEOI to HEOII for employees that meet qualifications, equipment
proficiency, and license requirements for HEOII. Advancement should not be allowed
sooner than 6 months of employment as an HEOI.
Provide an increase of one dollar per hour for Field Service Worked II’s (FSII’s) that obtain
a CDL.
Do not provide more pay for lateral moves.
Management staff applied these solutions to the construction crews in Streets, Drainage, Water,
and Wastewater. The proposed changes would affect 46 employees and is estimated to cost
$149,127. While this is a significant cost, the turnover these divisions have been experiencing is
also costly. Human Resources provided information from a study published by the Center for
American Progress (CAP) in 2012 that found the average cost to replace a mid-range employee
(earning $30,000 to $50,000) is 20% of annual salary plus benefits. Using the information provided
by the CAP study, the following table summarizes the cost of turnover during FY 16/17 (through
July 2017) for FSII’s, HEOI’s, and HEOII’s:
Position
# of
Employees
Who Left
the City
Average
Salary of
Employees
Leaving City
Average Salary +
30% for Benefits
Turnover Cost
(20% of Average Salary +
Benefits X # of Employees
Who Left)
FSWII 10 $31,512.00 $40,965.60 $81,931.12
HEO I 7 $35,932.35 $46,712.06 $65,396.88
HEO II 4 $42,887.52 $55,753.78 $44,603.02
TOTAL $191,931.02
The following table summarizes the minimum, maximum and selected percentile pay per hour
for the FSWII, HEOI, and HEOII positions. Currently, HEOI’s are pay grade 5 and are
proposed to be moved to pay grade 6, so both pay grades are provided for comparison.
Position Min P10 P25 P50 P75 Max
FSWII 14.10 15.03 16.43 18.76 21.08 23.41
HEO I (Grade 5) 15.51 16.54 18.07 20.63 23.19 25.75
HEO I (Grade 6) 17.06 18.19 19.88 22.70 25.51 28.33
HEO II 18.77 20.01 21.87 24.97 28.06 31.16
Date: August 4, 2017 Report No. 2017-054
The table below provides hourly rate of pay information for positions in surrounding cities that
are similar to Denton’s HEOI and HEOII positions. Titles are not the same between
organizations, but generally Denton’s HEOIs are similar to heavy equipment operators, HEOIIs
are similar to senior heavy equipment operators.
Management staff believes that making the proposed changes will help improve market
competitiveness and employee retention. The proposed changes have not been implemented at
this point, but we plan to implement the changes within the next week unless Council has
concerns. These changes are not expected to impact the current budget due to salary savings
from employee turnover. If these actions are successful in retaining employees as expected, the
changes can be accommodated within the proposed budget for fiscal year 17/18 due to savings in
budgeted overtime expenses caused by high employee turnover.
STAFF CONTACT:
Ken Banks
General Manager of Utilities
Kenneth.Banks@cityofdenton.com
(940) 349-7165
Heavy Equipment Operator
City City Title Reports To
# of
employees
Revision
Date
Avg Rate of
Pay
Allen Equipment Operator Crew Leader 16 1/1/2016 17.09$
Arlington Heavy Equipment Operator II Public Works Operations Superv 1 2/1/2017 20.37$
Carrollton Heavy Equipment Operator Maintenance Supervisor 25 2/1/2017 18.84$
Dallas Heavy Equipment Operator Various 64 4/1/2014 18.63$
Frisco Equip Operator II Various Dept Supr 12 1/1/2017 18.75$
Ft Worth Sr Equipment Operator Assigned Management 74 1/1/2017 20.32$
Garland Heavy Equipment Operator I Field Supervisor 3 2/1/2017 18.20$
Grand Prairie Heavy Equip. Op.-Streets Street Crew Leader or Fld. Ope 7 2/1/2017 20.44$
Irving Senior Heavy Equipment Operator Section Chief 13 2/1/2017 22.93$
Lewisville Heavy Equipment Operator Crew Leader 2 2/1/2017 17.97$
McKinney Maintenance Technician -Street Streets Supervisor 14 2/1/2017 17.20$
Mesquite Heavy Equipment Operator-Street Assistant Manager of Solid Was 1 2/1/2017 18.25$
Plano Sr Equipment Operator Supervisors 32 3/1/2017 21.61$
Richardson Heavy Equipment Operator Various Departments 35 5/1/2017 21.44$
21 19.43$ AVERAGE