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Home My WebLink About2017-054 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 Constr�uction 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 arganizations, and establishes market value as being between the 25th and SOth 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 j ob 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 lOth 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 (HEOPs) 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 (HEOIPs) 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 HEOIL 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: # of Average Turnover Cost Position Employees Salary of Average Salary + (20% of Average Salary + Who Left Employees 30% for Benefits Benefits X# of Employees the City Leaving City Who Left) FSWII 10 $31,512.00 $40,965.60 $81,931.12 HEOI 7 $35,932.35 $46,712.06 $65,396.88 HEOII 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 HEOII 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. Heavy Equipment Operator # of Revision Avg Rate of City City Title Reports To employees Date Pay Allen Equipment Operator Crew Leader 16 1/1/2016 $ 17.09 Arlington Heavy Equipment Operator II Pubfic Works Operations Supery 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 $ 2032 Garland Heavy Equipment Operator I Field Supervisor 3 2/1/2017 $ 18.20 Grand Prairie Heavy Equip. Op.-Streets Street Crew L,eader or Fld. Ope 7 2/1/2017 $ 20.44 Irv�g Senior Heavy Equipment Operator Scction Chief 13 2/1 /2017 $ 22.93 Lewisv�7le 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-Sfreet Assistant Manager of Sofid 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 AVERAGE 21 $ 19.43 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(a�cityofdenton.com (940) 349-7165 �