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In recent years, the City of Minot faced a rising employee turnover rate that was negatively impacting not only staff morale and experience levels, but the overall budget as well.
At the end of 2017, the turnover rate was an alarming 14.9 percent, with 17 open positions. Many short-staffed departments were unable to address long-term projects, instead having to cross-train staff members on the fly simply to keep up with the day-to-day work. Plus, constant turnover meant constant training, and that gets expensive very quickly, especially in the Police Department and Fire Department where each staff member can require approximately $70,000 in training.
City Manager Tom Barry said as part of the preliminary budget process, he gathers input from staff, department heads, and Council members as to their budget priorities.
“One of the priorities that everyone agreed on was to stabilize the workforce by implementing budget strategies focused on improving employee retention and reducing turnover,” Barry said. “So that was one of our main marching orders right at the beginning of the 2019 budget process.”
Department heads conducted market research and gathered input through an employee survey, and then went to work trying to make significant changes.
“Human Resources Director Lisa Jundt and the entire HR department developed an employee survey to identify what was important to staff members. We also asked department directors what they thought was important and what would make the biggest impact,” Barry said. “We used all that data to develop some strategies that we thought would make a big difference in retaining staff members.”
The comprehensive workforce improvement plan included several major upgrades, including a tuition reimbursement program, increased vacation and sick day accrual rates, added a flexible spending account option, increased vacation rollover, improved the City’s health care contribution, and added the North Dakota Public Employees Retirement System.
“With every one of our pay plans, we do a survey of similar benefits in other municipalities. We’ve always been a little bit short on our benefits,” Jundt said. “When we were having retention issues, we realized it’s not always the pay that was the problem for us. We thought if we enhance the overall benefit package, that would be a better retention tool for us.”
The City Council approved the changes, which were incorporated into the 2019 budget at a cost of approximately $567,837.
The results have been dramatic.
City staff determined that reducing the turnover rate by just 2 percentage points would create enough turnover-related savings to cover the cost of the improvements. In the first year, the plan paid for itself. But the cumulative reduction in the employee turnover rate in less than two years amounts to a 54 percent reduction, saving more than $2.1 million in turnover-related costs over two years.
“Our vacancy rate is low, which means we’re filling positions more efficiently than we were before, and our retention rate is increasing,” Barry said. “The program is working, even better than imagined.”
Reducing the turnover rate has benefits other than the financial ones. Full staffs create better morale, increase organizational efficiencies, enhance employee safety, and reduce legal liability.
“Longevity is another measure that we need to be attentive to, especially in public safety positions like the Police and Fire Departments,” Barry said. “As an organization, our institutional knowledge shrinks when we have high turnover rates. That’s changing for the better with the reduced turnover rates we’ve seen in the past two years.”
Barry and Jundt said improving the City’s health care contribution and moving to NDPERS have been major factors in reducing employee turnover.
“Moving into NDPERS has guaranteed a defined benefit when you retire,” Barry said. “The other thing that it did for us in addition to helping retain our own employees is that it put us on the map as far as attracting new employees from within our own state. We couldn’t recruit some people because they didn’t want to leave a position where they were in NDPERS at another North Dakota jurisdiction and come to the City, where we were not part of the system.”
The Council-approved changes didn’t completely cover all costs of employee insurance, but did increase the percentage paid for by the City. A single plan is now fully paid for by the City, while 90 percent of a single plus dependent is covered, and 80 percent of a family plan is now paid for by the City. This aligns more closely with Ward County, the State of North Dakota, and Minot State University.
“The one thing that we saw through employee exit interviews at the time was that other municipalities paid for the entire insurance cost,” Jundt said. “Family insurance is very expensive, and that was a huge component for us to work toward. I’ve had a lot of employees who have come to us and thanked us and the Council for moving in this direction because it did save them a significant amount of money. It’s been a very positive tool for us.”
The efforts to improve and maintain employee turnover rates will continue.
“Pay wise, I think we’re pretty good. The benefits were the main component that we dealt with by making adjustments to the benefit package,” Jundt said. “But there’s always ongoing discussions about making improvements.”