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Home My WebLink About2023-05-03 Council Packet - Work Session, Employee Recruitment and RetentionKenai City Council - Work Session Employee Recruitment and Retention Page 1 of 1 May 03, 2023 Kenai City Council - Work Session – Employee Recruitment and Retention May 03, 2023 ꟷ 4:30 PM Kenai City Council Chambers 210 Fidalgo Avenue, Kenai, Alaska **Telephonic/Virtual Information Below** www.kenai.city Agenda A. CALL TO ORDER B. INTRODUCTION – Terry Eubank, City Manager C. PRESENTATIONS 1. Alaska Department of Labor and Workforce Development Presentation 2. City of Kenai Working Group Employee Recruitment and Retention Difficulties and Recommendations Presentation D. COUNCIL DISCUSSION E. PUBLIC COMMENTS F. ADJOURNMENT Join Zoom Meeting OR https://us02web.zoom.us/j/86090121719 Dial In: (253) 215-8782 or (301) 715-8592 Meeting ID: 860 9012 1719 Passcode: 016058 Meeting ID: 860 9012 1719 Passcode: 016058 Page 1 MEMORANDUM TO: Mayor Gabriel and Council Members FROM: Terry Eubank, City Manager DATE: April 18, 2023 SUBJECT: Discussion/Action – Work Session on Employee Recruitment and Retention Challenges and Recommendations In September, 2022, Administration formed an internal working group to undertake a comprehensive review of the City’s personnel practices and processes in light of the changing workforce composition, current economic conditions and trends, and the City’s competitiveness to recruit and retain qualified employees to provide City services. The working group is comprised of the following City employees: 1. City Manager Terry Eubank 2. Assistant to City Manager Christine Cunningham 3. Human Resources Director Stephanie Randall 4. Police Chief Dave Ross 5. Fire Chief Tony Prior 6. Library Director Katja Wolfe 7. Controller Lana Metcalf Former City Manager Paul Ostrander and former Assistant to City Manager Randi Broyles also contributed to the proposed recommendations. After the initial kickoff meeting, the working group met regularly to identify and address workforce challenges specifically related to recruitment and retention to develop a list of recommendations within the fiscal capacity of the City and could be addressed without additional input from the scheduled FY24 Classification and Compensation Study, which would not be available until 2024. Below is a list of recommendations discussed by the working group: 1. Allow recruitment incentives for difficult-to-fill positions 2. Allow flexible staffing as a tool for recruitment and retention 3. Allow for setting initial compensation within the salary range based on years of service 4. Allow for setting initial leave accrual above the minimum based on years of service for returning employees 5. Allow flexible scheduling for exempt employees without requiring leave usage 6. Expand leave of absence with pay for a death in the immediate family Page 2 Page 2 of 2 7. Allow new employees to take leave without pay upon recommendation of the department 8. Establish an Employee Referral Program to encourage current employees to refer qualified candidates for open positions 9. Establish a Hybrid or Remote Work Program allowing eligible employees to select up to two weeks of temporary remote work per year 10. Update Educational Program for employees 11. Postpone the scheduled FY24 increase to the employee share of health insurance premiums 12. Add a half-day holiday on either Christmas Eve or New Year’s Eve 13. Increase the City’s contribution to employee supplemental retirement. 14. Other non-monetary changes to streamline the application process and allow for greater flexibility In addition to the above recommendations, the working group identified items that need to be addressed or will be clarified with information gathered by the FY24 Classification and Compensation Study, and the group will continue to provide input on the Request for Proposals (RFP) to ensure these items are addressed in the Study. The City is not alone in experiencing workforce challenges, and if the requested work session is scheduled for May 3, 2023 at 4:30 p.m., Administration and the working group will provide a presentation including background information specific to the workforce impacts experienced by the City of Kenai, demographic information and workforce trends from the Alaska Department of Labor and Workforce Development, and a presentation on the above recommendations. Thank you for your consideration. Page 3 City of Kenai Council Work Session Dan Robinson, Research Chief Alaska Department of Labor and Workforce Development Recruitment/Retention Challenges for Employers But a great market for job seekers May 3, 2023 Job Openings Are Up in Alaska and Nearby States 2 3.9 9.5 2.8 6.5 2.8 5.9 0.0 2.0 4.0 6.0 8.0 10.0 12.0 Job Openings Rates, 2013-22 (six-month moving average) Alaska Oregon Washington Why? 3 Some of the things people are saying, some of it true and some not: •People don’t want to work anymore (kids these days!) •Demographics (the Baby Boomers … wreaking havoc again) •Everyone’s starting their own business (gig work has taken over) •Negative net migration (another part of demographics) Do Working-Age People Want to Live in Your State? 4 How has working-age (18-64) population changed over the last decade: Alaska 2013: 479,000 Alaska 2022: 449,000 (-6.3%) Oregon 2013: 2,463,369 Oregon 2022: 2,596,425 (+5.4%) Washington 2013: 4,428,085 Washington 2022: 4,807,392 (+8.6%) March’s Issue of Alaska Economic Trends 5 Is Kenai Following Statewide Trends? 6 Is Kenai Following Statewide Trends? 7 •City of Kenai Working Age (20-64) Population 2010: 4,198 (7,112 Total Population) •City of Kenai Working Age Population 2022: 4,072 (7,507 Total Population) •Percent of Kenai’s Population that’s Working Age Has Fallen from 59 percent in 2010 to 54 percent in 2022 Early Signs of Less Seniority for City Employees 8 22.2% 34.6% 20.3% 22.9% 27.3% 39.4% 13.3% 20.0% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% New this calendar year 1 - 5 Years 6 - 9 Years 10 Years or more City of Kenai Employee Tenure 2016 2022 Market Forces Favor Job Seekers 9 Not since the late 1940s and 1950s (post WW 2) has their been a job market that offers so much opportunity to job seekers. Which means employers are going to have to compete much harder than previously to hire and keep good workers. So what do they want? Market Forces Favor Job Seekers –and Will for a While 10 So what do they want? Why Employees Leave (according to one survey) 11 Source: Society for Human Resource Management What Job Seekers Are Looking For 12 Source: Society for Human Resource Management A Few Things to Consider 13 •Is it better to hire a sub-par applicant or leave a position open? (And is there a difference in how you think about that if you’re a government employer?) •How do you change your “culture” for the better and help workers find “fulfillment” in their work? •What changes can you make in this more challenging environment to attract and retain workers? Questions/Comments 14 Dan.Robinson@Alaska.gov 907-465-6040 2% City Employees in Tier II City of Kenai Workforce Challenges Greater competition for qualified employees means more often applicants and City employees are comparing City salaries, benefits, and development opportunities with other employers 2% City Employees in PERS Tier I 18% City Employees in Tier III 78% City Employees in Tier IV 92% Projected number of employees in Tier IV in the next five years. 23% of City employees are eligible to retire in the next five years City of Kenai Recruitment & Retention Challenges May 3, 2023 Recruitments 2019 2020 2021 2022 0 10 20 30 Applicants 2019 2020 2021 2022 0 10 20 3027.3% New Employees in Calendar Year 2022 20% With 10 Years or More Experience 39.4% Employees with 1-5 Years Experience << 25 New Employees in Calendar Year 2022Source: Department of Labor; Research and Analysis Section 9 Average Number of Applicants in 2022 Recruitment & Retention Council Work Session May 3, 2023 TO IMPROVE THE CITY’S ABILITY TO RECRUIT AND RETAIN COMPETENT EMPLOYEES AS WELL AS ENSURE THE CITY’S PERSONNEL PRACTICES ARE FAIR AND EQUITABLE. Recruitment & Retention 2 Recruitment Retention Retirement/Turnover 2023 WHY? Workforce Challenges Recruitment Significant challenges currently facing the City include: •The number of City recruitments has increased by 40% •The average number of applicants for these positions has decreased by 65% to an average of 9 per position, with many positions receiving 0-4 applications. •Fewer applicants meet the minimum job qualifications of positions. •Positions are vacant for longer periods of time. Retention Recruitment & Retention 3 2023 Significant challenges currently facing the City include: •Competition for qualified employees means that more often City employees are comparing City salaries, benefits, and development opportunities with other employers •78% of PERS eligible employees are in Tier IV, which is portable, and that number is projected to grow to 92% in the next five-years. •23% of City employees are eligible to retire in the next five-years. Areas considered by working group Competitive Salaries Recruitment & Retention 4 2023 Work-life Balance Competitive Benefits Opportunities at Work Flexibility Non-monetary Benefits We looked at new ways to responsibly offer competitive salaries for difficult-to- fill positions We looked at monetary and non-monetary ways to improve work-life balance, which is important to employees and candidates We looked at ways to responsibly improve the competitiveness of the City’s total benefits We looked at ways to improve the hiring process and offer development opportunities for employees We looked at ways to increase the City’s flexibility in responding to a changing workforce and current recruitment and retention challenges We looked at ways to improve our culture and communications with employees to ensure that the City remains an employer of choice Objectives Objective 1 Identify and address items that require immediate attention and can be addressed without additional input from the scheduled FY24 Classification and Compensation Study Recruitment & Retention 5 2023 Identify items that need to be addressed in the FY24 Classification and Compensation Study and provide input on the Request for Proposals (RFP) for the FY24 Classification and Compensation Study Objective 2 Recruitment Incentives Recruitment & Retention 6 2023 Pros Cons Policy Budget Impact •One-time payment rather than higher starting salary •Allows City to compete with comparable government employers offering hiring bonuses •Current Employees may feel excluded •Effectiveness can be short-lived when used alone •Defines “difficult to fill” positions •Sets approval criteria and maximum amount (10%) •Requires an amendment to KMC •No additional cost based on the requirement that funds must be budgeted and available due to vacancy Recruitment bonuses can be a useful tool to attract qualified candidates for difficult-to-fill positions in a competitive market. The City of Kenai currently has hiring bonus in place for police officers with a payout schedule of up to four years depending on the amount of the bonus. Create Entry-Level Flexibility Recruitment & Retention 7 2023 Pros Cons Policy •Facilitates a larger applicant pool by allowing for entry into a position at a lower level with a plan to achieve the higher level while on the job •Not all positions are eligible •Defines “recruitment difficulty” •Requires flexible staffing plans and PERS concurrence •Requires an amendment to KMC •No additional cost and potential cost savings when filling positions at the lower level Flexibility in staffing entry-level positions is an effective tool to attract additional candidates when there is difficulty in recruitment. The City currently utilizes level I/II for utility positions in the Public Works Department. Budget Impact Initial Compensation Recruitment & Retention 8 2023 Pros Cons Policy •Improves the City’s ability to attract highly qualified candidates •Allows City to compete with comparable government employers able to set higher initial compensation •Current Employees may feel excluded •Employee would reach end of salary schedule sooner •Defines “difficult to fill” and determines eligibility •Requires an amendment to KMC •Potential increase in personnel costs in short term, depending on number of qualifying positions/vacancies Greater flexibility in setting initial compensation for difficult-to-fill positions would increase the City’s ability to attract highly qualified candidates. The City currently limits initial compensation to the minimum or not more than Step D for classified employees. Budget Impact Initial Leave Accrual Recruitment & Retention 9 2023 Pros Cons Policy •Increases the City’s ability to attract returning employees •Allows the City to set leave for employees based on total years of service with the City •Potential increase in leave usage •Determines eligibility •Does not require an amendment to KMC •No increase to budgeted personnel costs The ability to give returning employees credit for their prior years of service with the City is an important tool to attract returning employees. City policy currently limits the initial leave accrual rate for returning employees to the most recent date of hire and does not consider prior City service Budget Impact Flexible Scheduling for Exempt Employees Recruitment & Retention 10 2023 Pros Cons Policy •Allows City to compete with comparable government employers •Potential for reduced amount of interaction with employees and the public during normal work week •Exempt employees must work as many hours as the responsibilities of the position require •Substitute work day requires pre-approval •Requires an amendment to KMC •No increase to budgeted personnel costs Greater flexibility in scheduling for exempt (non-overtime eligible) positions improves the City’s competitiveness for these positions. The City’s Code requires exempt employees to use annual leave for any full-day absence during the work week, regardless of total hours worked in a week, including work on weekends. Budget Impact Expand Bereavement Leave Recruitment & Retention 11 2023 Pros Cons Policy •Improves the City’s ability to attract and retain employees •Allows City to compete with comparable government employers offering greater bereavement leave •Increased unscheduled leave may negatively affect productivity •Expands definition of immediate and extended family members •Requires an amendment to KMC •No increase to budgeted personnel costs Bereavement leave is an often overlooked benefit that is valuable to employees. The City currently provides up 24 hours of paid bereavement leave for a limited list of family members, which does not include grandparents, grandchildren, or in-law and step equivalents. Budget Impact Employee Referral Program Recruitment & Retention 12 2023 Pros Cons Policy •Cost-effective way to tap into a pool of passive job seekers •Incentivizes employees to share job postings and promote the City •Relying on this program alone could create less diverse applicant pools •Determine eligibility (all non-temporary recruitments) •Requires an amendment to KMC •No increase to budgeted personnel costs An Employee Referral Program is a cost effective way to encourage employees to refer qualified applicants. Employees would receive a day off with pay upon hire of a non- temporary employee. Budget Impact Limited Remote Work Program Recruitment & Retention 13 2023 Pros Cons Policy •Allows the City to offer limited remote work for up to two workweeks per year for positions which allow off- site work •Provides greater flexibility in scheduling for employees •Absence from the work site may affect productivity •Eligibility will be limited for some positions •Determines eligibility •Requires Limited Remote Work Agreement •Requires an amendment to KMC •No increase to budgeted personnel costs A limited remote work program may be appropriate for some positions and recognizes the importance of employees being available in-person. City policy does not allow remote work; however, a temporary telework agreement was allowed during the pandemic on a case-by-case basis. Budget Impact Employee Educational Program Recruitment & Retention 14 2023 Pros Cons Policy •Improves recruitment and retention and maintains an educated and skilled workforce •Requires administration -employees responsible for maintaining receipts and documentation for reimbursement •Established in KMC 23.40.070 •Does not require an amendment to KMC •$5,000 increase in personnel costs to establish program in FY24 and may increase based on usage and availability of funds An educational assistance program can help recruit, develop, engage and retain high- quality employees. The City currently has the ability to offer educational opportunities but the program has not been funded. Budget Impact Additional Half-Holiday Recruitment & Retention 15 2023 Pros Cons Policy •Allows City to compete with comparable government employers able to set higher initial compensation •Provides an equitable benefit to all employees to improve retention and morale of current workforce •Increased holiday leave may affect staffing •Requires an amendment to KMC •$12,000 (Public Safety) Adding an additional holiday provides a benefit similar to benefits offered by other comparable government employers. City Managers have allowed employees to be released from work at noon on either Christmas Eve or New Years’ eve as long as coverage is provided and at the discretion of each department. Budget Impact Supplemental Retirement Recruitment & Retention 16 2023 Pros Cons Policy •Increased retirement benefits improves the City’s ability to attract and retain employees •Allows City to compete with comparable government employers with supplemental retirement programs •Promotes longevity and retention •Increased cost to the City may effect the City’s ability to contribute to other benefits •Requires an amendment to KMC •Requires an amendment to retirement plan documents •$166,000 Competitive retirement benefits improve the City’s competitiveness with comparable government employers. The City currently contributes 4% of the first $37,500 of base wages earned in a calendar year for employees who work 15 or more hours per week. An increase to 6.2% with tiers increasing the maximum wages based on years of service will improve City’s competitiveness. Budget Impact Health Insurance Benefits Recruitment & Retention 17 2023 Pros Cons Policy •Maintaining the employee cost share at 13% improves the City’s ability to attract and retain employees •Allows City to compete with comparable government employers with comparable health benefits •Increased cost to the City may effect the sustainability of quality employee health benefits •Does not require an amendment to KMC •$29,000 Competitive health insurance benefits improve the City’s competitiveness with comparable government employers. Over the past several years, the City has continued toward increasing the employee cost share from 10% to 15%. Postponing the1% increase scheduled in FY24 will maintain the City’s competitiveness for recruitment and retention Budget Impact Non-monetary Changes Recruitment & Retention 18 2023 1.Allow City Manager to delegate personnel authority and streamline application process. 2.Adopt new recruiting methods and technologies (improve use of online application system, attend job fairs, connect with community resources and partners) 3.Create Total Compensation annual report for employees 4.Provide additional training opportunities (e.g., retirement) 5.Improve advertisement of benefits offered in recruitments 6.Advertise City of Kenai using ilovekenai website 7.Re-evaluate education and experience requirements for positions Successful recruitment and retention requires adopting new methods and tools as well as offering competitive compensation and benefits. The City has explored a variety of new methods and continues to evaluate practices. New Methods and Tools: Next Steps Objective 1 •Prepare Ordinance with recommended Code Amendments for consideration by City Council •Communicate policy changes to employees/ update Employee Handbook Recruitment & Retention 19 2023 Continue to identify items that need to be addressed in the FY24 Classification and Compensation Study and provide input on the Request for Proposals (RFP) for the FY24 Classification and Compensation Study Objective 2 THANK YOU! Questions? 2023