Request for Committee Action

2022-01165 - 2023 Appointed, Non-Represented, and Politically Appointed employee salary schedules

The Human Resources (HR) department has experienced a 40% turnover rate over the past year, which is significantly higher than the industry average. This high turnover rate is primarily attributed to two factors: increased workload and lack of competitive pay and advancement opportunities. The current salary structure does not adequately reflect the effort and dedication required to handle the demanding HR responsibilities, resulting in turnover, employee dissatisfaction, and burnout.

• Turnover Costs: The cost of turnover is substantial, encompassing recruitment expenses, training, decreased productivity during onboarding, and the potential loss of institutional knowledge. A conservative estimate of the cost of turnover is 50% of the employee’s base pay. By addressing the root causes of turnover, we can significantly reduce these costs and improve overall operational efficiency.
• Employee Burnout: The HR team is experiencing burnout due to the heavy workload. This not only impacts their productivity but also increases the risk of errors, decreases employee engagement, and leads to decreased job satisfaction.

The HR department conducted two salary surveys:

• A market analysis of public and private organizations has shown that overall, the middle of the ranges for Human Resources jobs are below the 50th percentile of the market.
• An analysis of the City of Minneapolis Human Resources pay compared to local government entities and found that the Minneapolis Human Resources team is more than 8% below some competitors.

We are requesting an 8% increase in base salaries for the Human Resources (HR) department at the City effective July 2, 2023. This increase is necessary due to the high turnover rate and employee burnout caused by excessive workload and the lack of competitive pay and advancement opportunities. By addressing these issues and providing fair compensation, the City can improve employee retention, enhance productivity, and maintain a competitive advantage.

This increase aligns with market benchmarks and acknowledges the complexity and importance of the HR function. The proposed salary increase will have the following benefits:

1. Improve Service Levels: As an internal service department, improving and retaining the HR workforce will benefit the entire enterprise through faster processing of personnel actions and responsiveness to advice.
2. Retain Top Talent: Higher salaries will help attract and retain skilled HR professionals, reducing turnover rates and ensuring continuity in departmental operations.
3. Motivate and Engage Employees: Fair compensation encourages employee motivation, engagement, and a sense of value, resulting in increased productivity and job satisfaction.
4. Address Workload Challenges: The increased salaries will reflect the increased responsibilities and workload, incentivizing employees to take on additional tasks and perform at their best.

Financial Analysis:

• Cost of Implementation: The estimated annualized cost of implementing the 8% salary increase for the HR department is $384,500, which would come from the salary adjustment and retention account.
• Cost Savings: By reducing turnover and associated recruitment and training costs, the City can save approximately $961,100 annually for a net savings of $576,600.
• Improved Productivity: Higher salaries and reduced burnout will lead to increased productivity.

By investing in the HR department through an 8% base salary increase, the City can address the challenges of high turnover and employee burnout.