This document summarizes workforce trends for Coconino County from 2007 to 2011. It finds that compensation remains below market rates, driving high turnover rates. Benefit costs are rising while salaries have been frozen. An aging workforce is expected to see high retirement rates. A 2007 compensation strategy aimed to increase salaries, implement performance pay, and monitor indicators. However, salaries have been frozen since 2010. Moving forward, the county aims to use trend data to recruit and retain employees through flexible policies while managing budgets constraints.

1. Workforce Trends in Coconino County “Then and Now” A Presentation to the Coconino County Board of Supervisors April 12, 2011

2. Presentation Overview Financial Planning Trends and Status Workforce Trends Influencing Coconino County County Workforce Characteristics Benefit Costs Workforce Indicators (i.e. Turnover and Vacancy Rates) 2007 4-Phase Compensation Strategy Plan Review and Status Update Present and Future Compensation Strategy Trends Where do we go from here?

3. Financial Planning Trends Many of the messages from 2007 still ring true today! County’s Financial Flexibility is Restricted and Constrained Growth in Mandated Expenditures Due to Funding Cuts Rising Benefits and Retirement Costs Combined with frozen merit increases = Decreasing net pay for employees Long-Term Plan is Necessary Focus on “Mission Critical” areas: People and Infrastructure are essential to delivering service Trends Continuing in FY12 and Beyond

4. Coconino County Workforce Trends Employee Characteristics Years of Service Years to Retirement Age Diversity

5. Coconino County Workforce Trends 55% 46% 22% 25% 15% 10% 6% 8% 5% 4% 2% 2%

6. Coconino County Workforce Trends

7. Coconino County Workforce Trends

8. Coconino County Workforce Trends

9. Workforce Trends-US Labor Force

10. Workforce Trends-US Labor Force Table 3.4 Civilian U.S. labor force by age-1988, 1998, 2008 and projected 2018 [Numbers in thousands]

11. Coconino County Workforce Trends Diversity – Ethnicity & Gender 74% 13% 11% 1% 1%

12. Benefit Costs

13. Benefit Costs

14. Benefit Costs Retirement Contribution Rates-Employer

15. Benefit Costs Retirement Contribution Rates-Employee

16. Benefit Costs ASRS Contribution Rates-Projected

17. Key Workforce Indicators/Measures Vacancy Rate Turnover Rate Turnover Rate Comparisons Employee Reasons for Leaving Costs of Turnover Impacts of Turnover

18. Key Workforce Indicators/Measures Coconino County Vacancy Rate History *Hiring chill/ Vacancy Review Board

19. Key Workforce Indicators/Measures Coconino County Turnover History

20. Key Workforce Indicators/Measures Recession Pay Plan

21. Key Workforce Indicators/Measures Local Turnover Rate Comparisons

22. Key Workforce Indicators/Measures

23. Key Workforce Indicators/Measures WHY ARE EMPLOYEES LEAVING? 2007 Top Reasons for Leaving: 1) Taking Another Job in the Same Market; 2) Personal Reasons; 3) Cost of Living Over 66% Rated Compensation “Poor” or “Fair” 2010 Top Reasons for Leaving: 1) Job Opportunity; 2) Cost of Living/Moving out of Area 82% rated compensation as “Fair” or “Poor”

24. Key Workforce Indicators/Measures The Costs of Turnover 2007 Annual Turnover Cost: $6.5 million Based on Median Annual County Salary of $37,000 2010 Annual Turnover Cost: $4.6 million Based on Median Annual County Salary: $39,938 Turnover Cost: Between 75% and 125% of Annual Salary Conservative Estimate Using 75% of Median Annual Salary

25. Key Workforce Indicators/Measures Impacts of Turnover Reduces Customer Service Hurts Employee Morale Reduces Efficiency Hurts Performance Lowers Effectiveness

26. Market Information Distribution of Employee Salaries Compared to Market

27. Employee Salaries Compared to Market as of 1/1/07 30% 20% % Below / Above market 10% 0% -5 0 5 10 15 20 25 30 35 40 45 -10% -20% -30% -40% Years of Service Market Information

28. Market Information Employee Salaries Compared to Market as of 1/1/2011

29. National Workforce Trends Labor force not meeting job market needs 2011 median base salary projected to increase 2.8% (2010 Hay Salary Survey) 98% of companies say they plan to award base pay increases in 2011 (Mercer 2010-2011 US Compensation Planning Survey) Private industry growth in earnings (2009) = 2.2% SHRM-recommended top initiatives for 2011: Focus on Succession Planning and Talent Acquisition Lift Pay Freezes Find Innovative Approaches/Non-Monetary Rewards

30. Workforce Trends Summary Our Reality: The Cost of Living in Coconino County Continues to be a challenge 27% more expensive than Phoenix 15.1% higher than national average The Workforce Age Population in Coconino County Continues to Decrease Shrinking labor pool combined with loss of knowledge retention

31. Workforce Trends Summary Key Issues in 2007 – Same Going Forward High Turnover Turnover high in comparison to our market Turnover is expensive Compensation is Below Market Higher Health Care and Retirement Costs Affect Employer and Employee

32. County Compensation Strategy Goals: Improve Service to the Public Strengthen the Overall Workforce Reduce Wasted Costs of Turnover “Quality People = Quality Service”

33. County Compensation Strategy

34. County Compensation Strategy Salary adjustments based on merit, market & tenure provided July 1, 2007 (FY08). Increased market placement 2.5% merit increases built into County base budget Provided in FY09 Market premium compensation plans developed for Sheriff’s Office, Nursing classifications and County Attorney Performance Measures Vacancy & Turnover Rates Exit Interview Questionnaire Results Market Survey

35. County Compensation Strategy Merit Increases provided in FY09 – Frozen in FY10 and FY11 Pending Hay Study Implementation - Salary range maximums lifted Hay Study began FY09 to present day: All classifications reviewed and placed in new, proposed structure Classification specifications revised and new ones developed where necessary Final classification and proposed salary plan to be presented to BOS for consideration as part of FY12 Budget.

36. County Compensation Strategy New Performance Management Program developed and piloted in Health Department. Feedback received and revisions being made Working with IT to improve automation 2nd pilot opened to entire organization in 2011 Continually monitor turnover data and trends Premier Employer Committee developed to focus on retention Continually looking for flexible and innovative ways to meet staffing needs Part-time; job sharing; underfilling; phased retirement, return retirees.

37. County Compensation Strategy Performance Management Program geared to provide for salary increases based on core competencies; performance. Dependent on budget capacity Next steps for Performance Management Program 2nd year pilot Training Handbook/Training Manual Development Not complete: Total Compensation Information Salary structure frozen since FY10.

38. County Compensation Strategy All items in Phase 4 entail ongoing maintenance of a competitive and successful compensation strategy. Revisions/additions will be made as necessary based on trend evaluation.

39. Moving Forward Learning from history Decisions we make today will affect our future Just as in 2007 Loss of intellectual capital/institutional knowledge Increased cost for recruiting and turnover Reduced employee morale Doing more with less/Reduced net pay 2011 and beyond Impacts from State Labor Shortages Changing labor force Lasting effects of economy

40. Moving Forward Using Workforce Trend Data to Deliver a Multi-Faceted Approach Hiring “Chill” vs. “Freeze” Personal Day Purchase Program $ saved to date $426K Phased Retirement with smartworksplus, inc. Budget Reduction & Layoff “Triage” Strategy EGAD Focus PEC Focus