Recruiting and Retaining Individuals in State Transportation Agencies (2003)

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6 CHAPTER TWO LITERATURE REVIEW Recruitment and retention are problems that pervade many industries and exist across the region. Examples of indus- tries dealing with these problems include health care (Bu- chan 2002) and IT professions (DeMers 2002). TRB began to publish research on this topic in 1985 (Special Report 207) and more recently, in 1990, published a synthesis, In- novative Strategies for Upgrading Personnel in State Transportation Departments (Poister et al. 1990), which dealt with the growing concern over recruitment and reten- tion issues. Another resource for people interested in re- cruitment and retention issues, also published in 1990, was The AASHTO Guide to Recruitment and Retention of Civil Engineers. More recently, many other articles and studies have been published on this subject. The current research hopes to build upon and update these studies. Because of the current state of the American work force, recruitment and retention of employees are important is- sues. In their book, Workforce 2020 (1997), Judy and D’Amico examined workers in the United States and pre- dicted how the work force will change over the coming years. The authors noted that one of the main changes will be the aging of the population. Where now there are four workers for every retiree, there will soon be only two workers for every retired person. The percentage of Cauca- sians in the work force is expected to drop from 76% to 68%, whereas the percentage of African Americans will remain at 11%, that of Hispanics will increase from 9% to 14%, and that of Asians will increase from 4% to 6%. However, Judy and D’Amico explain, “the aging of the U.S. workforce will be far more dramatic than its ethnic shifts.” Overall, professional and related fields are ex- pected to grow faster than other occupational areas in the coming years, gaining 7 million workers. About 6% to 7% of these jobs will be in engineering and management ser- vices. In general, government jobs are expected to grow more slowly in comparison with those in the private sector (“Occupational Employment Projections to 2010” 2001). Recruiting new employees can be expensive. The aver- age cost to replace an employee has been determined to be 25% of the employee’s annual salary plus 25% of the bene- fits package. These percentages include the cost of admin- istrative time and paperwork, training costs, lower initial productivity, customer/client uncertainty, and lower return on investment. Turnover also affects organizations in other ways, including “loss of institutional memory, diversion of management focus, diversion of peers to train new hires, damage to the organization’s image and poor morale among remaining workers” (“Occupational Employment Projections to 2010” 2001). The transportation industry has a hard time with retention as well. According to one sur- vey, those in the transportation and automotive industries were most likely to indicate an area-wide retention prob- lem. These same industries also had the highest turnover rate of employees who had been employed for 6 months or less (Jardine and Amig 2001). One survey on the issues of retention is the Society for Human Resource Management’s 2000 Retention Survey. This survey of HR professionals in the United States found that in organizations with 1,001 to 5,000 employees, the voluntary annual turnover rate was 21%. In organizations with more than 5,000 employees, the turnover rate in- creased to 26%. The most common reasons for leaving were career opportunities elsewhere, which was cited by 78% of respondents, and a better compensation/benefits package, cited by 65%. The highest turnover rates were found among professionals, followed by office and clerical workers. According to this survey, highly effective reten- tion tools included health care benefits, competitive sala- ries, competitive salary increases, and competitive vacation and holiday benefits. The least effective retention tools in- cluded telecommuting, noncompete agreements, and con- cierge services (Thomas Staffing 2002). One article uses the term “employer of choice” to de- scribe an organization that is able to attract top performing employees. This employer of choice must provide an em- ployee with opportunities for learning, growth, and chal- lenge. It must also allow for employee participation in de- cisions and empowerment. Furthermore, top performing employees switch jobs more often than their coworkers be- cause of boredom and their need for more opportunities for growth. Such job switching should not be interpreted as disloyalty to an organization, but rather a reflection of in- terest in new challenges. An employer of choice will be flexible with its employees and allow them to balance their work and family life to create an atmosphere of greater productivity (Society for Human Resource Management 2000). In TCRP Report 77 (2002), the top five positions for which agencies had a difficult time recruiting and retaining were determined to be mechanics, bus operators, planners, engineers, IT programmers, and systems analysts. Some recruitment methods found to be the most effective by agencies included internal job announcements, newspaper

7 Hood et al.’s study also analyzed the relationships among retention factors. Perceived limits on promotion opportunities are related to dissatisfaction with location, salary, and work conditions. Dissatisfaction with the loca- tion of the agency relates to uninteresting work and dissat- isfaction with supervisors. Lack of job security is related to uninteresting work, with higher than usual turnover in these positions. Dissatisfaction with salary has relation- ships with limits on promotion, uninteresting work, and dissatisfaction with location and work conditions. Dissatis- faction with supervisors is related to dissatisfaction with location and work conditions. Furthermore, the study found that retention of civil engineers and staff with certi- fied technical skills is difficult because of perceived pro- motion limits and dissatisfaction with salary. It was noted that staff with certified technical skills were more likely to leave their positions as a consequence of dissatisfaction with supervisors rather than because of their marketability with other firms (Hood et al. 2000). classified advertisements, and competitive compensation packages. The study also looked at retention methods, which included formal employee orientation, safety incen- tives, and upward communication and feedback. Another aspect of the study concerned training. Effective training methods included performance-based needs assessment, performance-based instruction, and tutoring (Mure 2001). One article cited Towers Perrin and the National Asso- ciation of Colleges and Employers’ study and the desires of the most successful employees in an organization. These de- sires include challenges, change on the job, opportunity for growth with the employer, a rewards system based on per- formance, and autonomy to complete work assignments. The most undesirable aspects of a job for top performers are rules, regulations, policy manuals, long meetings, and job descriptions and job duties (TCRP Report 77 2002). Another article advocates the strategies of the United States military in recruitment and retention efforts. Those efforts included using outstanding recruiters, hiring for character above skill, offering training, caring for employ- ees, offering rewards, and promoting from within (Langan 2000). A different article listed the reasons for which an employee leaves a company, other than money. They in- cluded lack of career development opportunities, “burn- out” jobs, difficulty in balancing work and family obliga- tions, and a lack of appreciation (Estell 2001). Another ar- ticle cited a survey of employees from the American Elec- tronics Association, which found that the top 10 retention strategies for IT workers included challenging work as- signments, a favorable work environment, flextime, addi- tional vacation time, support for career/family values, a casual dress code, high-quality supervision and leadership, visionary technical leadership, cross-functional assign- ments, tuition and training reimbursement, and 401(k) matching (Daniels 2002). In her scan pertaining to managing change in state DOTs, Gilliland (2001) declared that retention and re- cruitment of IT professionals are at a crisis. A solution found for this crisis is the Idaho DOT’s practice of training existing employees for 6 months to become IT profession- als. The scan also advocates identifying core competencies within the DOT for use in developing a succession plan, such as the Minnesota DOT has done. Another retention tool presented by the scan is reverse mentoring, whereby a younger computer-savvy employee is paired with a mem- ber of senior management. In this scenario, the senior manager learns computer skills and the younger employee learns other skills from the senior manager (Gilliland 2001). In a study aimed at improving recruitment at the DOTs, researchers recommended offering fellowships for post- graduate work, with guaranteed employment after gradua- tion, and recruiting women and minorities into these pro- grams. Researchers also recommended assigning someone to monitor recruitment practices nationwide and to have this person report to management. The study also recom- mended in-house training programs, mentor programs, and incentives for employees during the critical 2- to 6-year pe- riod of initial employment. For employees beyond the critical period, the study recommended career advance- ment opportunities, such as job rotation, short course at- tendance, and professional society membership, as well as examining relocation policies to encourage upward mobil- ity (Hoel and Perfater 1995). Reporting on a staffing plan survey, Hood et al. (2000) discovered trends in state recruitment and retention. Re- cruitment and retention issues ranked first and second among state staffing plan priorities. The main recruitment issue facing state agencies is the hiring of information sys- tems personnel. Hood et al. also found that “problems re- cruiting employees were significantly related to competi- tion with the private sector and low entry-level salaries. Problems in recruiting due to competition with the private sector were significantly related to recruiting civil engi- neers, staff with skills needed to do the job, and staff with certified technical skills.” The most successful recruitment strategies cited by the states were college or technical school campus recruitment and job fairs, internships or tui- tion reimbursement programs, Internet recruitment, and fo- cused recruitment of women and minorities. This study also found that the average time from a vacancy opening to the day the new individual begins work is 76 days. As reported in an article on civil engineers, researchers found that 100% of DOTs surveyed use university faculty for recruitment, 88% use co-op/intern programs, and 38% use guaranteed raises. For retention, the DOTs use new employee orientation (100%), professional engineer (PE)

8 preparation training (67%), paid continuing education (89%), unpaid continuing education (22%), and bonuses (11%). Other retention methods addressed are opportuni- ties for new engineers, job challenges, support for profes- sional activities, employee recognition, mentoring by sen- ior engineers, and relocation support (Glagola and Nicholas 2001). In 2001, the Kansas Department of Administration con- ducted a survey of state employees. The survey found that approximately 70% of employees did not believe that they receive a fair amount of pay and 85% believed that they are paid below the amount they could receive in the private sector. These employees also believed that the low level of pay they receive makes them feel unappreciated by the state and their agency. Also, 71% of employees disagreed that “hard work is usually rewarded at my agency,” and approximately 76% of these same employees believed that there is too little chance for promotion. Also, 75% agreed that “you have to know the right people to get ahead in the state system.” Many employees (65%) believed that they receive the basic training they need to complete their jobs; however, 45% felt they are not offered additional training in the technology advances that affect their jobs. A large percentage of employees (80%) were satisfied with the na- ture of their work and 75% are “proud to be a state em- ployee.” In addition, 74% agreed that their supervisor is competent, and 82% agreed that their supervisor is fair. Approximately 82% of employees surveyed are “currently able and willing to take a better job should one become available,” 66% have “thought about looking for a job op- portunity outside state employment,” and 42% “plan to seek employment outside of the state government within the next year.” Those expressing the highest intention to leave were African Americans and Native Americans at 58%, and employees between the ages of 25 and 35 at 56%. The study was not detailed enough to determine the reason for these two ethnic groups to have this tendency (“Employee Retention Survey” 2002). An important study from the HR Benchmark Group showed that management and HR professionals do not understand why employees are leaving their organizations. The top five reasons employees gave for staying or leaving were quality of relationship with supervisor or manager, ability to balance work and home life, amount of meaning- ful work, level of cooperation with coworkers, and level of trust in the workplace. The reasons given by HR profes- sionals were opportunities for growth and advancement, quality of compensation package, level of job stress, qual- ity of relationship with supervisor or manager, and the abil- ity to balance work and home life. That study also showed that there are substantial costs associated with turnover in organizations (Bernthal and Wellins 2002). 8