The pandemic-era hiring crisis for state and local government may be easing, but there is still intense competition for employees and frustration about rapid turnover. This HR headache is not only disruptive to departments but is also expensive. SHRM, the Society for Human Resource Management, puts the price tag on replacing an employee at three to four times salary. This includes recruitment expenses, lost training time, department upheaval, unexpected and excessive overtime, and the effort involved in onboarding new workers.

With cities across the nation attempting to hold onto their employees, a recent audit in Austin provides some important answers to a pressing question: What can be done to increase employee retention? The advice it offers isn’t just useful to Austin but can help other cities, counties and states as well.

 A few details about Austin’s situation. The turnover rate was 9.88% in 2023 -- lower than 11.7% in 2022, but still above the rate of 8.19% in 2018.  Looking across those years – 2018 through 2023 – the average rate masks the troubles of individual departments, which ranged from a low of 5.23% for Telecom & Regulatory Affairs to 19.24% for Animal Services. The audit noted that 25% of surveyed employees say they’ve applied for a non-city job in the past six months.

As we’ve reported for many years, Austin leaders have historically had a respect for data and a penchant for measuring performance. As the audit points out, the city conducts a “Listening to the Workforce” survey and it also interviews employees who are leaving, using exit surveys to find out the reasons why.

But collecting information isn’t enough. If it’s not actively used that’s something like putting gas in a car’s engine, without putting your foot on the pedal. “Best practices recommend organizations capture information from both current and departing employees,” auditors write. “However, it is not clear that the city is using this data to make decisions.”

For example, employee survey comments, including one conducted in early 2024 by the auditor, center on three major challenges to better retention: “Uncompetitive compensation, limited career progression opportunities, and unpopular telework rules.” Powerful information. But auditors learned that it was not used when making decisions. 

For example, with exit surveys, staff in only one out of eight departments said they used the data, with the audit also noting that the response rate had fallen from 33% in 2018 to 27% in 2022. The quality of survey questions was also mentioned, with departments reporting concern that answers to the exit survey were often vague, particularly when an answer for leaving was “personal” reasons. According to the audit, “Clarifications would allow the city to know whether there were any steps it could have taken to keep these employees.”

Here are key actions the audit recommended: 

1. Reevaluate the city’s compensation strategy. Topics include the city’s approach to market studies, and a reexamination of policies that forbid performance pay or other kinds of merit increases. Competition with other governments and the private sector is a very real problem in this high-growth city and charts provided in the audit demonstrate that cost-of-living salary increases have lagged inflation in recent years. The auditor’s survey found that 94% of employees said compensation was critical to retention.

   
   

2. Better track the success of retention incentives. While performance pay is not allowed, some individual departments use modest monetary incentives to keep employees who may be tempted to leave. These can be small stipends or one-time payments offered to achieve milestones. Departments vary widely in how incentives are used and the audit notes that of the 20 departments that had turnover rates above the city average, only 7 used retention incentives. In the departments that do offer retention incentives, the audit found that 40% of surveyed respondents were not aware of them.

   
   

3. Evaluate and potentially expand career progression plans. The audit recommends that HR work with departments that don’t have such plans to consider if they would be beneficial. It also recommends assigning responsibility to monitor and evaluate their success. According to Austin’s own exit surveys, over half of employees were unhappy with their chances to progress in their careers.

   
   

4. Consider providing more telework flexibility. In 2023, a new telework policy limited departments’ ability to provide telework for employees more than 3 out of 5 working days each week. This departure from the looser rules of the pandemic while not extreme, presents a problem for the city since Travis County (where Austin is the county seat) allows 75% of employees to work remotely. In answers to the auditor survey, 73% of employees said telework policies and flexible work schedules were an important key in deciding to work for the city.

In its response, management agreed with auditor suggestions and has begun working on these issues by evaluating “compensation, philosophy and pay practices”, while also looking into market studies, retention incentives and career progression. The city manager’s office is also evaluating Austin’s Flexible Work Arrangement policy, which includes telework. 

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