Fiscal year 2001 State of Georgia workforce salary report

Fiscal Year 2001 State of Georgia Workforce Salary Report
Georgia Merit System Marjorie H. Young, Commissioner
Georgia Merit System
People Partnerships Performance
September 30, 1999

Every attempt has been made in this report to provide accurate data and to synthesize data, pertinent research, staff observations and intermittent feedback/discussions to identify issues and to provide input into the State's strategic/budget process. This report contains informed opinion and is the sole responsibility of the Georgia Merit System.

TableofContents
Executive Summary.....................................................................................................................1 Employees Below Target.....................................................................................................1 Market Adjustment of Salary Structure..................................................................................1 Performance- Based Increases............................................................................................2 Adjustments for Hard to Fill Common Jobs.....................................................................2 Options, Considerations and Base Annual Cost...............................................................3
Part I Introduction..............................................................................................................................S
Background of GeorgiaGain Reform.....................................................................................S State Pay System Reforms Still Not Fully Funded.....................................................................S Hidden Costs ofNot Fully Implementing Pay for Performance......................................................6 Chart A - Turnover Rate for Most Highly Populated Jobs..........................................................7 Chart B - Turnover by Length ofTenure................................................................................9 Part II Assessment of Current Pay Structure...............................................................................................10
Chart C - Progression of Employees Within Pay Ranges June 1999.....................................10 Chart D - Progression of Employees Within Pay Ranges After 10/1/99 Increase......................11 Chart E - Impact of Performance Increases to Employees Below Target ...............................11 Chart F - Market Driven v State's Projected Distribution ofEE's Within Pay Ranges ..............12 Effect of Performance Increases in Reducing Numbers Below Target......................................................-12 Chart G - Employees Below Target in Turnover Categories........................................................13 Chart H - Redistribution of Employees in Pay Structure............................................................14

TableofControts
Partill Foundations for Formulating Salary Options .................................................................................-15
Structure Adjustment.....................................................................................................15 Chart I - Employees Below State and Market Target Hire Salary................................................15 Performance Increases..............................................................................................................-16 Salary Adjustments to Employees in Hard to Fill Jobs..........................................................................16 Chart J - Turnover in Hard to Fill Common Jobs....................................................................17 Part IV Options................................... - .................................. ................................................... .....18 PartV Cost Analyses....................................................................................- .......................................19 Cost Analysis for Structure Adjustment...............................................................................19 Cost Analysis for Performance Increases.............................................................................20 Cost Analysis for Moving Employees to Target Hire Salary in One Step........................................21 Cost Analysis for Moving Employees in 21 High Populated Jobs to Target....................................-21 Cost Analysis for Moving Employees by a Specified Percentage.................................................22 Cost for Salary Adjustments to Employees in Hard to Fill Jobs...................................................23 APPENDIX Appendix A - History of General Pay Plan and Performance Increase Program.............................................24 Statewide Salary Plan (10/99) .............................26 Appendix B - Cost ofTurnover.....................................................................................................27 Appendix C - Jobs With 20 or More Employees & 10% or More Leaving State Service..................................32 Turnover Computation Methodology.............................................,.................................-33 Cost of Turnover Worksheet .....................33

Georgia Merit System

FY 2001 Workforce Salary Report.

Executive Summary FY 2001- Workforce Report Major Findings
Employees Below Target
In October 1996, the state designed a salary plan that was aligned with the labor market rates of jobs in general industry. The state did not fund moving all employees to the market target hiring salary of the new salary plan. This set up a situation of paying 9,000 - 14,000 employees1 and hiring new employees at rates that are often well below labor market rates.
The state adjusted the pay plan on October 1, 1997 by 2.5% and moved employees hired from July 1 through September 30 by 2.5%, allowing the market target hiring rate to be raised by 2.5%. Employees below target have not been addressed, as a whole, since that time.
Performance increases alone will not get employees to target. 69% of employees will not reach the 1997 target before October 2001, assuming yearly increases of 3% and no turnover.
Employees hired from July 1 through September 30 of the year the performance increase is granted do not get an increase. With the state's high turnover and new hires in jobs below target, it becomes virtually impossible to move the workforce closer to target.
93% of employees below target are in pay grades 7 to 14 in such jobs as juvenile correctional officer, houseparent, and caseworker, for example.
Employees hired below target leave state service at double the rate of those hired above target. From May 1997 through June 1999, 80% of non-retirement separations were employees hired below target who stayed less than 3 years.
Conservatively estimated, employees leaving state service in jobs highly populated with employees below target cost the state $80 million2 per year in lost resources.
The state is spending money hiring, recruiting, and training large numbers of employees below target and only retaining a small number for any length of time. This can lead to using large numbers of unskilled, inexperienced employees to do work that could be done more effectively by more senior employees.
Market Adjustment of Salary Structure
The state's salary structure is drifting seriously out of line with market due to missed salary adjustments and the large number ofjobs with hiring salaries below target.
Pay plan minimum and maximum rates were last adjusted in October 1997. Salary plans in private industry are adjusted each year to keep pace with changes in the labor market.
In October 2000, with no structure adjustment, 2,800 or more employees, about 5% of the eligible workforce, will have reached the pay ceiling and be denied performance increases.
1 The number of employees below target fluctuates over the course of a year. The maximum is reached in September and decreases October 1 when pay increases take effect. 2 Refer to Appendix C for explanation of cost of turnover calculations.
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Executive Summary (cont'd)
An American Compensation Association survey of how 2,800 employers adjusted their pay structures since 1998 indicates that the state's target hiring rate is currently 6% behind the labor market. Because no structure adjustment was authorized for October 1999, by October 2000 state hiring salaries will trail the market by approximately 9%.3
Performance-based Increases
The low salary of state jobs compared to the general labor market undermines the pay for performance program. Often the main effect of the "far exceeds" rating is to make an employee more conscious of the discrepancy between his or her salary and what could be earned working outside state government. For example, the entry wage for a Houseparent working for the state is $7.10 an hour and the average minimum pay for the same job outside Georgia state government is $9.44. After working for the state for an average of a year, if the Houseparent receives a performance rating of "meets expectations", his or her hourly rate increases by just 21 cents to $7.31. This is $2.13 an hour less than a Houseparent hired at the entry rate for the same job outside Georgia state government. If the Houseparent had earned the highest rating of "far exceeds" expectations, his or her salary hourly rate be $7.52, or $1.92 per hour less than the $9.44 entry rate for the comparable job in the labor market.
The amounts awarded as performance increases have to be viewed as "worth the effort" to motivate employees to higher performance levels. Research shows that the award amount for the highest rating level should be double the amount for the lowest rating level, e.g., if the lowest is 4% the highest should be 8%, and there should be at least a 3% difference between award amounts4, e.g., 4%, 7%, 10%.
The American Compensation Association projects average pay increases for 2000 at 4.1 - 4.2 percent for salaried employees.5 Hewitt Associates makes the same projection.6
Adjustments For Hard to Fill Common Jobs
Agencies report difficulty hiring and retaining employees in financial services, information technology, and health services jobs. Competitors are hiring at the pay range midpoint to attract this highly skilled employee group.
The 1999 Market Composite Summary, a labor market analysis of 430 jobs with over 47,000 employees covered conducted by the Merit System, indicates the state financial services, information technology, and health service common job average salaries are up to 37% below average market salaries.
Of the 345 employees that left state employment in financial services, information technology, and health services common jobs from May 1997 to June 1999, only 10% were age 50 or older with 10 or more years of service. Thus, most turnover in these jobs is not due to retirement.

3 ACA 1999-2000 Total Salary Increase Budget Survey, American Compensation Association, Scottsdale, AZ. 4 Wm. M. Mercer Management Consultants, 1992. HR Magazine, "Big Returns for Award Bucks", June, I994. 5 ACA 1999-2000 Total Salary Increase Budget Survey, American Compensation Association, Scottsdale, AZ 6 "Moderate U.S. Salary Increases in the Year 2000 Offset by Significant Increases in Variable Pay"@ URL:
http//www.hewittassoc.com, press release 9/06/99.

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Options, Considerations, and Base Annual Cost

All options provide the return on investment in the following categories to varying degrees:

Service delivery enhanced

Pay equity enhanced

More head room for salary

Motivational value of performance Morale improved

ceiling

increase enhanced

State service a more attractive and

Vacancy reduction

Retention increased

competitive option

Training or potential legal

costs reduced

Options

Cost

Considerations

A. Optimal Option
9% Structure Adjustment Performance Increase of3-6-9% Raise all employees to adjusted
structure target7 (includes 7/1 - 9/30
new hires)
Raise salaries for Hard to Fill Common Jobs to new structure midpoint

$169.13 M annual base salary

Hiring and maximum salaries offered by state
would match labor market rates.
Return on investment is maximized. Employees are paid within pay ranges.
Eliminates all of the alphabetic grades that are being used publicly to designate employees
below target
Agencies would be aided in filling mission critical hard to fill jobs and would be more

orone to use common jobs.

B.
6% Structure Adjustment Performance Increase of 4-6-8% Raise all employees to adjusted
structure target (includes 7/1-9/30 new

$158.36 M annual base salary

Hiring and maximum salaries offered by state would trail labor market rates by only 3%,
instead of a projected 9%.
Eliminates all of the alphabetic grades that are
being used publicly to designate employees

hires)
Raise salaries for Hard to Fill Common Jobs to 10% above new

below target
Agencies would be aided in filling mission critical hard to fill jobs and would be more

target

prone to use common jobs.

C.
6% Structure Adjustment Performance Increase of 4-6-8%
Raise employees up to 10% but not more than up to adjusted target

$138.42 M annual base salary

Hiring and maximum salaries offered by state would trail labor market rates by only 3%
instead of a projected 9%.
Raises hiring rates of all jobs that are below target by 10% but not beyond target-thus

(includes 7/1-9/ 30 new hires)

beginning the road back to pay equity within

Raise salaries for Hard to Fill Common Jobs to 10% above new target

the current pay plan.
Removes some of the alphabetic grades that are being used publicly to designate employees

below target.

Agencies would be aided in filling mission critical hard to fill jobs and would be more

prone to use common jobs.

D.
3% Structure Adjustment Performance Increase of 4-6-8% Raise employees up to 10% but not
more than up to adjusted structure

$126.22 M annual base salary

Hiring and maximum salaries offered by state would trail labor market rates by 6%, instead of
a projected 9%.
Raises hiring rates of all jobs that are below
target by 10% but not beyond target-thus

target (includes 7/1 -9/30 new hires)

beginning the road back to pay equity within

Raise salaries for Hard to Fill Common Jobs to 10% above new

the current pay plan.
Removes some of the alphabetic grades that are

target

used to designate employees below target.

Agencies would be aided in filling mission

critical hard to fill jobs and would be more

prone to use common jobs.

7 Adjusted Structure Target is the new target rate after the structure has been moved upward.

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E.
0% Structure Adjustment Performance Increase of 4-6-8% Raise all employees to target (includes
7/1- 9/30 new hires)
Raise salaries for Hard to Fill Common Jobs to 10% above new
target

$123.55 M annual base salary

F.
3% Structure Adjustment Performance Increase of4-6-8% Raise employees up to 5% but not
more than up to adjusted structure target (includes 7/1- 9/30 new hires)
Raise salaries for Hard to Fill
Common Jobs to 10% above new target

$120.21 M annual base salary

G.
0% Structure Adjustment Performance Increase of 4-6-8% Raise employees in 21 high population
jobs to target (includes 7/1-9/30 new
hires)
Raise salaries for Hard to Fill Common Jobs to 10% above new target
H.
0% Structure Adjustment Performance Increase of 4-6-8%
Raise 7/1-9/30 new hires by 4% so
that all jobs can be raised closer to target
Raise salaries for Hard to Fill
Common Jobs to 10% above new target

$108.80 M annual base salary
$105.29 M annual base salary

I. Minimum Cost Optiou
0% Structure Adjustment 0% Performance Increase Raise all employees to target Raise salaries for Hurd to fill Common
Jobs to 10% above new target

$31.49 M annual base salary

Hiring and maximum salaries offered by state would trail labor market rates by projected 9%.
Eliminates all of the alphabetic grades that are being used publicly to designate employees below target
Agencies would be aided in filling mission critical hard to fill jobs and would be more prone to use common jobs.
Hiring and maximum salaries offered by state
would trail labor market rates by 6%, as opposed to projected 9%.
Raises hiring rates of all jobs that are below
target by 5% but not beyond target-thus beginning the road back to pay equity within the current pay plan.
Removes some of the alphabetic grades that are
being used publicly to designate employees below target.
Agencies would be aided in filling mission
critical hard to fill jobs and would be more Prone to use common iobs.
Hiring and maximum salaries offered by state would trail labor market rates by projected 9%.
Pay equity is improved for high population jobs
covering 4,413 employees, but leaves 6,441 being paid under target.
Agencies would be aided in filling mission critical hard to fill jobs and would be more prone to use common jobs.
Hiring and maximum salaries offered by state would trail labor market rates by projected 9%.
Would allow state to raise hiring rates of all
jobs that are below target by 4% but not beyond target-thus beginning the road back to pay equity within the current pay plan.
State will never be rid of the problems caused
by paying below target without this action.
Eliminates the lowest of the alphabetic grades that are being used publicly to designate employees below target.
Agencies would be aided in filling mission critical hard to fill jobs and would be more prone to use common iobs.
Hiring and maximum salaries offered by state would trail labor market rates by projected 9%.
Eliminates all of the alphabetic grades that are being used publicly to designate employees below target
Agencies would be aided in filling mission critical hard to fill jobs and would be more Prone to use common iobs.

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Part I
Introduction
Background of GeorgiaGain Reform
In 1991 the Governor's Commission on Effectiveness and Economy in Government recommended that the State of Georgia move to pay for performance for the state workforce. The project to develop and implement this recommendation was called GeorgiaGain. In 1996 the Governor and legislature, acting on the recommendations of the Quality Service Georgia/GeorgiaGain Task Force of ten state agency department heads, made two sweeping changes to the state's compensation system. The state designed a market sensitive pay structure and the state implemented a system of salary increases that was based on performance. Each of the changes was designed to resolve long-standing complaints by state agencies.
Until the inception of the GeorgiaGain project, the state had not systematically determined the relationship of pay rates for its jobs to pay for equivalent jobs in the labor markets where the state competed for hiring employees. (For a brief history of the state's compensation system, see Appendix A.) As a result, managers complained of excessive turnover as capable employees left state government for more lucrative positions in the private sector. Managers also complained of their inability to recruit and hire high-performing employees at the starting salaries on the old pay plan. The GeorgiaGain project extensively documented the validity of these complaints: salaries for many key jobs in state government were not competitive with salaries of the state's public or private sector counterparts.
The second change brought about in 1996 was variable salary increases based on performance. Prior to 1996, employees who performed adequately or above in their jobs all received the same standard increases each year. Managers complained that they did not have the flexibility to withhold increases from mediocre performers or to give larger increases for high achievers.
The Task Force recognized that a market sensitive salary plan is needed for a successful pay for performance program. If hiring salaries are not close to the range offered by competing employers, the state cannot hope to attract high performing employees. Industry experience has shown that pay for performance is only effective when employees' base salaries are competitive with market rates, otherwise managers, in desperation, seek ways to "game" the system to raise base pay in order to meet critical staffing needs.8
State Pay System Reforms Still Not Fully Funded in 1999
A major goal of the pay for performance project has not been realized. State salaries, on average, are not comparable with salaries in the labor market. Agencies are now more than ever at a competitive disadvantage in recruiting and retaining high-performing employees. Unfortunately, when pay for performance was put in place, it hit a major funding stumbling block. After four years, the major tenets are still not fully funded. As each year goes by without full funding, the state moves farther from being able to achieve its original objectives and the cost of full funding increases.

8 Mercer, 1992.

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In the course of the Georg;,aGain project, the majority of state jobs were assigned to pay grades that reflected the hiring rates for jobs in the labor markets where the state competes for employees. However, at the conclusion of the project, the analysis of employee data revealed a disturbing fact: Incumbents in many jobs were working at salaries lower than the new hiring rates. Moreover, since funding was not made available to raise salaries to the new rates, using the new market-based hiring rates would have meant bringing in new employees at salaries higher than salaries of incumbents. Because of equity, legal and workforce morale considerations, the state was unwilling to take this step. Instead, state policy designated the salary of the lowest paid incumbent in a job as the hiring salary, called the "job minimum." The competitive hiring salary for a pay grade as determined by market analysis, was designated as the ''target hire" salary, or "target."
"Target" is the salary at which state government is aiming in order to attract and retain competent workers in a competitive job market. "Target" for Georgia was set roughly 10% below private sector benchmarks for competitive hiring. Yet, it is the lowest baseline hiring salary that reasonably should be used and it is the hiring salary that would be used if funding were made available to adjust incumbent salaries to these baseline levels. Since funding for incumbents has not been available in 1996-1999, the "job minimums" have turned into a system of special pay grades, kept in effect by massive state turnover that continually perpetuates the 1996 conditions. (Appendix A shows the October 1999 Statewide Salary Plan with hiring rates below target).
In addition, even though variable pay increases based on performance have been in existence since 1996, budgets appropriated for state employee pay increases have resulted in very small monetary differentials between performance levels. In some instances, funding uncertainties appear to have fueled management practices that have artificially lowered the number of "exceeds" and "far exceeds" performance ratings awarded. These and other actions driven by funding issues have the effect of undermining the effectiveness of pay for performance, and, as will be discussed in more detail later, may actually have a de-motivating effect on employee performance.
Data and analyses on workforce and pay structure issu~s follow in the four sections entitled:
Hidden Costs of Not Fully Funding Pay for Performance Where Employees Are on Current Pay Structure Effect of Performance Increases Structure Adjustment
Further discussion of pay differentials between performance levels is found in Part ill of this report, "Foundations for Formulating Salary Options."
Hidden Costs of Not Fully Implementing Pay for Performance
It is a relatively straightforward process to calculate the direct costs of fully implementing the pay for ~rformance rcconunendations. Unfortunately the costs of not fully implementing a competitive wage structure and an effective process of variable pay increases linked to performance are more difficult to identify and calculate, even though these costs are greater than the direct costs.
The costs of fully funding the original GeorgiaGain initiative include the costs of: adjusting employee salaries to appropriate market based hire rates adjusting the current pay structure to reflect changes in the market that have taken place over the past four years providing sufficient differentials for superior performance incentives

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The costs of not funding the initiative are the costs of: not being able to attract top talent to the state workforce lost productivity and failure to provide adequate service to taxpayers and constituents wasted resources siphoned off by turnover in the state workforce.

Turnover - One of the most damaging and excessive costs of having large numbers of employees
at salaries below the market-hiring rate is increased turnover. A conservative estimate of the annual cost of turnover for Georgia state government is $253 million.9

For the 21 most popuious jobs in state government, turnover costs $80.7 million per year. These jobs cover a combined total of 18,564 employees. 5,787 or 31% of which are below the target hire rate. As shown in Chart A, the percentage of employees in each job earning salaries below target varies from 7.63% to 69.27% of the total employees in each job. For example, of the 1,139 employees classified as Juvenile Correction Officer 1, over half, (789 or 69%) are paid below target. At 39%, turnover for this job is the highest among the 21 jobs. Leading industry sources consider a turnover rate of 10% or more to be of great significance in the absence of other factors.

Chart A

Turnover* Rate for Most Highly Populated Jobs

GMSJC

Job Title

17251 70201 70917 70833 70924 71109 50301 14412 70923 60101 60107 71122 60112 70834 60108 60102 10006 40806 14454 17234 17502

.JUVENJLE CORR OrF I HOUSEPARENT SOCIAL SVS PROVIDER I HEALTH SVCS TECH (1/S) SOCIAL SVS TECH LPN (INPATIENT SVCS) FOOD SERVICE EMPLOYEE FAMILY INDEP CM 1-DFCS SOCIAL SVS TECH SR SECRETARY 1 CLERK 1, GENERAL PH NURSE PROGRAM ASSISTANT (DHR) HLTH SVCS TCH LD 1/S CLERK 2, GENERAL SECRETARY2 INSTRUCTOR ACCOUNT ANT, PARAPROF FAMILY INDEP CM 2-DFCS SERGEANT (GOC) PROBATION OFFICER 112

Pay Grade
11 7 12 7 8 9 6 11 9 8 8 14 9 8 9 9 8 II 12 13 13

6/1/99 # in Job

#Below %Below Avg of Median Job Min Target Turnover Target Target Base Sal Salary Minimum Salary Rate

1,139 998 740
1.612 618 502 413
1,437 755 892 822 620
1,970 380 887
1,291 629 911 654 567 727

789 69.27% 410 41.08% 156 21.08% 642 39.83% 155 25.08% 66 13.15% 67 16.22% 578 40.22% 75 9.93% 315 35.31% 380 46.23% 62 10.00% 590 29.95% 29 7.63% 219 24.69% 189 14.64% 125 19.87% 226 24.81% 198 30.28% 290 51.15% 206 28.34%

20,625 16,212 27.403 17,115 18.652 23.713 16,776 25,431 21,573 18,829 17.694 34.402 21.404 21,748 21,192 22,223 19,719 25.366 27,760 27.400 30,813

19.530 15.570 26.010 16.773 17.904 23.028 16.578 23.256 20.694 17.652 16,812 34,356 20,694 22.476 20,442 21.612 18,792 24,414 26,262 26,514 30,402

18.522 14.778 19.530 13.758 14,088 16,980 13,758 21.000 16,734 15,138 14,088 26,778 15.954 15.954 15,138 15,954 14,418
18.162 22.044 24.054 22,800

22,044 15,498 24.174 15,498 16.812 18.162 14.286 22.044 18,162 16,812 16,812 29,382 18.162 16.812 18.162 18,162 16,812 22.044 24,174 26,646 26,646

39.24% 30.06% 28.38%
25.68% 24.60% 23.90% 23.49% 22.20% 21.19% 21.08% 20.92% 16.94% 16.90% 15.53% 14.43% 14.02% 13.67% 11.53% 11.31% 9.35%
7.84%

Totals

18,564 5,767

Turnover is defined as employees leaving state service June I. 1998 through June I. 1999 and is calculated using the number of filled positions in a job divided by the number of employees leaving that job.

18,564 represents approx 27% of ee's on the SWD plan.

9 Appendix C provides information regarding calculation of turnover costs.

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Hiring Disadvantage - Another hidden cost of having hiring salaries that are not aligned with market is a competitive disadvantage in hiring high-performing employees. Research in both the public and private sectors indicates that productivity rates of the top I 0-15% of high-pe,forminfo employees in moderately complex jobs are, on average, I times that of average workers. 0 Productivity rates for high performers in highly complex jobs, such as programmers, are as much as 15 times that of average workers and high performer rates for low complexity jobs exceed those of the average performers by an average of 20%. 11 Benchmarks from the private sector indicate that high performing companies recognize that an organization's human capital is the key component of success.12 In state government, the goal of every state agency is to provide services valued by the taxpayers, with due regard to economy, efficiency and customer service. It is well documented that the only way to produce such desired, effective outcomes is to reliably select superior performers and to continually re-skill, motivate and reward them to sustain performance at their highest levels of competence. That the state does have many high performing workers is a blessing, but managers report that their numbers are dropping and there are severe difficulties in finding replacements and in adding to the numbers of high performers in the workforce.
The state's difficulties are exacerbated by the fact that the labor market is now much tighter and more competitive than in 1996. According to the Bureau of National Affairs (BNA), during the first quarter of 1999, 208 national employers reported hiring rates across the board that were higher than levels recorded throughout most of the 1990s.13 The unemployment rate in Georgia for persons over the age of 16 was reported to average 4.6% in 1996, 4.5% in 1997, and 4.2% in 1998. In the Metro Atlanta area, covering 40 percent of the state's workforce, the unemployment rate for this age group was 3.8% in 1996, 3.7% in 1997, and 3.3% in 1998.14
The tight labor market is making the competition for workers in high-demand technical areas such as information technology, accounting, nursing, and engineering more intense than ever, and the state has traditionally lagged behind the private sector in attracting top talent in these critical occupations. The state's ability to recruit and remain competitive in these areas is pivotal to modernizing and streamlining state government. To attract and retain high performing workers in a tight labor market requires superior incentives. The present state pay and benefit structure does not provide competitive incentives, much less superior ones. 15
Pay for Performance Undermined --The low salaries of employees in some state jobs compared to the general labor market undermines the pay for performance program. The performance management program is designed to recognize and motivate high-performing employees. As noted above, the productivity of high performers exceeds the productivity of average performers at least 20% and as much as 1500% depending on the complexity of the job. Unfortunately, in a tight labor market, when a high-performer's base salary is below what the market is paying and the differential between the performance levels is small, the pay for performance program may cause top performers to leave the organization.
As an example, consider one ofthe 410 Houseparents with a salary below target. (Houseparents monitor residents in a 24-hour/7-day inpatient facility and may supervise other residential staff). Between July 1, 1998 and June 1, 1999 approximately 300 Houseparents left state service and were

10 Hunter, Schmidt, and Judiesch, Journal ofApplied Psychology, 1990, vol. 75, pp. 28-42; Spencer, 1986; Brooks, 1999.
11 Hunter, et al, 1990; Spencer, 1986. 12 Grubman, Ed, ACA News, "Finding the Talent Solution", November/December 1998. 13 BNA's Employment Outlook-First Quarter 1999 Bulletin to Management, (Washington, D.C.), December JO, 1998. 14 Tammy Joyner, "The Boom's Benefits Run Deep" Journal-Constitution (Atlanta, GA), 13 Jun, 1999 pp. 1-4. 15 Hewitt, 1993; Bensley, Kathy, ACA News, "Avoiding Mutiny Means Having Your Act Together" November/December 1998.

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replaced at a hiring rate of $14,778 or $7.10 per hour. The state's hiring rate for Houseparent is considerably less than the average starting rate of $19,636 ($9.44 per hour) paid in the general labor market for the same work. After working for the state for an a year, if the Houseparent receives a performance rating of "meets expectations", his or her hourly rate increases by just 21 cents to become $7. 31. This is $2.13 an hour less than a Houseparent hired at the entry rate for the same work outside Georgia state government. If the Houseparent had earned a rating of "far exceeds" expectations, then the increase becomes 42 cents per hour. The superior performing Houseparent earns only $7.52 per hour after the increase, which is $1.92 per hour less than the beginning rate for a Houseparent job in the general labor market. Thus, the main effect ofthe "far exceeds" rating may be to make the employee more conscious ofthe discrepancy between his or her salary and the salary that could be earned by seeking employment outside state government.
Workforce Stability Threatened --If an organization cannot retain newly hired employees in its key jobs, an experience gap is inevitable. As more experienced or senior employees retire, obtain promotions or leave the organization there are fewer employees with comparable job proficiency or experience moving up the ladder to replace them. As the organization hires more and more new hires to replace the senior employees, the distribution of employees in the job bunches up at the extreme of low tenure. When this bunching occurs, an organization is uselessly spending money hiring, recruiting, and training large numbers ofemployees to retain a proportionally small number on the job. The organization is also utilizing large numbers ofunskilled, inexperienced employees to do work that could be done more effectively by more senior employees.
Managers in many organizations have confirmed that an employee typically needs to stay with an organization a minimum of three years in order for the organization to recover a baseline productivity return on the investment in recruiting, training and, generally, getting the employee "up to speed" in the work environment. However, the state's turnover rates for employees with less than 3 years' tenure indicates severe problems in building an experienced cadre for most jobs. Of a representative group of 14,605 employees during the period between May 1997 to June 1999, 56% or 8,179 non-retirement separations were employees with less than 3 years of tenure. Of these 8,179 separations approximately 6,540 or 80% were employees hired below target (see Chart B).
ChartB
TURNOVER BY LENGTH OF TENURE MAY 97 TO JUN 99 (14,605 EMPLOYEES)

MORE THAN 3 YRS TENURE 43%
September 1999

BELOW TARGET 80%
ABOVE TARGET 20'%,
IJMORE THAN 3 YRS TENURE BELOW TARGET ABOVE TARGET
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Part II
Assessment of Current Pay Structure
The median annual salary (i.e., the amount at which half the employees are paid above and half are paid below) for employees on the statewide pay plan is $25,134 and the annual average salary is $28,285. The FY2000 workforce salary report noted the majority of state employees were clustered at or below the target market-hiring rate of the pay range. As of June 1999 salaries for 15,869 individuals or 23% of state employees on the statewide plan, remain below the target minimum for their assigned pay grade. Additionally 34,733 or 56% of all state employees on the statewide plan are paid at or below the lower quartile of the pay range. Chart C shows the current distribution of the state employees among all pay grades.
ChartC
PROGRESSION OF EMPLOYEES WITHIN PAY RANGES June 1999
20000
15000
10000
5000

5000

10000

15000

20000 IINumbsrofEmployees

Below Range 15869

Target to 25% 18864,

25%. to SO% 14388

50%to75% 10632

75%toTopof Range
6423

Ator.Above Maximum
1849

After the performance-based increases of October 1999 (assuming that employees receive proportionately the same ratings and increases as were given in 1998), the number of employees on the statewide pay plan below target will be reduced from 15,869 to 10,854 or 16% of employees on the statewide plan. Similarly, the number of employees remaining below the lower quartile of the pay range will be reduced from 34,733 to 31,573 or 45% of employees on the statewide pay plan. Although it appears that some progress has been made in decreasing the number of employees on the statewide plan who are below the target hiring rate, a comparison over a year reveals otherwise.

September 1999

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After the October 1998 performance increases 9,771 employees were still below target. It is projected that after the October 1999 performance increases 10,854 employees will still be below target, an increase of 1,083 employees. Chart D shows the relatively minor progression of the workforce within the pay range after performance increases are awarded.
ChartD
PROGRESSION OF EMPLOYEES WITHIN PAV RANGES 10t'1199 PAO..ECTED
25tXJI) 20000 15000 10000
5000

5000

10000

15000

Below Rangs 10854

Targ,l to 25% 20719

25% ta 50% 15774

50%to 75"% 11711

75% lo Top of Range
1848

Al or AboV9 Max/mm
2800

Chart E shows little progress toward achieving a more balanced pay structure since the GeorgiaGain implementation in 1996. The chart indicates that the number of employees below target fluctuates between 9,000 and 14,000 within any given year. Each year, when the annual performance increases and legislated pay adjustments go into effect the number drops. As the year progresses, however, the number of employees below target increases to near the previous year's figure. The maximum is reached just before pay increases go into effect on October 1 and the minimum is reached on the date the pay increases go into effect. This cycle is repeated in each performance increase cycle. The net effect is that the changes cancel out and the number of employees below target on any given date does not change significantly from year to year.
ChartE

18000

Change lo Number of Employees Below Target Resu!llng lrom Porlormance Increases

14000 12000

~Change lo Number of Employeos Below Tar et Resullln lrom Merl! Increases

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Chart F contrasts the salary distribution based on the state's current salary administration practices versus the expected distribution that would result from market-driven salary increases. The light colored cylinders represent the projected distribution of state employees' salaries with the pay ranges after the October 1999 performance increases. The dark cylinders represent the expected distribution when salaries are paid market rates. Clearly the large percent of employees below target (the upside down cylinder) continues to keep median salaries below market rates.
Chart F
MARKET DRIVEN VERSUS STATE'S ~0/1199 PROJECTED DISTRIBUTION OF EMPLOYEES WITHIN PAV RANGES

r ,oo/Ormurion ,wo

ArorAbon /dall'/fflr'1n

Effect of Performance Increases on Reducing Numbers Below Target
Performance increases alone will not reduce the number of employees below target. One of the principal reasons that state hiring salaries have not progressed toward target is because employees who are hired between July 1 and September 30 do not receive the performance increase. Historically, the state has hired about 6,000 employees each year, with about a third of those employees being hired in the first quarter of the fiscal year. Thus, about 2,000 employees are added to the ranks of those below target with no statewide planned mechanism to adjust their salaries until the next October 1 performance increase. Therefore, performance increases alone cannot remedy the problems created by employees being hired and paid below target.
For performance increases alone to eliminate or significantly reduce employees below target the following conditions must hold:
1. The salaries of the lowest paid below target employees must move significantly closer to target each year, including those hired between July and September 30.
2. The yearly increase in the number of employees at or over target resulting from promotions and performance increases must exceed increases to the number of employees below target resulting from turnover and new hiring.

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At present these conditions fail to hold for the following reasons:
1. The number of employees below target increases over the course of the year. It is not good business practice to hire new, lesser skilled employees above the pay rates of current high performing employees who are the same classification level. If a job class has incumbents below target, the salary of the lowest paid incumbent in a job typically determines hiring salary. In this circumstance, any hiring increases the number of employees below target. In a year's time 55% of state employees hired on the statewide plan are hired below target. Because employees hired from July through September 30 are not eligible for a performance increase, any hiring in this period can prevent the yearly performance increases from moving hiring salaries closer to target.
Although agencies generally try to schedule hiring and make adjustments to insure that hiring salaries below target make some progress, the effect is only a small boost. The effect of the 1998 performance increases was to raise the below target hiring salaries of jobs with 100 or more incumbents by an average of 2.9%, which is less than the 4% merit increase received by most employees. The hiring salary of 6% of the below target jobs actually decreased between October 1997 and October 1998.
2. High turnover among employees in the lowest salary ranges. For yearly performance increases to move employees below the target hire salary into their appropriate salary range, employees must remain on the payroll long enough for the accumulated increases to fall into the target range. Unfortunately, as Chart G depicts, turnover is directly related to below target pay, with average turnover for below target employ~s averaging more than twice the turnover for employees at or above target. When employees leave, new employees at the minimum salary replace them, and the gains from performance increases are wiped out. As noted in 1 above, employees hired between October and July are not eligible for performance increases. Consequently, the high turnover rate insures that in high population jobs some employees will always be hired at the minimum rate in the July-October period, effectively preventing the hiring salaries from moving closer to target.
ChartG
Employees Below Target in Turnover Categories
45%
40%
3.5%
30"h,

20;. or Higher
September 1999

10~... to 15 "., Turnover Rate

Less than 5~-;,
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FY 2001 Workforce Salary Report

3. Distance from target and turnover. The longer an employee remains below target, the higher the probability the employee will leave state service. Of the employees currently below target, 69% would have to wait until October of the year 2001 or later to reach target through performance increases alone, assuming yearly performance increases of 3% and no pay structure adjustments. Forty-six percent of employees would have to wait until October of the year 2002 or later to reach target by performance increases alone. This waiting time increases the likelihood that these employees will leave. When the employees leave, employees at the minimum hiring salary replace them and the downward cycle begins anew.
Because the minimum hiring salary for a job is set by the lowest-paid employee, if employees in the range above target leave during the course of a year, employees at the minimum salary will frequently replace them. As Chart H illustrates, the net result of hiring, transfers, and other turnover is an increase in the number of employees below target and a slight decrease in the number of employees in the above target range.
ChartH

REDISTRIBUTION OF EMPLOYEES IN PAY STRUCTURE JUNE 1, 98 TO JUNE 1, 99

800

New Employees Are Hired In

600

400

200

-200 -400 -600 -800 ase,1es1

75"'/4 to Tq, of
Range
-248

Top of Range and Abovo
-124

September 1999

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FY 2001 Workforce Salarv Report

Part ill Foundations for Formulating Salary Options
Structure Adjustment Each year, as wages reflect cost-of-living increases, businesses, governments and other organizations with market-based pay plans increase hiring salaries and grade maximums of their pay structure. This is done to maintain their competitiveness and to allow senior employees to continue to receive cost of living or performance increases. Over the past two years structure adjustments in the U.S. have averaged 2.5% to 2.9%, depending on the industries considered. 16 Preliminary projections for 2000 estimate a 3.1 % structure increase.17
The state's salary structure is drifting seriously out of line with market as a result of the combined effects of missed salary adjustments and the large number of jobs with hiring salaries below "target." The last structure adjustment to the State's pay plan was in 1997-thus, the state has "missed" two adjustments. Target hiring salaries lag by nearly 6% in the labor markets where the state competes for employees. Since no structure adjustment was authorized for 1999, by October 2000 state target salaries will trail the market by approximately 9%.
To show this effect, the number of employees below market hiring salaries for their jobs is compared to the number below the state's target hire salary. The number of employees below target on October 1 has held steady between 11,000 and 9,000 from 1997 on. However,, the number of employees below target compared to labor market hire rates jumps with each missed structure adjustment. As shown in Chart I, 11,000 employees are projected to be below the state's "target" salary after the October 1999 performance increases. More than 20,000 are projected to be below the true market hire rate. By October 2000 this number will likely increase to over 27,000.
Chart I
Employees Below State and Market Target Hire Salary

-+-Number of Employees Below State Target Hire
-er-Number of Employees Below Markel Target Hire

16 ACA 1999-2000 Total Salary fucrease Budget Survey. American Compensation Association. Scottsdale. AZ. 17 ACA 1999-2000 Total Salary fucrease Budget Survey. American Compensation Association. Scottsdale. AZ.

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FY 2001 Workforce Salary Report

Another serious problem resulting from missing structure adjustments is that senior employees begin to reach the maximum of their pay range and are no longer eligible for performance or other scheduled salary increases. Projections indicate 1,500 senior employees will receive no performance increases in October 1999 because their salaries are at the maximum of their range. In October 2000, with no structure adjustment 2,800 or more employees, approximately 5% of the eligible workforce, will be denied performance increases because they will have reached their maximum pay rate. These projections do not include employees who will lose part of an increase because they will top out at the maximum before receiving the full increase.
Performance Increases
Estimates from the American Compensation Association's (ACA) 1999 - 2000 Total Salary Increase Budget Survey projects year 2000 salary increases to be 4.1 % for non-exempt salaried employees and 4.2% for exempt salaried employees.18 Hewitt Associates in their 1999 Salary Increase Survey makes the same projection. 19 A survey by Buck Consultants, Inc., consisting of 406 companies, reveals that for three consecutive years, salary increases have remained steady at an average of4.1 %.20
The primary objective of the state's compensation plans is to attract, retain and reward high-quality employees and enhance organizational performance while maximizing taxpayer value. In order to accomplish this task, the state utilizes a pay-for-performance system that was designed to compensate employees only when positive results are achieved. Currently, under the statewide salary plan (SWD), a "meets" expectations rating will result in a 3% increase to base pay; an "exceeds" rating results in a 4.5% increase to base pay; and a "far exceeds" rating results in a 6% increase to base pay. Recently, HR Magazine noted that research shows that salary increases must be between 3% and 5% to motivate employees.21 A higher differential between ratings results in a larger effect on performance. If we apply this concept to the average employee who meets expectations of the standard requirements of the job, then salary increases for top performing employees should be set somewhat higher. Therefore, an increase for top performing employees should range between 5% and 8% with a spread of at least 3.0% between ratings for a greater incentive for employees to exceed job expectations.
Salary Adiustments to Employees in Hard to Fill Jobs
Statistics show that state agencies are having difficulty hiring and retaining jobs in finance, information technology and the health care fields. The state must look to aligning its compensation strategy with the existing job market or it will experience even more serious critical skills gaps.
Market data was obtained for 430 state jobs held by 47,000 employees in 1999. Identified in this survey was a list of bard to fill jobs in finance, information technology, and health care that the state is paying substantially below market rates. This data was compared to turnover and vacancy percentage data. The chart below shows leading high-skill common jobs where the percentage of

18 ACA 1999-2000 Total Salary Increase Budget Survey, American Compensation Association, Scottsdale, AZ. 19 "Moderate U.S. Salary Increases in the Year 2000 Offset by Significant Increases in Variable Pay"@ URL:
http//www.hewittassoc.com, press release 9/06/99. 20 "Buck Survey: Pay Raises to Remain Flat in 1999" @ URL: http//ww~.acaonline.org, newsline posted I 1/27/98. 21 "Big Returns for Awards Bucks" by Bill Leonard, HR Magazine, June 1994, pp. 59-60.

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FY 2001 Workforce Salary Report

vacant positions varies from 6% to 31% and the turnover rate varies from 7% to 35%. These percentages imply that the State of Georgia has difficulty hiring and retaining employees in these hard to fill common jobs. Additional data in the chart identifies the percentage of employees in each job currently paid below target and compares average state salaries to average market pay. A direct relationship seems to exist among these variables.
It is envisioned that adjusting current employee salaries and the hiring rate of future employees to 10% above target will decrease the administrative and training costs associated with turnover. It will also enable the State to be more competitive in hiring and retaining employees who possess the education and skills necessary in efficiently carrying out the state's business objectives.
ChartJ
Turnover in Hard to Fill Common Jobs

Oxle 80005 00301 00401 00007 40405 412)4
60713 61402 71123 71125 71127 71129 713)2 00003 80004 00006 00112

idJ!itle SVSTBvS ANALYST'
EDP ENG SUPTEOI I* cx:M='UT'EROPERATOO 1
LAB TEO! SR" Al.DITOR, seJICR' PAYFO..l.. PARAPRJ' CFERATIOJS ANALYST' STAT. ANALYST 11 Ill.JR.SE PRACTTTlo-JER" PHLPN" r-JJRSE, STAFP LPN" PHAFIMb,CIST* flETWCR< SPECIALIST* tTWCflK ACMNISTRATO' MCFOSUP SPECIALIST* BUSINESS ANALYST'

N3 T01al Ees

18N

14l

12R

14i

10C

10:

10E

6!

15G

24

110 I

31,

121 i

81

14

a:

17F

174

9H

25:e

140

4S

9H

24C

17

24

13

31

120

23

13M

83

14D

41:

Pct State Avg

Tumover Pct Below Taroet BelONM<IAva %Vacant

13.33%i

35.71%;

aJ.8% 21.05

11.11%!

35.71%

37.2%, 19.05

10.00%,

40.00"!..

aJ.0%

28.57"/J 1250"/.

50.00"/., -- - --- - 1--6-.-9-%--- ------

4.17"/.

~.3%i 17.65

1212"/.

17.95"/.

18.9% 9.09

13.16"/.

24.69"/J

31.8%1 19.42

7.14o/c

0.00"/d

16.9%1 31.03

13.67"/.

5.03"/~

21.4%! 14.95

18.58o/c

19.44%

13.2%i

35.42"/.

18.37%

16.5%

:16.52"/.

15.92"/d

129%

18.18"/. Z3.53"/.

0.00"/~ 0.00"/.J

15.2% 19.8'~

.---"1a8o.7o5

15.63"/.

1200"/.

Z3.0"/.; 25.81

24.07"/.

Z3.46"/.

11.6"/o;

10.340/.

8.330/~

~.7'%: 24.19

September 1999

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Georgia Merit System

FY 2001 Workforce Salary Report

Part IV

Options
(All cost projections are annual base salarie!t-tlo fringes.)

To address the concerns and issues identified in Parts I, II, and III of this report, the salary options below include nine alternatives designed to provide a recommendation regarding:
a structure adjusnnent to the statewide pay plan a performance based increase for employees meeting or exceeding performance criteria funding to move belo,v target employees at or closer to the target hire rate
an adjustment for hard to fill common jobs in finance, information technology, and health care that will make the state more competitive with other employers

Option Optimal A B
C
D
E
F
G
H
Minimum I

Structure Adiustment 9% 6% 6% 3% 0% 3% 0% 0% 0%

Performance Increase 3%-6%-9%

Employees to Target
Raise all employees to adjusted structure target (includes 7/l - 9/30 new hires)

Hard to Fill Common Jobs Raise pay to new structure midpoint

4%-6%-8%

Raise all employees to adjusted structure target (includes 7/1 - 9/30 new hires)

Raise pay to IOabove new target

4%-6%-8% 4%-6%-8% 4%-6%-8%

Raise employees up to I0% but no more than up to adjusted structure target (includes 7/1 9/30 new hires)
Raise employees up to I0% but no more than up to adjusted structure target (includes 7/19/30 new hires) Raise all employees to target (includes 7/1 9/30 new hires)

Raise pay to 10% above new target
Raise pay to 10% above new target
Raise pay to IOabove target

4%-6%-8% 4%-6%-8%

Raise employees up to 5% but no more than up to adjusted structure target (includes 7/1 9/30 new hires)
Raise employees in 21 high population jobs to target (includes 7/1 9/30 new hires)

Raise pay to IOabove new target
Raise pay to 10% above new target

4%-6%-8%

Raise 7/1 - 9/30 new hires by 4% so that all jobs can be raised closer to target

Raise pay to 10%above new target

0%

Raise all employees to

Raise pay to

target (includes 7/1 -

10% above

9/30 new hires)

new target

Itemized Costs in Millions
$012.08 structure-p. 19 $083.7 l performance- p. 20 $067.23 new target - p. 2 l $006.1 l hard to fill-p. 23 $169.13 Total $0 l 0.30 structure - p. 19 $102.28 performance. - p. 20 $044.59 new target-p. 21 $001.19 hard to fill-p. 23 $158.36 Total $010.30 structure - p. 19 $102.28 performance - p. 20 $024.65 new target-p. 22 $001.l 9 hard to fill-p. 23 $138.42 Total $006.20 structure - p. 19 $102.28 performance - p. 20 $016.91 new target-p. 22 $000.83 hard to fill -p. 23 $126. 22 Total $000 structure $102.28 perfonnance - p. 20 $020.72 new target-p. 21 $000.55 hard to fill - p. 23 $123.55 Total $006.20 structure - p. 19 $ I02.28 perfonnance - p. 20 $010.90 new target-p. 22 $000.83 hard to fill - p. 23 $120.21 Total $000 structure $1 02.28 perfonnance - p. 20 $008.59 to target -p. 22 $000.83 hard to fill- p. 23 $108.80 Total $000 structure $ I02.28 perfonnance - p. 20 $002.18 new hire - p. 22 $000.83 hard to fill - p. 23 $105.29 Total $000 structure $000 performance $030.66 to target-p. 21 $000.83 hard to fill - p. 23 $031.49 Total

September 1999

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FY 2001 Workforce Salary Report

PartV Cost Analyses

Cost Analysis of Structure Adjustment (assumes the performance increase shown in the chart)22
The costs for a structure adjustment have two sources that should be added together to determine total cost:
1. Currently 1,500 or more employees have reached the maximum salary for their pay grade and are ineligible for performance increases. An adjustment to the pay structure moves the maximum salary up and gives most of these employees an opportunity to receive some increase. These are called "headroom" costs.
2. When the structure is adjusted, the hiring rates for jobs are increased by the same percentage.

Headroom Costs for Structure Adjustment
an millions)

Performance Increase Plan

3% Structure 6% Structure

Adjustment

Adjustment

3%/4.5%16%

3.28

4.03

3%16%/9%

3.51

4.55

4%/6%/8%

3.91

5.61

4%/8%/10%

4.23

6.15

9% Structure Adjustment
4.25
4.93
5.99
6.89

One Year Hiring Costs for Structure Adjustment

(In millions)

3% Structure Adjustment

6% Structure

Adjustment

2.29

4.69

9% Structure Adiustment
7.15

22 The cost of a structure adjustment without a performance increase equals the amounts shown above as 1 year's hiring cost.

September 1999

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FY 2001 Workforce Salary Report

Cost Analysis for Performance Increases

Increasing the differential between ratings has only a modest impact on the total performance increase costs. The funding formula assumes that 10% of employees receive "exceeds" ratings, and 5% of employees will receive "far exceeds" ratings. Using actual ratings for the October 1, 1998 increases, statewide, 13.5% of the employees exceeded performance expectations and less than one percent far exceeded expectations. Between 11.6% to 20.4% of employees in agencies with 500 or more employees exceeded or far exceeded performance expectations.

Performance Increase 3%/4.5%16% 3%/6%19% 4%16%/8% 4%/8%/10%

Yearly Cost (In Millions) 76.71 83.71 102.28 109.39

If hiring salaries for jobs below target are raised by the percentage increase amount for "meets expectations", hiring costs in those jobs will increase. A 4% increase to job hiring rates that are currently below target will increase the annual hiring costs by approximately $2.18 million.

September 1999

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FY 2001 Workforce Salary Report

Cost Analysis for Moving Employees to Target Hire Salary in One Step

Performance Increase Plan 0%/0%/0%
3%14.5%/6%
3%16%/9%
4%/6%/8%
4%/8%/10%

Cost of Moving Existing Employees To Target (In millions)

0% Structure Adjustment 23.49
15.71
15.89 13.55
13.42

3% Structure Adjustment
36.56
23.89
24.06
21.07
20.82

6% Structure Adjustment
53.14
32.03
36.81
32.30
31.92

9% Structure Adjustment
74.14
52.86
52.27
46.79
46.17

Moving all employees to target would increase yearly hiring costs because new employees would be hired at the target salaries for their jobs instead of at the current "temporary" minimums. The estimate below is based on hiring between 6/1/98 and 6/1/99. The difference between the entry salary of each employee hired below target during the period was subtracted from the employee's target hire salary. The difference was multiplied by the fraction of the year worked by the employee. The sum of these differences gives the estimate ofthe increase to yearly hiring costs.

One Year Hiring Costs for Moving All Employees to Target (In millions) No Structure Adjustment 3% Structure Adjustment 6% Structure Adjustment 9% Structure Adjustment

7.17

9.68

12.29

14.96

NOTE: To compute the cost of the new target rate add the cost of the structure and performance increase to the one year hiring cost.

Cost Analysis for Moving Employees in 21 High Populated Jobs to Target

Perf. % 4%/6%/8% 4%/6%/8% 4%/6%/8% 4%/6%/8% 4%/6%/8% 4%/6%/8% 4%/6%/8% 4%/6%/8% 4%/6%/8% 4%/6%/8 4%/6%/8% 4%/6%/8% 4%/6%/8% 4%/6%/8% 4%/6%/8% 4%/6%/8% 4%/6%/8% 4%/6%/8% 4%/6%/8% 4%/6%/8%

Job Code 10006 14412 14454 17234 17251 17502 40806 60101 60102 60107 60108 60112 70201 70833 70834 70917 70923 70924 71109 71122

Title Instructor I Family Independence Case Mgr I Family Independence Case Mgr 2 Sergeant (GDC) Juvenile Correctional Ofer 1 Probation Officer 1/2 Accountant Paraprofessional Secretary I Secretary 2 Clerk I General Clerk 2 General Program Assistant Houseparent Health Services Tech I/S Health Services Tech, Lead I/S Social Serv Providr 1 Social Serv Tech 2 Social Serv Tech I Nurse Licensed Practical lnpt Nurse PH

To Target - No Structure Adjustment $94,726.90 $72,434.61 $38,305.89
$168, I06.96 $1,789,498.25
$452,848.27 $344,294.78 $221,742.71 $ I70,458.10 $464,502.12 $315,575.40 $662,877.49 $116,853.42 $406,695.56
$6,597.68 $171,146.20
$29,172,03 $108,336.01
$20,589.66 $31,156.73 $5,685,918.73

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Cost Analysis for Moving Employees Below Target by a Specified Percentage

The cost for moving employees below target by a specified percentage depends on whether there is a structure adjustment and on the performance increase plan. A structure adjustment increases the number of employees who are below the target salary and, hence, increases the cost of the increase. Larger performance increase percentages decrease the number of employees remaining below the target after increases and, hence, reduce the cost of the flat percentage increase. Costs below are given for 3% and 6% structure adjustments. The flat percentage increase is applied in such a way that if the increase would put an employee over target, only the portion of the increase necessary to move the employee to target is received.

3% Structure Adjustment
(Annual Base Salary Cost in Millions)

Performance Increase Plan

3%/4.5%/6 4%/6%/8 4%/8%/10

Salaries of All Employees Below Target fire Increased By

5% 12.00 10.90 10.75

10% 18.63 16.91 16.49

Employees Remaining Below Target with 3% Structure Adjustment

Performance Increase Plan

3%/4.5%/6% 4%/6%/8% 4%18%/10%

Number of Employees Below Target

5% 8,593 7,653 7,592

10% 4,854 3,600 3,569

6% Structure Adjustment (Annual Base Salary Cost in Millions)

Performance Increase Plan

3%/4.5%/6% 4%/6%/8 4%/8%/10

Salaries of All Employees Below Target fire Increased By

5% 17.87 15.88 15.67

10% 27.67 24.65 24.34

Employees Remaining Below Target with 6% Structure Adjustment

Performance Increase Plan

3%/4.5%/6% 4%/6%/8% 4%/8%/10%

Number of Employees Below Target

5% 11,566 10,785 10,659

10% 6,973 6,175 6,127

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FY 2001 Workforce Salary Report

Costs for Salary Adjustments to Employees in Bard to Fill, High-Demand Jobs
The estimated cost of moving the employees to midpoint is approximately $6.11 million ($5.35 million to move existing employees and $760 thousand additional hiring costs) with a 9% structure adjustment.
The estimated cost of moving the employees to 10% above the existing target is approximately $1.19 million ($911 thousand to move existing employees and $274 thousand additional hiring costs) with a 6% structure increase. The cost is $830 thousand ($606 thousand to move existing employees and $224 thousand additional hiring costs) with a 3% structure adjustment.
The estimated cost of moving employees to 10% above the existing target is $550 thousand ($370 thousand to move existing employees and $180 thousand in hiring costs).

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FY 2001 Workforce Salary Report

Appendix A History of the General Pay Plan and Performance Increase Program
Background of Pay Structure
Pay structures are the foundation of most employee compensation programs. They are hierarchies with pay rates and/or pay ranges assigned. The greater the worth of a jolr-as determined by job content and labor market analysis--the higher its pay grade and range.
A pay structure is established by setting the rates of pay for the jobs in the job hierarchy. Pay ranges are developed around each pay grade midpoint. The midpoint represents the rate generally accepted within the compensation discipline as the salary the organization wishes to pay for its fully proficient employees. Midpoints actually reflect the organizations' policies regarding the relationship of their pay trends to the market (i.e., whether they lead, match, or lag behind competitive pay rates). Hiring rates are generally set at 20-25% below the pay grade midpoint, depending on the knowledge and skill level associated with the job.
Most organizations set the minimum and maximum rates of pay for grades in relation to demands they wish to make on their pay systems. The spread of the pay range provides an opportunity to differentiate the pay received by the newly hired person, the probationary employee, the competent performer, and the excellent performer.
The General Pay Schedule has undergone considerable change since 1991, when it was the subject of a report by the Governor's Commission on Effectiveness and Economy in Government.
The Pay Structure in 1991
In 1991 the compensation system was based on a salary structure of 44 pay grades, each grade consisting of 12 steps (entry, 1-7, and L-1 to L-4).
The ranges of the pay grades varied from 35% at lower levels to 64% at higher levels.
Employees typically were hired at the first step (entry) of the grade and moved to the second step after six months. Employees then typically received a step increase annually for the next six years, and biennially for the next eight years. Step increases were as little as 2% in the lower pay grades and as much as 4.5% for the top pay grades. In theory, step increases were awarded based on an appraisal of performance, but this was not the case in many instances.
The General Assembly awarded cost of living increases that affected both the pay structure and individual employee's salaries.
Step increases became viewed as an "entitlement" by a sector of employees as demonstrated by legal action when they were withheld due to a period of budgetary crisis in 1991. (Buskirk, et al vs. The State of Georgia, et al. Superior Court of Fulton County, 1995).
The Pay Structure 1992 - 1996
The last cost of living increase occurred October 1992 in the form of a 2.5% across the board increase, with a cap of $1,000.

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FY 2001 Wor1fforce Salary Report

The minimum hiring rate remained the same from October 1992 - October 1996. However, as each performance increase was approved, the pay range maximum salary was increased. The ranges were expanded to 57% at the lowest grade and to 86% at the upper grades.
The Pay Structure, Implemented October 1996
A market-sensitive pay structure with 19 grades was established by first setting the midpoint of each grade according to representative labor market data and then establishing grade maximums at 20-30% higher than the midpoints and target hiring rates at 20-30% below the range midpoints. Private sector benchmarks set hiring rates at roughly 10% higher than the state chose for the 1996 pay structure.
Funding was not made available to move all employees to the new structure, so pay grade minimums were established at 16-32% below the target hiring rates ofthe grades.
Job minimums (hiring rates unique to each job) were created between the target hiring rates and the pay grade minimums with the goal of raising job hiring salaries up to the target hiring rate-over time--as the General Assembly appropriated money to do so.
The Quality Service Georgia/GeorgiaGain Task Force of ten department heads established the following principles to guide decisions regarding establishment of performance awards:
Employees who do not meet expectations should receive no increase (performance-based or structural). Performance increases should be awarded to employees who meet expectations based on labor market data and
the state's ability to pay.
Top performers should be awarded twice the performance-increase amount of employees who meet
expectations.
Pay grade minimums and maximums should be adjusted annually according to market data and the state's
ability to pay.
The pay structure adjustment to pay grade minimums and maximums should be a component of the
performance-based increase---not a substitute.
The 1996 structure was adjusted by 2.5% in October 1997; no further structure adjustments have been funded.
The Statewide Pay Structure Implemented October 1999 (see next page)
The state implemented a new HR System on October 1, 1999 using PeopleSoft software. The lack of funds when the pay structure was developed in 1996 caused jobs on the pay grades to have differing minimum hiring rates. The PeopleSoft software does not allow for more than one hiring rate on a pay grade so a change in the pay plan was necessary.
The new pay plan consists of 26 base grades with a pay range from target to maximum and up to 26 alpha grades per base grade, as needed, to represent actual job minimum variations within the grade. For example, the base grade 13 ranges from target to maximum; grade 13A ranges from the closest job minimum to target up to maximum; and grade 132 ranges from the farthest job minimum from target up to maximum.
The statewide pay plan has a minimum, midpoint, and maximum salary for each grade. There are no steps or increments. Each job is on the base grade or the alpha-grade that matches the job minimum for that grade.

September 1999

25

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123,256 $20,202

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$29,670

123,484 $21,000 $18,792 $17,232

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$30,252

$27,174 $23,712 $21,828 $19,530 $18,162

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$32,550

$27,306 124,054 $21,938 $20,010 $18,432

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$27,702 $24,174 $22.368 $20,202 $18,522

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$33,198

$28,254 125,014 122,800 120,490 118,792

u

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$33,522 $24,534 $28,530 $25,254 $22,914 $20,592 $19,062

T

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$34,188 $26,010 $28,806 $25,506 $23,028 $21,204 $19,152

s

$34,356 $26,254 $28,950 125.758 $23,142 $21,306 $19,530

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$31,614 $34,692 $31,302 $29,362 $26,010 $23,256 $21,612 $19,626

$32,238 $34,660 $31,456 $29,526 $26,262 123,370 $21,720 $19,722

$33,198 $35,034 $31,614 129,814 $26,514 $23,598 $21,628 $19,818 $16,500 15,136

$35,382 $35,382 $32,082 129,958 126,778 $23,712 $21,936 $20,298 $16,980 15,354

$36,256 $35,730 $32,238 $30,102 $26,910 $23,940 122,044 120,490 $17,568 15,954

$36,798 $35,904 $32,712 $30,402 $27,174 $24,054 $22,152 $20,592 $17,820 16,500

$36,978 $36,438 132,874 130,552 $27,306 $24,174 $22,260 $20,694 $17,904 16,578

137,896 $36,818 $33,036 $30,702 $27,570 $24,414 $22,368 $20,796 $18,162 16,734

$44,136

136,618 $38,454 $36.798 $33,198 $30,852 $27,702 $24,654 $22,564 120,898 $18,252 16,896

$47,520

$37,158 $38,646 $36,978 $33,360 $31,002 $27,840 $24,894 $22,692 $21,000 $18,342 16,980

$48,222

$37,524 $39,030 $37,524 $33,684 $31,152 $27,978 125,014 $22,800 $21,102 $18,522 17.232

$48,942 $38,454 $41,604 $40,200 137,710 $33,852 $31,302 $28,116 $25,254 $22,914 $21,306 $18,702 17,400

$50,406 1,2,m $42,432 $40,596 $37,896 $34,020 131.458 $28,392 $25,380 $23,028 $21,408 $18,792 17.568

$51,162 $45,906 $43,062 $40,794 $38,082 $34,188 S3l.614 $28,530 $25,506 $23,i;& $21,510 $19,062 17,652

$54,012 $53,220 $48,462 $44,352 $41,196 138.454 $34,524 $31,770 128,668 $26,136 123.598 $21,612 $19,152 17,820

$57,312 $53,748 148.222 $45,012 $41,400 $38,646 $35,034 $31,926 $28,950 $26,262 $23,712 $21,828 $19,530 17,988

14,0SS 14,418 14,778 15,138 15.210 15,954

13,758 14,088 14,418 14,778 14,850 15,138

13.758 13,956

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N O'I

Georgia Merit System

FY 2001 Workforce Salary Report

Appendix.B
Jobs with 20 or More Employees That Have 10% or More Employees Leaving State Service
Note: The following should be considered in relation to this table:
This table does not address transfer activity from one state agency to another. However, movement of employees from one agency to another causes the same disruption and loss of productivity as described in Appendix D.
This table does not address vacancy rates for a job. For example, the job Assistant Financial Examiner (40405) is shown as having 4 employees out of20 who left state service from June I, 1998-June I, 1999. However, total positions are shown in the Georgia Employment Management System as 43, indicating a vacancy rate of over 50%.
Percentage leaving state service is shown only for jobs with 20 or more employees because the percentage . calculations for jobs with fewer incumbents would inflate the percentages. 55 of 894 single position jobs had employees leaving state service. 833 employees in 1212 jobs with 2-19 positions left. The effect of turnover for pivotal specialty jobs can be even more devastating to an agency's mission.

JCUSTODIAN

6i

28:

52.83%:

,___ ____,!_T_E_O_T_R_A_IN_E_E______________8.._1_ _ _ _ _ _ _47_,i_ _ _ _ _ _2_4_,-----5-1.-06_'_0'

________________________________ ,!_7_1603 !NUTRITIONIST, CL.

I

13i

37!

16:

43.24%;

1 19614
;
iJ7251

!' PROGRAM SPECIALIST jJCO I

1s:

22:

10

45.45%'

11

1139 1

491.

39.24%

!16908 !TRAINING SPECIALIST

... 12r

24r

10

41.67%;

j50324 !FD SVC EMP, SR(GDC)

81

23:

9

39.13%:

'30802 !sTEAMPLANT OPERATOR i!-1-52_0_8--+-iE_Q_U_I_POPERi(DOT)

......

69:[

32: 340]

12

37.50%

124: ................. 36:47%:

171127 !NURSE, STAFF

14j

48/

17

35.42%;

120703 ENVIRON ENGR

16!

20!

7

35.00%

170201 HOUSEPARENT
!1 - - - - + - - - - -
14001 INTERPRETER, PH

71

998

328

30.06%;

'

'

8j

27i

9i

33.33%'

j19115 !J4212 ;J5204

AGR.INSPECTOR SS CASE MGT ASSOC. VEHICLE OPER/COUR

9:

33:

11 !

200!

6!

241 i

10

30.30%;

61 i

30.50%:

73:

30.29%:

j 17025
!70305

!DRIVER EXAMINER !DENTAL ASST

91

1091

8:

611

33

30.28%[

18:

29.51 i

)19422 ;ENVHLTHTECH

i... -
!50323

--

J1.F. D-SV-C-

....
SUPV

...........
(GDC)





9;

28i

9f -----3-90i

8'

28.57%1

-
29.23%:

j16048 DOL SERVICES ASSIST.

91

22/

6;

p9992 EDUCATION PROGRAM AN

161

22;

61

------'----+-------~--

io: 180002 LAN ENGINEER
16-060-I--+-IM_A_l_L_S_E_R_V_C_L_E_R_K.

_

_

_

_

_

_

_

181 _8...i.._

_

__

_

_

_3 3417

~

!

-

-

-

-

-

10:

I

i

'

170917 isoCIAL SVS PROV I
!-12_04_9_9--+iTRA--N-sENG.Asso_c___ -

n:12!

7401 23i

206; 6

27.27%l
I
27.27%i
29".4jo)~:
27.03%'
28.38%;
26:i)9%

September 1999

27

Georgia Merit System

FY 200I Workforce Salary Report

;70811 !PH TECH

7i

163'.

45

1 1T4si3 suBsTANc~_A_s_t:sE-co-_~---_-:_-__..,..____i"_2l__-__- - - - - + - - - -

!71129 ILPN
l~~~i- l~~~~~~~~~~~R(VS)

91

240)

64

;! ,.~~: .,;

27.61%: 21 .59%i 26.67%
:::::~;

171113 INURSE (l/S)

14i

354i

92;

25.99%1

:70924 1soc1AL SYS TECH.

8!

6181

159:

24.60%J

!16009 !PERS. ANALYST, SR

14i

54j

14

25.93%:

!71128 JNURSE

14!

2701

68,

25.19%:

j70304 !DENTIST (INST)

2d

30!

7

23.33%

;sooo6
i80003

IMICRO SUP SPECIALIST 1NETwoRK si>EciALis_T___

1

-

-

13i 13

-

;

-

-

-

-

83; 311~--

20

I

24.10% 22.58%

: 10012
i

INSTR AIDE

71

311 J

73:

23.47%

:19322 !CONST PROJ MGR 2

13!

101!

24

23.76%'

trn---+l____

-~--{--

- - -.. --rn

i61111 FIRESAFETYCOMPLIAN

13:

29;

7'

24.14%.

________________ I
,1_7_1319

ACTIVITY THRPY SUP.

- -14- - - - - - 2-6! - - - - - - 6 - - - - -23.08%

!17242 CORRECTIONAL OFFICER

11 1

7592;

1748.

23.02%

;-"----t m--HH------ .. -- m--
171305 )ACTIVITY THERAPIST

~--

12;

134

31

23.13%

!80102 IPROGRAMMER/ANALYST

15i

47!

11

23.40%;

jl9319
l[10922
10908

lASST AREA ENG lsocIAL svs TECH PRIN

15/

361

111

329i

8

22.22%.

75

1~: 22.so0

jsoc1AL svcs_P_R_o_v_1_1------,---1-3;_ _ _ _ _ _2_46--.------56-.-----22-_1_6_%

171109 LPN (INPATIENT SVCS)

9j

502;

112

23.90%

!30902 il3811 :70923 !17246
r11602

HSEKEEPNG TEAM LDR
WILDLIFE BIOLOGIST
!SOCIAL SVS TECH SR
pco n
iNUTRITIONisT

6!

63,

i

17;

2li

i

9!

755;

12!

202:

ijf" - 61:

14

22.22%

5

23.81%

168

21.19%

45:

22.28%;

15,

22.39o/~i

!19609 !NURSESURVEYOR(ORS)

15J

ni

)50301 !FOOD SERVICE EMPLOYE

6!

413;

I 140505 FINANCIAL EXAM, ASST

13!

201

17

22.08%

91

23.49%:

20.00i

1!\710-9961-188---1iLP-SRSO+PGIR-A-M-SP-E-C,-SR-. -----_.__B18-1i --,_----2866-(; ~------169,

[6iso1 1voL-ru::scooiio

13-:- -

21r

6.

23.08%; 22.09%: 2fa2o;.

j70919 jSOCSERVDAYCOORD

13:

74[

16

21.62%

;71201 IPHARMACY TECHNICIAN

9j

49;

10

20.41%

i70402 !RADIOLOGY TECH

. . -- 12;

20

4;

20.000/o

i16909 iSTAFF DEV/fRNG CORD

14:

49!

10

20.41%:

j60101 !SECRETARY I

Si

892(

186

21.08%:

,-!5_0_30_3_--.-!F_O_ODSVCMANAGER
i60l 11 IOFFICE ASSISTANT

11!

25i

Si

294:

: 14203 iSOC SVCS CASE MGR

131

1391:

160105 IRECEPTIONIST

Si

53i

171141. fcERTN_U_R_S_IN_G_A_SS-I-ST--

71

264/

5

20.00%'

60

20.41 %

_ 28_5:,_ _ __20.49%;

11

20.75%

54

20.45%

September I999

28

Georgia Merit System

FY 2001 Workforce Salary Report

j60107 !CLERK I, GENERAL
; .....-........------ --1-------
I11403 ilNSTRUCTOR,SR (DJJ)

g:

822!

165:

:

!

9!

26i

5,

!60113 !PROGRAM ASSOCIATE

10/

1031

110412 lcLIN LAB TECHNICIAN

11 i

201

i14514 -1f--s-R_C_O_UN__S_'_M__H/M_R_ _ _ _ ____, - --j3r------l-l_,9! - - -

24;

120102 jSR ENVIRON ENGR

17i

26i

5

il7461 ISPECIAL AGENT IN CHA

19;

5

I

/50302 !FOOD SERVICE, SR.

8)

143:

28

i

119321 !CONST PROJ ENG

5

171133 [NURSE MANAGER

16i

30/

!i__1__4___4___5___7_

!DIS ADJUD, ASSOC

!

--------

- - ~ -..........._..1...2._:L _ __

104!

20

i60152 :SECRETARY (AGR)

10!

221

4'

!

/71101 !CHARGE NURSE (1/S)

15i

134!

26

: 14412 !FAM INDEP CM I(DFCS)

270

!70916 lLSSP II

15

!71125 IPHLPN I

9i

252:

47

i40202 !30002

jBILLING CLERK II !PROP & SUPP SUPV

101 SR-----.----12..,..:- - -



...

:4f9o1i

I

i

:5m21 !FD SVC DIR (GDC)

141

5

l~o8o3 iACCOUNTING MANAGER

17/

28\

5:

I
il9424 jENV HLTH SPEC II

---+--

~--

13

127; .

23

i 19643 !SPEC SURVEYOR (ORS)

14;

7

i80119 1PROJECT CONSULTANT

36,

7

!71202 iPHARMACIST

17!

4

:71142
;11303
! 10013 160112

______ _____ iCERTNllRSG ASST, LD
;ACTIVITY THERAPY LDR

Si
-------_9.j_

43i

8

62i.,__

11

!DIR, DEV DIS TRNG/W

13!

33;

6

!PROGRAMASsisfA_N_T_ _ --- 9i ........ ---- 1970~i- - -

20.92%: 19.23%; 20.39%; 20.00%; 20.17%.
18.52% 19.58%'. 18.52%'. 20.00% 19.23%i 18.18% 19.40% 22.20%. 18.07% 18.65% 18.37% 20.00% 19.23%; 17.86%, 18.11% 17.95%t 19.44%, 16.67%; 18.60% 17.74%; 18.18% 1

j 10801 iREC. SUPERVISOR

IOI

20j

; 19366 !PERMITS INSPECTR ADV

121

24!

!14606 ToFcs coMMiis sPEcL

121

104]

/30901 !HOUSEKEEPER

5!

492)

180502 !DATA TRANSCRIBER I

Sj

213 1

~1i122 IPH NURSE

- - - - + "14]

620!

i71112 iNURSEMGR(I/S)

161

49:

i19413 !ENVIRON SPEC 2 (DNR)

141

21

;60114 ioPR.rn_s_A_N_A-LYsf,sil:-- - . 1 4 : - - - - - 36i

! 16006
,31601
i 14508
!14605
! 17705
l80004
I I
10904

iPERSONNEL MGR.

14:

60'

;PLUMBER

I J;

30i

!COUNSELOR

13;

310i

;TRAINING INSTRUCTOR .

9'

148i

!SERGEANT FIRST CLASS

17!

53!

!NETWORK ADMINISTRATO

121

23

n; I ---l.... _ _ _ _ _ _ _ --------.L.--.---+-1---------1

;BEHAv1OR SPEC

113

15.00%

4

16.67%i

.... ,

18

17.31%

85

17.28%

36

16.90%

106:

16.94%.

8

16.33%,

4:

19.05%

...................... .......

6

16.67%'

------~.

10

16.67%'

5
-

------1-6-.-6-7~%.

50,

16.13%,

23

15.54%,

8,

15.09%

4

17.39%:

18

15.93%

September I 999

29

Georgia Merit System

FY 2001 Workforce Salary Report

i20422 ' 119423

IENG TECH TRAINEE

81

206!

32

---------------"--------------""'~"-""----

IENV. HLTH SPEC. l

12j

SOj

8:

!71111 iNITE/EV NURS ADM

16i

27

4

'

1137T0i9o0_92_

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_

_

_- + -

--

131 s-

+

i

--

--

--

3

87j -8i,_

_ _

_

13,

6:

119318 !AREA ENGINEER

161

421

6

170834 \15209 !14108

JHLTH SVCS TCH LD 1/S
IEQUIP OPER II (DOT)
lFAMSERVWORKERI

81

380!

57

7i

109'

6i

59:

9i

!60147 lcusT SERV REP (DOAS)

10!

5

jl0007 jINSTRUCTOR, PRIN

10;

5

1 - -----. - - - : ............. -'---

30005 !UTILITY WRKR, SKLD

7i

8,

1

!81122 ICOMM EQUIP OFCR, SR.

lOi

481

7

i 17249 :COTTAGE LIFE SUPV

52:

8

r71 l 18 iPH NURSIN_G_S_U_P_E_R_ _ _ _ __

15!

103

15

:10912 1soc SERV COORD II
I3190l !STOREKEEPER
i708is -1MiffiJRSHIFTSUPV

:i 7411 iFAC POLICE, SGT

il4604 ' !70823

!TRAINING INST. SR ' IMHIMR TEAM LEADER

! 10101 !EDUCATION PROGR. MGR

16/
I
8i 101
I
11 I
' !Si I 19:

78'.

II

1631

23

36

5

221

3,

so:

7;

L........... _ __

37!

5

3

(40807 181121

!ACC'TING CLERK iCOMM EQUIP OFFICER

91

2951

42

i

91

1971

28

j50304
I 14659

!FOOD SVC SUPV iDRS ACCT REP

91

84;

12

!

Bi

80j

II

:71126 iNURSE, LEAD

s:

'

-l---------- -. ----------------. --------. --"t-....

'70941 !PSYCHOLOGIST

6'

'
!60108

!'CLERK 2, GENERAL

124

'60102 lSECRETARY II
J ...... - - - - - -

----91-,81---- 1..2..9..1..!....

178;

!70807 IFORENSIC SERV TECH

132!

18

!71123 !NURSE PRACTITIONER

17;

174i

24

'

;10006 1INSTRUCTOR

81

629i

86

114107 -+IF_A_M-SVCWORKERiC----11 - 191~,--

26:

:61204
!I ~~?~:_
; 17527

!SALES MANAGER
!
'.PERS. ANALYST, ADV. 1PAROLE OFFICER

9!

54i

7

4

131

40:

170502 jCOMMUNICABLE DIS

13!

54i

7

j60713 !OPERATIONS ANALYST

12i

81i

II

/40805 jACCOUNTANT II, PROF.

14J

66:

9:

I !17032

DRIVER EXAMINER, SR

10!

135

18

;30703 !LANDSCAPE GARDENER

7!

20

3

160715 jOPRTNS ANALYST, ADV

, 1s:

2s

3.

----- [ - - - - - - - ~ -

!30032 !CRAFTSMAN (GDC)

:

11 i

249

32

September 1999

15.53% 16.00% 14.81% 14.94%1
J
15.79%i I
14.29%; 15.53%
' 14.89%: 15.25%' 15.15% 14.29%: 14.29% 14.58% 15.38% 14.56% 14.10% 14.11% 13.89%:
13.64%: 14.00%: 13.51%
13.64% 14.24%; 14.21%; 14.29%' 13.75%1 13.16%\
.. .....................- >
13.95%i 14.43%: 14.02% 13.64%: 13.79% 13.67%.
13:6i%:
i
12.96%; 14.81%i
'
13.29%; 12.96%:
i
13.58% 13.64% 13.33% 15.00% 12.00%, i:i:85%;
30

Georgia Merit System

FY 2001 Workforce Salary Report

i71329

PT/OT TECH

if-1---1--3-09-

------EDUC/MEDIA

RES

SPEC

117605 ; 17423 16091 I i 14038

/PSTI III
I
:mv PROB/PAR SPEC 2
!INFO & REFERRAL SPEC
!coUNTY DIRECTOR II

15/

26:

'

3

13i

230i



>

...- .f..- --........- .. ~

-"-"--~---

::1

7

j60104
I30003

!ADMIN ASST CRAFTSMAN

121

248i

31

!

JI!

209j

26

170942 RES. SVCS SPVR (GRN)

121

221

3

I

!20425 !suRVEY PARTY CHF

31;:

4

140405 120421

;AUDITOR, SENIOR
jTRAN ENG ASST ADMIN

15i ---2245+:,

3, 3

l; 14401
14201

ICSE AGENT !soc SVCS SUPERVISOR

12;

333!

I

141

2801

41 34.

i-16_0_07----;-IP-ERSC>NNELREP

-- ---..- - - - + - - -
121

44:

5

I

!19619 jORS STAND SURVEYOR

14(

461

6

1~7_o9_I_5_ lsoc sERV cooRD 1,

37! '

5'

:70808
I

1LD FORENSIC SVC TECH

27/

i 14405 iMEDICAJD ELIG SPEC

312!

!

;,.41204

PAYROLL PARAPRO

1 I:

-------r-----l.- ----

5

i70411 !CLINICAL LAB TECH

14!

8

!30401

' !ELECTRICIAN____

11 i

41::

5

!31703 !PROCUREMENT OFFICER

121

57!

7

l4o8o6
l 19362

!ACCOUNTANT, PARAPROF !PERMITS INSPEC ENGIN

11 :i
13!

d 91
20:

107, 2:

i13817 jWILDLIFE TECH 3

15i

!71121 IPH NURSE SPECIAL

I

15i

155j

18'

-+----------
:50322 . JFD SVC MGR (GDC)

89!

IO

j80503 jDATA TRANSCRIBER II

9

131 I

15

i 17457 ISPECIAL AGENT, SENIO

15:

l109j4 -- [SOCIAL SVSCO_O_R_ D _ _ __

151

!14411 jFRAUD PREY. INVEST.

11 !

5

:17033 1UNITMGR
~--------------+---'- - - - -
ll6075 jE&T CONSULTANT
I
l 19605 !MEATINSP

151

35!

---

"+

16i

38l

4

l 17302 :RANGER I

121

362:

41

i-- --

.... -----

"- ~ - - - ........................................

!71328 iACTIVITY THERAPIST

12

41 i

5

12.73%: 12.20%: I 1.54%; 12.61% 13.43%; 12.73%, 12.50%: 12.44%. 13.64%: 12.90% 12.50% 12.00% 12.31% 12.14% 11.36%: 13.04% 13.51%,
12.82%; 12.12%1 12.20% 12.28%: 11.53%; 10.00i
!
12.50% I 1.61% I 1.24%: I 1.45%; 10.91% I 1.68% 12.20%: I 1.43% 10.53% 11.11%; 11.33% 12.20%

September 1999

31

Georgia Merit System

FY 2001 Workforce Salary Report

AppendixC Costs of Turnover23

Research across various occupations in the private and public sectors indicates that turnover costs per employee are higher for professional jobs where recruitment is more difficult, the learning curve is longer, and mistakes are more costly. In low skilled jobs, a large volume of tu.mover can more than make up for the lower per capita costs. Estimates of tu.mover costs in state jobs is based on established industry studies and detailed analysis of turnover costs in specific state jobs. Research paints a typical generic picture as follows:

The costs of turnover begin when an employee first seriously considers leaving. Typically, there is a period of slack productivity and absenteeism as the disaffected employee searches for another job. This effect spreads to the work group as other employees take up the slack of the employee who is coasting during a job search. Group members become less focused on their central tasks. When the employee leaves, the work group must carry the workload of the vacant position. At this point the agency also incurs the costs of out-processing the employee through payroll, benefits, the credit union, and other stations. The search for a new employee includes costs for recruitment, advertising, security and reference checks, and managers' time taken up with interviews. When the new employee is hired there are costs for payroll processing, orientation, and in some cases training and additional security and background checks. Finally, productivity is lost in the workgroup while members help the new employee's until he or she gets through the learning curve for the job, which typically ranges from six to twelve months.

Job Title
Juvenile Corr Off 1 Houseparent Social Svs Provider Health Svcs Tech (I/S) Social Svs Tech LPN (inpatient svcs) Food Service Emp Family Indep CM I Social Svs Tech Sr Secrerary I Clerk I, General PH Nurse Program Assistant Health Svcs Tch Ld I/S Clerk 2 , General Secrerary 2 Instructor Accountant, Paraprof Family Indep CM 2-DFCS Sergeant (GDC) Probation Officer

#in Job
1139 998 740 1,612 618 502 413 1,437 755 892 822 620 1,970 380 887 1291 629 911 654 567 727

CostofTurnover f<orTon Jobs m Percent BelowTarr;set24

# Leaving Avg. Salary

% Below Tareet

% Turnover

446

20,625

69.27

39.24

300

16,212

41.08

30.06

210

27,403

21.08

28.38

413

17,115

39.83

25.68

152

23,028

25.08

24.60

120

23,713

13.15

23.90

97

16,776

16.22

23.49

319

25,431

40.22

22.20

160

21,573

9.93

21.19

188

18,829

35.31

21.08

172

17,694

46.23

20.92

105

34,402

10.00

16.94

333

21,404

29.95

16.90

59

21,748

7.63

15.53

128

21,192

24.69

14.43

181

22,223

14.64

14.02

86

19,719

19.87

13.67

105

25,366

24.81

11.53

74

27,760

30.28

11.31

53

27,400

51.15

9.35

57

30,813

28.34

7.84

Cost ofTurnover-25
$ 9,218,211 4,853,872 5,754,958 7,084,952 2,835,626 2,845,038 1,627,501 8,112,845 3,451,345 3,540,484 3,042,702 3,613,173 7,126,033 1,283,132 2,712,450 4,022,322 1,695,834 2,664,401 2,053,335 1,452,597 1,756,242

23 Turnover is defmed as employees leaving state service June I, 1998 through June I, 1999 and is calculated using the number of filled
~sitions in a job divided by the number of employees leaving that job. 4 A conservative estimate of the relationship of turnover to employees below target indicates that an 11 % reduction in the number of employees below target reduces turnover by at least I%. Moving all employees to the current target would reduce turnover costs in the jobs listed above by 8 million. 25 The following researchers have concluded that turnover cost can be estimated as 100% annual salary oflost employee: Gross, 1982, Flamholtz, 1974, Spencer, 1986; Brooks & Fogg-Ellis, 1999; Brooks, Fogg-Ellis & Collier, 1999. Other researchers put the cost of turnover at a higher level, up to 300"/o of annual salary. The costs presented in this chart reflect the most conservative estimate, 100% of annual salary.

September 1999

32

Georgia Merit System

FY 2001 Workforce Salary Report

Turnover Source Data and Computation Methodology
The source of turnover data used in Merit System calculations is a payroll extract from the central employee database. The extract lists all of the employees in state government except for the judicial branch, the World Congress Center, the Audits Department, and a few other authorities or small departments that do not use the statewide salary plan. Basic salary, job, and demographic information for each employee is included in the extract.
Using this extract, a file of monthly data is prepared for use in calculating turnover. To find the number of separations and hires in a month's time, social security numbers are compared between monthly extracts. The social security numbers that are on the first extract, but not on the second extract identify separations. The social security numbers on the second extract, but not on the first, identify hires.
Each month, the data are added to a file that gives a month by month tally from October 1997 through August 1999.26 The numbers of separations for each month is broken down by job. The file also includes the figure for the total number of employees in each job at the beginning of each month. To determine the turnover in a job for any given period, the number of separations in each month ofthe period is summed and that figure is divided by the total number of employees in the job at the start of the period.
There are a number of limitations to these calculations. The first is that they do not record employees who come and go within the same month. These estimates, then, may be somewhat conservative, ignoring employees who are not good matches for the job requirements or who are entertaining other job offers at the time they started the job, for example. At this time, the cause of separation cannot be determined in any systematic statewide basis, but the number of separations due to retirement can be approximated by considering the age and years of service of the separating employee.
Another problem with these calculations is gaps in the data because the employee payroll extract has not been consistently captured each month. In spite of the limitations, these statistics appear to be accurate, if on the low side. They agree closely with job-specific numbers that agencies have computed independently or personnel representatives and managers familiar with listed jobs concur that the numbers are consistent with their estimates. All of these limitations are being pursued in an on-going effort to refine the data and the estimates.
Cost of Turnover Worksheet
The Merit System has developed a turnover cost worksheet as modified from Spencer, 1986 (Calculating HR Cost & Benefits), that can be applied job by job to calculate turnover cost. For the jobs for which this analysis has been done, the costs are significantly higher than 100% of annual salary. For example, the minimum hire salary for Ranger I ofthe Georgia Forestry Commission is $18,792.00. The cost of turnover per employee is $63,270.79, over 33% of annual salary. A blank worksheet and the completed worksheet for Ranger I are provided.

26 Data format and availability after Phoenix HR System implementation October I, 1999 to be determined.

September 1999

33

Gggrgia Merit System

FY 2001 Workforce Salary Report Standard Costing Probes

1. What steps are involved? 2. Who is involved in each step? 3. How much time does each person involved spend during the step? 4. How much does each person involved make?

5. What is the full cost of the person's time in each step?
6. What out-of-pocket expenses are incurred in each step?
Costing Worksheet

A Analysis
Step*

B
Labor (Who?)

LABOR COSTS

C

D

# Full

Cost/Time

$ xM =

T

E Time
X

F Cost CxDxE
=

OUTLAY OR OPPORTUNITY COSTS

G

H

I

J

Expenses Cost/Unit

# Units

CostH x I

OPTION Kl;
TOTALS* F+J

TOTALS
K2:
TOTALS* F+J

X

=

$ xM =

X

=

T

X

=

$ xM =

X

=

T

X

=

$ xM =

X

=

X

=

T

Total Labor Cost/Step

Total Direct Cost

Total Cost Total Cost

$ = SalaryNear

M = Full cost Multiplier (e.g., 1.4)

T = Time: 260 days, 2080 Hours, 124800 minutes per year

*Fill in number and name of step; draw heavy horizontal line to show where one steps ends and the next begins; put step, labor, and direct costs on this line. Continue this procedure, using as many of the costing worksheets as you need.

September 1999

34

Georgia Merit System

I.

Exit

Step

1.

Counseling,

warning,

meetings

2.

Documenting perfonnance problems

3.

Termination meeting

4.

Exit interview

5.

Administrative: payroll, security, credit union,

Unemployment hearings

FY 2001 Workforce Salary Report Turnover and Staffing: Exit and Entry Costs

Managers Employee

Labor

Managers
Employee
Personnel Staff Managers Employee Personnel Staff Managers Personnel Personnel (legal, etc.)

6.

Lost productivity during separation period, e.g., Individual

absenteeism

Team

7.

Cost of position being vacant

Team

II

E

Steo

Labor

1.

Recruiting/Communication ofjob opening: job description,

Personnel Staff

job posting, advertising, college (and other source) relations

2.

Pre-employment Administration

3. Interviews

4.

Hiring-decision meeting

Personnel Staff Managers
Personnel Staff Employee Personnel Staff

5.

Post-employment administration

6. Orientation Training 7. Learning Curve
September 1999

Managers Employee
Personnel Staff
Trainers Employee Employee Team
35

Outlay
Out-placement fee Severance pay; Unemployment benefits Losses: theft of tools, supplies Law suits (legal fees and settlement) Lost sales, production delays, scrap, quality
problems
Overtime, temporary worker costs
Lost sales, production delays, scrap, quality problems
Overtime, temporary worker costs
Outlay
Advertisements
Travel and expenses
Tests Travel and expenses (recruiters and
applicants)
Signing bonus
Agency fees
Referrals bonus Relocation, moving, temporary living, etc. Medical exams
Training materials Lost sales, production delays, accidents, scrap,
quality problems

Gtwrgia Merit System

FY 2001 Workforce Salary Report Ranger 1 Costing Worksheet

A
Step*
1. Administrative: payroll, security, credit union, unemployment hearing
2. Loss of productivity during separation period (e.g. absenteeism, slacking of assignments, more time srent on unproductive activities) 2
3. Loss of productivity during separation period (e.g. absenteeism, slacking of assignments, more time spent on unoroductive activities)30

SALARY COSTS

B

C

Employee

Salar~ X 1.41

D
Percent Productive

Personnel

$20/hr

Employee Team

$33600/yr X25% productivity

$33600/yr X 10%

X 3.5

productivity

E
Time (Hours or
vears)

F
Cost CxDxE

X .5 hr

$10

X .25 yr29 $2100.00
X .25 yr $2940.00

4. Cost of position being vacant ( e.g. spreading team out to cover for vacancy)

Team

$33600/yr X 3.5

X 10% productivity

$980.00

DIRECT COSTS
G
Expenses

PRODUCTION OR LOST

PRODUCTION COSTS

H

I

I

Cost/Unit # Units

Cost H x I

5. Recruiting/Communication ofjob
opening/job description, job posting,
advertising, college (and other source) relations31

Personnel

$20/hr

.5 hr

$10

27 Full cost of payroll multiplier including benefits, etc. for the State of Georgia 28 Percent of individual reduction during separation period (Spencer, 1986; CSE Cost of Turnover, 1999). 29 Average 3 month separation period.
30 Amount of team productivity lost filling in for the lost employee during separation period (Spencer, 1986; CSE Cost of Turnover, 1999). 31 Figures derived from average hourly amount of personnel analyst

September 1999

36

-...-~- _ - .... ......._...... .... ..,.,_.
7. Post-employment Administration: paperwork, payroll, security, credit union.34
8. Post-employment Administration: paperwork, payroll, security, credit union.
9. Post-employment Administration: paperwork, payroll, security, credit union.

Managers Employee Personnel

I0. Processing: District/Personnel/Payro1135

Personnel

TRAINING- EMPLOYEE AND CHIEF RANGER ' 0 11. Week 1-2 12. Week 3-6 13. Week 7-10 14. Week 11-16 15. Week 17-24 16. Week 25-52

17. Personal Protective Equipment 18. Uniforms 19. Drug Testing

_ --.- - - ................................ --- _...._... ...... .,

$20.00/hr

.5 hr

$10.00

$20.42/hr $20.00/hr

.5 hr

$10.21

.5 hr

$10.00

$20.42/hr
$31.35/hr $31.35/hr $31.35/hr $31.35/hr $31.35/hr $31.35/hr

4/4/2=10 hr

$204.20

56 hr 112 hr 112 hr 168 hr 128 hr 240hr

$1755.60 $3511.20 $3511.20 $5266.80 $4012.80 $7524.00

$575.00" $425.00 $41.79

34 Figures derived from average hourly amount of managerial personnel. 35 Figures come from the Ranger I Recruitmentffraining Cost Worksheet, developed by the GFC. 36 Figures come from the Ranger I Recruitment/fraining Cost Worksheet, developed by the GFC - Includes Employee & Chief Ranger costs.
37 These three costs paid to the vendor.

September 1999

37

- ... .. .......... -....-,___.-

.,.,

, ......_.

TRAINING - EXPENSES38 20. Academy 21. Academy Overhead 22. CDLOJT 23. District Training Officer 24. Training Materials 25. Equipment Use (Tractor) 26. Equipment Use (Truck)

Trainer
Trainer Trainer

27. Learning Curve (excess use of resources, quality problems/rework, unusable work, overtime, temporary worker costs)

Team

....__ .. ... _..,V' ............" ....... _. __..,._._

.........

$31.35/hr $31.35/hr $24.5O/hr
$336OO/yr ! X2O%41 3_540

152 hr 55 hr 24 hr
.5 yr

4765.20
$1724.25 $588.00

$400.00
$210.00
$50 * 4Ohrs
= $2000
$1.97 * 500
miles= $985.0039

$11760

28. Learning Curve (excess use of resources, quality problems/rework, unusable work, overtime, temporary worker costs)

Employee

STATE ASSESSMENTS4 ' 29. Merit System 30. Workers Comp 31. Unemployment 32. Liability 33. Bond

$263O8/yr X 50%42

.5 yr

$6577

$137.00 $798.00 $64.00 $104.00
$6.00
$57.525,50 Total Labor Cost $63.27!!.72 Total Cost Cost

38 Figures come from the Ranger l Recruitment/Training Cost, developed by the GFC.
39 CDL training is complete once trainee drives 500 miles in a 6 month period. 40 Average Ranger l salary multiplied by the average number of team members. 41 Average decline in productivity of the team mates during the learning curve. 42 Average productivity of new employee during learning curve. 43 Figures come from the Ranger l Recruitment/Training Cost, developed by the GFC.

September 1999

38

Average Production per Ranger who turns over

Georgia Merit System

FY 2001 Workforce Salary Report

REFERENCES

"ACA 1999-2000 Total Salary Increase Budget Survey," American Compensation Association, Scottsdale, AZ. (April 1999).
Bensley, Kathy, "Avoiding Mutiny Means Having Your Act Together" ACA News, November/December 1998.
BNA's Employment Outlook-First Quarter 1999. Bulletin to Management, (Washington, D.C.), December 10, 1998.
Brooks, Charlie and Fogg-Ellis, Victoria 1999, "Strategic Aligned Selection Research, Performance Measures And ROI," symposium presented at the 1999 Conference of the International Personnel Management Association Assessment Council.
Brooks, Charlie, Fogg-Ellis, Victoria and Collier, Jason "Technical Report on the Development and Validation of an Assessment Process for Selecting Child Support Enforcement Agents," 1999.
"Buck Survey: Pay Raises to Remain Flat in 1999" @ URL:http//www.acaonline.org , newsline posted 11/27/98.
Buskirk, et al. vs. The State of Georgia, et al. Superior Court of Fulton County, Civil Action No. E31547, 1995.
Grubman, Ed, ACA News, "Finding the Talent Solution." November/December 1998.
"1999 Salary Increases Tilt Upward Again" @ http://www.hweittassoc.com/new/pressre/1998/0820-98.htm
Hewitt Associates "Benefit Index". Prepared for State of Georgia, (September 1993).
Hunter, Schmidt, and Judiesch. Journal of Applied Psychology, 1990, vol. 75, pp. 28-42.
Journal-Constitution (Atlanta, GA), 13 June, 1999 pp.1-4, Joyner, Tammy, "The Boom's Benefits Run Deep."
Leonard, Bill, "Big Returns for Award Bucks." HR Magazine, (June, 1994). pp.59-60.
"Moderate U.S. Salary Increases in the Year 2000 Offset by Significant Increases in Variable Pay" @ URL:http//www.hewittassoc.com, press release 09/06/99.
Spencer, Lyle, 1986. Calculating HR Costs and Benefits, Wiley & Sons, New York.

September 1999

39