Palo Alto Weekly

News - March 14, 2014

Palo Alto looks to resolve 'retention crisis' with pay raises

With vacancies on the rise, city offers major salary bumps to Public Works, Utilities workers

by Gennady Sheyner

For years, Palo Alto's Utilities Department employees and managers fretted about the challenges of recruiting and retaining skilled workers at a time of stagnant salaries and reduced benefits.

Now, with the city's economic recovery speeding along and tax revenues happily spiking, the city is doing something to stem the concerns — pay workers more.

In the recently completed round of contract negotiations with Service Employees International Union, Local 521, the City Council adopted a set of principles that included "setting compensation at levels sufficient to recruit and retain qualified employees when economically feasible." The city also tried to align salaries of the SEIU workers with the median of comparable jurisdictions.

In the Utilities Department, the effort has particular urgency. The department currently has 20 open positions out of 236 positions in the budget, and the problem may get even more acute in the next few years. More than half of the Utilities workforce will be eligible for retirement by 2015, according to a report from city's Human Resources department. The hope is that the new contract, which reserves the biggest pay bumps for the most urgently needed employees, will help curtail or perhaps delay this potential exodus. The council is expected to approve the contract on Monday.

Under the proposal, while splicers in Utilities would receive 12.1 percent raises over the two-year period and utility locators would receive raises of 14.6 percent, a utilities-system operator would receive a 19.5 percent raise. In the waste water-treatment plant, most employees would get raises of 8.3 percent, while the maintenance mechanic would see a salary increase of 14.5 percent over the two-year period.

"We know there's a risk, especially in Utilities," Chief People Officer Kathryn Shen told the Weekly. "Just looking at the age of our utilities operators and managers, we know we have to be prepared for turnover, and we know we'll have to recruit."

Shen said the city is also now in the process of doing a new market study for the managers and professional group, which would be based on more recent data than the one used for the last salary alignment.

The staffing situation in Utilities and Public Works has been called a "crisis" by workers. Many staff members have left the city since 2009.

In January, Aaron Miller, an operator at the water quality control plant, told the council that two of his coworkers recently left the department to take jobs that paid them an additional $10 an hour.

"The city isn't paying competitive wage for the skilled workers," Miller said. "I believe that a hiring and retention crisis is happening."

Worker Jesus Cruz introduced himself as "the last electric system operator for the City of Palo Alto."

"There used to be six of us, and now it's only me," Cruz said.

Four operators have left to work for Santa Clara, he said, because of wage differences.

A new report conducted by the consulting firm Leidos, which examined the culture within the Utilities Department, confirms that these have not been happy times at the department — and not merely from a financial standpoint. The report, known as the "Utilities Department Organization Assessment," surveyed the workers and, after listing their many frustrations, concluded that "the organization is ready for change."

Workers specifically feel limited by bureaucracy and cost-reduction efforts and would like a "more open work environment" and more accountability, Leidos found. The current culture, the report states, directs "employees' energy toward negative rather than positive factors.

"This indicates that approximately one-third of the efforts and energy is negatively focused, which impacts overall organizational performance," the report states. "However, the survey also shows that the employees have a desire to improve the way the group works together to build a strong internal community and are open and ready for change. The employees are asking for a more open work environment and to be held accountable."

The firm recommends that the city make an effort in "addressing the potentially limiting values of bureaucracy, confusion, cost reduction and control."

"CPAU should also address employee requests for accountability and development through training and recognition, competitive compensation packages, and opportunities to develop effective processes/systems and communication strategies," the report states.

According to management, the challenge of retaining Utilities employees has already had a visible impact on customers. A new report from City Manager James Keene notes that the 2012 Customer Satisfaction Survey "indicated that while customers experienced fewer outages, they were less satisfied with the time that it has taken to restore service." This, the report notes, is very likely the result of six open linesperson/cable splicer positions (half of the 12 budgeted positions).

"While no evidence suggests that current authorized staffing levels are in excess of current needs, the ability to meet future needs could be very different if attrition due to retirements and employees leaving for better opportunities is realized as expected," the staff report states.

The new SEIU contract will cover 570 union members, more than half of whom will receive salary raises beyond the 4.6 percent cost-of-living adjustment that every employee will receive. In most cases, the salaries would be raised to align with those in other jurisdictions.

In addition to utilities workers, the SEIU group includes employees from Library, Planning, Public Works, Public Safety and other departments. The group makes up about half of the city's total workforce. An average raise in the new agreement is 7.7 percent.

The new contract will cost the city about $7.6 million in additional compensation over the two-year period, which stretches from December 2013 to December 2015.

Staff Writer Gennady Sheyner can be emailed at gsheyner@paweekly.com.

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