TO:
Honorable Mayor and Members of the City Council
THROUGH:
Mark Danaj, City Manager
FROM:
Teresia Zadroga-Haase, Human Resources Director
SUBJECT:Title
Reorganization of the Human Resources Department, Restoration of Authorized Full-Time Support Positions, Upgrading the Senior Human Resources Analyst Position (Human Resources Director Zadroga-Haase).
APPROVE
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Recommended Action
RECOMMENDATION:
It is recommended that the City Council approve the reorganization plan for the Human Resources Department in order to improve efficiency and effectiveness in the administration of the City’s personnel and risk management functions to include:
1. Restore the full-time position of Human Resources Assistant (confidential)
2. Restore a full-time position intended to support the Director and provide general office management support - Executive Assistant (confidential)
3. Upgrade the Senior Human Resources Analyst position to Human Resources Manager and authorize City Manager to approve class specification
Body
EXECUTIVE SUMMARY:
Over the last several years, the Human Resources Department has seen a reduction in full-time staffing, coupled with an increase in the complexity of labor law, retirement law (Pension Reform), benefits administration (Affordable Care Act and various leave rights legislation), Workers’ Compensation legislation, and so on. The result has been degradation in service levels and effectiveness as the department has labored under these developments in the Human Resources arena with reduced staffing levels. This report recommends the restoration of two full-time positions and the upgrade of one analyst position.
FISCAL IMPLICATIONS:
The fiscal impact of the recommended action is a net increase to the Departmental budget of approximately $72K annually in personnel-related costs. If approved, this amount will be included in the Fiscal Year 2016/2017 Budget. However, recruitment will begin immediately, and should the positions be filled prior to July 1, 2016, there are sufficient salary savings in the current budget year to cover any additional cost for the remainder of this current fiscal year.
BACKGROUND:
The Human Resources Department currently has a full-time equivalent (FTE) allocation of six employees spread across the two functional areas of Administration and Risk Management. In Fiscal Year 2011/2012 the department went from a staffing level of seven to six through the budget process which resulted in the addition of one analyst position and the elimination of two lower level administrative/clerical positions. While the need for increased analytical and technical capacity was recognized, the reduction in support staff has resulted in higher classified, higher paid staff performing duties below their classification. The department director has no administrative staff support which detracts time and attention from strategic planning and program development. Analytical staff are spending far too much time and energy on lower level administrative tasks, and as a consequence the department in general is not operating at maximum efficiency.
In addition, existing staff has been placed into key positions by default, without the due diligence required in making strategic hiring decisions that will serve the City over the long-term. Staff has not been mentored, trained or developed, and the department has been operating virtually on auto-pilot for several years. In 2015 an organizational analysis of the department revealed that operating departments are frustrated by the lack of customer service and responsiveness from Human Resources, and have begun performing some functions internally, exposing the City to risk of rule violations, employee relations issues and potentially employment claims. An example on the Risk Management side is the lack of capacity has prevented the Third Party Administrator contract(s) from being re-bid in many years. At a minimum contracts should have been re-negotiated to take advantage of changes in the law and industry practices with respect to fee and billing rates.
The department has needed restructuring for some time. Staff are eager to learn, desire to serve the City’s employees and citizens, and have the potential to become a high-performing team. Included in this reorganization plan are some staffing realignments to get the right people in the “right seats on the bus” within the department allowing us to take advantage of strengths and recruit for those areas where additional competencies are required. There are two distinct functional areas within the department, HR operations or administration which encompasses recruitment, classification, compensation, employee relations and labor relations. The other side of the house is Risk Management, which includes our benefits programs (Workers Compensation, health insurance, etc.) and our general liability programs (risk transfer, claims administration, loss control programs, etc.). The proposed organization includes a mid-management level position over each of the two main functional area, providing a balance of responsibility and proper oversight and staff development within each area.
DISCUSSION:
The positions of Executive Secretary and Human Resources Assistant were eliminated during the Fiscal Year 2011/2012 budget process in exchange for one Human Resources Analyst position. Over time, the glaring need for administrative support throughout the department has led to the use of temporary/part-time employees, which has resulted in inconsistencies, lack of follow-through, high employee turnover, and inefficient use of higher classified staff time and energy to keep the department operating as smoothly as possible.
The department controls programs significant in terms of cost. The City’s labor related expenses comprise approximately 68% of the General Fund, making labor relations and benefits administration (including the Risk Management insurance programs) critical factors in controlling costs for the General Fund. The necessity of managing these programs effectively comes at a cost - of investment in human capital, time, training and support.
The recommendation, if approved, will restore these two support positions to the Department on a full-time basis. Specifically, we are recommending the Executive Secretary position as an Executive Assistant position. This is due to the fact that the Executive Secretary is a Teamster represented position, and as critical support to the Director, will be involved in matters relating to labor relations. This position will provide supervisory oversight of the Human Resources Assistant (recommended below) and will support the department in budget development and administration.
The second recommended position of Human Resources Assistant, will provide consistent day-to-day support to the department as a whole, and is the first contact most employees, potential employees and the public will have with the Department. This position will take over the duties currently provided by the temporary/part-time staff within the department.
The complexity of public sector human resources functions has increased dramatically with recent legislation which has expanded employee rights, and increased the scope and quantity of various entitlements that must be administered, tracked and reported. Examples include the Affordable Care Act, changes to the Public Employment Retirement Law brought about by pension reform, expanded Workers’ Compensation entitlements, increased Social Security requirements, and the list goes on. In addition, these key pieces of legislation continue to evolve and the City must have the capacity to analyze impacts and implement whatever actions are necessary to limit exposure and comply with the law. CalPERS has dramatically stepped up their compliance oversight of public agencies requiring significantly more attention to retirement benefits administration by member agencies. In addition they are pushing more of the administrative work back onto the member agencies through the implementation of the MyCalPERS portal for administering retirement benefits. Pension reform has increased the complexity of benefit administration by creating dual member classifications (pre and post pension reform entitlements).
In the Risk Management area, there are several key initiatives that need to be addressed through program development. Staff briefly touched on some of these initiatives during the November 17, 2015 Council meeting report regarding the Insurance Fund status. These include evaluation of our Workers’ Compensation Third Party Administrator services and contract; expansion of loss prevention programs to improve education and fitness related to prevention of injuries; safety programs; and a more coordinated and effective return to work program. Our Risk Manager must be allowed to strategically focus on program development in these areas in order to improve efficiency and control costs. The City’s participation in our current risk pool needs to be evaluated for long-term viability and the development and assessment for options that could bring more stability to the City’s Workers Compensation, General Liability and other risk related services and funding requirements.
The decision to bring this recommendation forward now as opposed to incorporating it into the budget process for FY2016/2017, is due to the very urgent issues facing the City in the Risk Management area. The City is at a cross-roads with respect to the risk pool we participate in, and we require experience and strong leadership in the Risk Management area to make the assessment and develop recommendations for long-term risk pooling options and protecting the City from financial exposure. The Insurance Fund requires subsidization over the next three years due to unexpectedly high liability claim settlements and Workers’ Compensation claims. It is critical that the City be proactive in managing risk, development of loss control programs and managing our third-party administrators if we are to gain control over spiraling costs.
By the same token, the importance of the operations/administration side of the department cannot be overstated. The City has committed (through the employee survey process) to be proactive in the development and engagement of staff. The department is key to supporting one of the City’s strategic pillars of success - providing excellent municipal services by an aligned and committed workforce. The employee focus groups established after the last City-wide all hands meeting and dissemination of the employee survey results are resulting in many great recommendations for ways to improve both services and employee engagement/development. Many of these initiatives will need to be supported and/or managed by Human Resources.
In addition to the day-to-day operations of the Human Resources Administration function, there are several key initiatives that will also improve the City’s personnel related operations to more effectively manage our biggest asset - our employees. The Personnel Rules need updating. The City’s personnel and administrative policies and procedures need to be reviewed and updated for compliance with the law, and improved clarity and efficiency. Staff is recommending the Senior Human Resources Analyst position be upgraded to Human Resources Manager. This will provide a mid-management level position in each area of the department (Administration and Risk Management) for a balanced team of peers to collaborate on Human Resources policies and program development and supervision of subordinate staff. The Human Resources Manager will be accountable for program development and implementation under the direction of the Human Resources Director and will also provide support to the labor relations functions, duties which currently fall under the Risk Manager duties for no logical reason. This position will also supervise lower level staff. The salary range for the Human Resources Manager is proposed to be equal to the salary range of the Risk Manager classification, and the cost of the upgrade will be included in the FY2016/2017 budget. If approved, staff will develop the classification specification and associated salary schedule for approval by the City Manager.
The additional benefit of creating a mid-management position for each side of the department is to provide for career and succession planning within the organization through each of the two main functional areas. Attachments A and B depict the current and proposed organizational structure respectively.
This reorganization of the Human Resources Department and restoration of two administrative positions will allocate appropriate resources to accomplish critical strategic objectives - namely to more effectively control costs of benefit and insurance programs, to provide better service to our internal and external customers, protect the City from liability exposure, and most importantly to more effectively recruit, train, and retain our greatest asset - our employees.
Attachments:
1. HR Org Chart Old Version 2
2. HR Org Chart New Version 2