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SECTION 1 Introduction Objective of the Guidebook Welcome. This guidebook provides guidelines and tools to help providers of transit in rural Guidebook and small urban areas make employee compensation decisions. These decisions are critical to the economic health of your organization and can provide the key to good customer service. Section 1 Introduction Because labor costs make up the highest portion of your transit expenses, hiring and retaining employees are critical issues both in providing quality service and in managing your budget. As a Section 2 Wage and public transit operator, you are challenged to provide high-quality transit services that are respon- Benefit Data sive to the needs of your customers and the community as a whole. These challenges can only be met Section 3 Guide if you have highly qualified and well-compensated employees; however, transit managers in rural to Compensation and small urban areas often report being understaffed, particularly for drivers. Many such managers Decisions report that recruitment, retention, and turnover are among their most pressing concerns (1). Section 4 To make good, informed decisions about employee compensation, the Guidebook and tools Recruiting, Hiring, are intended to assist you in understanding the following: and Retaining Staff 1. What Compensation Levels Are Appropriateby providing compensation levels with defined job classifications (benchmarks) that you can use to assess compensation levels at your system relative to your peers. 2. How to Attract and Retain High-Quality Employeesby suggesting ways to recruit, hire, and retain desirable employees. You may face many of the same employment issues that challenge other employers today. In many areas of the country, unemployment rates are relatively low and the workforce is increas- Research indicates ingly mobile (making the pool of perspective employees lower). If you are like many of your that hiring new counterparts, you may not have the flexibility to raise pay levels or benefits so as to compete with employees can cost other employers in your area. from 25% to 200% of The effect that compensation levels have on your budget and your ability to hire and retain their annual salary employees involves complex relationshipsthese are not necessarily intuitive. It is commonly (to hire, train, and recognized that higher compensation levels allow transit systems to attract employees and reduce allow for time to turnover; it may well be that higher compensation levels may result in lower labor costs overall. learn the job, etc.). For example, providing higher compensation can reduce turnover and attract employees at Costs that are more lower risk for accidents. This may actually be more cost-effective, particularly for jobs where difficult to estimate the cost of training and orienting new employees is high. Further, transit systems with more include customer effective compensation policies may be better able to reduce or control overtime wages. (These service disruption, loss relationships are explored more in Section 3 of this Guidebook.) of morale, overtime, and burnout among The rest of Section 1 of the Guidebook provides a working definition of compensation, remaining employees. followed by a review of issues that you may encounter when making compensation decisions. 1