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Page 1
Suggested Citation:"Section 1 - Introduction." National Academies of Sciences, Engineering, and Medicine. 2008. Employee Compensation Guidelines for Transit Providers in Rural and Small Urban Areas. Washington, DC: The National Academies Press. doi: 10.17226/14163.
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Page 1
Page 2
Suggested Citation:"Section 1 - Introduction." National Academies of Sciences, Engineering, and Medicine. 2008. Employee Compensation Guidelines for Transit Providers in Rural and Small Urban Areas. Washington, DC: The National Academies Press. doi: 10.17226/14163.
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Page 2
Page 3
Suggested Citation:"Section 1 - Introduction." National Academies of Sciences, Engineering, and Medicine. 2008. Employee Compensation Guidelines for Transit Providers in Rural and Small Urban Areas. Washington, DC: The National Academies Press. doi: 10.17226/14163.
×
Page 3
Page 4
Suggested Citation:"Section 1 - Introduction." National Academies of Sciences, Engineering, and Medicine. 2008. Employee Compensation Guidelines for Transit Providers in Rural and Small Urban Areas. Washington, DC: The National Academies Press. doi: 10.17226/14163.
×
Page 4
Page 5
Suggested Citation:"Section 1 - Introduction." National Academies of Sciences, Engineering, and Medicine. 2008. Employee Compensation Guidelines for Transit Providers in Rural and Small Urban Areas. Washington, DC: The National Academies Press. doi: 10.17226/14163.
×
Page 5
Page 6
Suggested Citation:"Section 1 - Introduction." National Academies of Sciences, Engineering, and Medicine. 2008. Employee Compensation Guidelines for Transit Providers in Rural and Small Urban Areas. Washington, DC: The National Academies Press. doi: 10.17226/14163.
×
Page 6
Page 7
Suggested Citation:"Section 1 - Introduction." National Academies of Sciences, Engineering, and Medicine. 2008. Employee Compensation Guidelines for Transit Providers in Rural and Small Urban Areas. Washington, DC: The National Academies Press. doi: 10.17226/14163.
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Page 7

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Objective of the Guidebook Welcome. This guidebook provides guidelines and tools to help providers of transit in rural 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. 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 public transit operator, you are challenged to provide high-quality transit services that are respon- sive to the needs of your customers and the community as a whole. These challenges can only be met if you have highly qualified and well-compensated employees; however, transit managers in rural and small urban areas often report being understaffed, particularly for drivers. Many such managers report that recruitment, retention, and turnover are among their most pressing concerns (1). To make good, informed decisions about employee compensation, the Guidebook and tools are intended to assist you in understanding the following: 1. What Compensation Levels Are Appropriate–by 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 Employees–by 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- ingly mobile (making the pool of perspective employees lower). If you are like many of your counterparts, you may not have the flexibility to raise pay levels or benefits so as to compete with other employers in your area. The effect that compensation levels have on your budget and your ability to hire and retain employees involves complex relationships–these are not necessarily intuitive. It is commonly recognized that higher compensation levels allow transit systems to attract employees and reduce turnover; it may well be that higher compensation levels may result in lower labor costs overall. For example, providing higher compensation can reduce turnover and attract employees at lower risk for accidents. This may actually be more cost-effective, particularly for jobs where the cost of training and orienting new employees is high. Further, transit systems with more effective compensation policies may be better able to reduce or control overtime wages. (These relationships are explored more in Section 3 of this Guidebook.) The rest of Section 1 of the Guidebook provides a working definition of compensation, followed by a review of issues that you may encounter when making compensation decisions. 1 S E C T I O N 1 Introduction Guidebook Section 1 – Introduction Section 2 – Wage and Benefit Data Section 3 – Guide to Compensation Decisions Section 4 – Recruiting, Hiring, and Retaining Staff Research indicates that hiring new employees can cost from 25% to 200% of their annual salary (to hire, train, and allow for time to learn the job, etc.). Costs that are more difficult to estimate include customer service disruption, loss of morale, overtime, and burnout among remaining employees.

We also provide background on the research conducted in developing the Guidebook and accompanying interactive computer tool. Finally, we describe the interactive computer tool that accompanies the Guidebook and how it can be used to explore salary and benefit characteristics of comparable transit systems in rural and small urban areas. Definition of Compensation How much employees are compensated for their work involves more than just their salary and/or wages. Recent literature suggests that employees frequently place a higher value on other parts of their compensation and that often the benefits associated with the job are as important, or more important, than their actual wages. When considering how attractive your transit system is as an employer, examine your total compensation package, including (but not limited to) the following: 1. Wages/Salaries – • Base wages for full-time or part-time employees • Whether employees are paid for overtime or given compensatory time 2. Benefits – employee/employer contribution • Paid Leave – Vacation – Sick – Personal days • Medical/Life Insurances – Health insurance – Dental insurance – Disability insurance – Life insurance • Other – Pension/401(k) – Education/tuition reimbursement – Wellness program All aspects of a compensation package can affect a transit system’s ability to attract, hire, and retain good employees. Keep in mind that different elements of the compensation package may motivate management employees more than front-line employees such as drivers and dispatch- ers. Other, non-monetary aspects that will affect your ability to recruit and retain employees are discussed in Section 4. Compensation Issues Unique to Rural and Small Urban Transit Rural and small urban transit systems, by necessity, operate differently than larger urban systems. As distinct from their counterparts in large urban areas, which often have an entire department dedicated to managing human resources, rural and small urban transit systems have unique, non-standardized needs when making compensation decisions. Looking at the characteristics of the systems responding to the survey for this project provides some insights into the types of transit systems operating in rural and small urban areas of the United States. Based on the inventory of transit systems developed for this project, it appears there are about 1,850 – 1,900 rural and small urban public transit operators, including almost 1,500 rural operators and 400 small urban operators. Given that no definitive database on rural 2 Employee Compensation Guidelines for Transit Providers in Rural and Small Urban Areas Reducing overtime can also save money – most systems pay for overtime at time and a half. Reducing overtime can save 50% on those hours. A transit system is only as good as its people.

and small urban operators exists, the best that can be assumed is that the characteristics of the systems responding to the survey roughly represent transit systems operating in rural and small urban areas of the country. Some characteristics of rural and small urban systems that can affect compensation are described in the following subsections. Service Area Characteristics There are wide variations in the size and character of the areas served by transit systems responding to the survey. The highest percentage operate in a single county (37%), but many operate multi-county (27%), in a single municipality (21%), or in a multi-town area (14%). About half of the respondents have an urbanized area within their primary service area, but, for those that do not, the distance to the nearest urbanized area varies greatly. Consequently, some of the respondents may be dealing with the influence of proximity to a more urban workforce while others are not. Another measure of the urban nature of the areas served by the systems can be seen in the source of transit funding they receive; over 80% of the respondents received S.5311 grants (for non-urbanized areas) and 22% received S.5307 grants (for small urban areas). Transit System Organizational Characteristics Transit systems in rural and small urban areas tend to be more varied—operating within a wider range of organizational models. There are many variations in the types of organiza- tions/agencies operating transit in rural and small urban environs. The highest percentage of respondents operate within multi-purpose private-nonprofit human services agencies (25%). Systems operating out of a multi-purpose agency may present a different set of compensation issues because the employees of the agency are not focused on a single mission (e.g., compensa- tion for transit employees may be weighed against decisions concerning home health workers and city/county maintenance workers). County and city governments account for 17% and 21% of the respondents, respectively, while 15% of the respondents are transit authorities, and 14% are single-purpose private-nonprofit agencies that only provide transportation. The issues faced and the process of making compensation decisions within a government unit will differ from a relatively independent transit authority or private-nonprofit agency. Transit Service Characteristics Most transit systems responding to the survey operate a mix of services ranging from true fixed routes to paratransit/demand-responsive and everything in between. This range of services has implications for the size and type of vehicles needed, the need for drivers to have a Commercial Drivers License (CDL), and the need for specific operational skills. Transit systems vary greatly in the size of their operation—from a system that operates one vehicle and provides only 10 trips without any CDL vehicles to systems with fleets of hundreds of vehicles requiring CDL drivers and providing millions of trips annually. Employee Characteristics Most transit systems responding to the survey have both full- and part-time employees. For those that use part-time employees, the percentage of part-time employees varies from 3% to 100%. Only 15% use volunteers—all of those in conjunction with paid employees. The turnover rate (defined as the number of employees who left during a year divided by the average monthly employment for the year) averages 11%, but varies widely—from 0% to 65% (with a standard deviation of 13%). Only 20% of the respondents have employee unions at their systems; gener- ally, these are the small urban systems operated by transit authorities or local government. Introduction 3 Service areas vary greatly in terms of size and proximity to an urban area. Services are operated by various types of organizations from independent transit authorities to government units to private-nonprofit agencies. Systems provide many types of service: fixed routes, deviated fixed routes, paratransit, and subscription. Most systems use both part- and full-time employees.

Typical Transit Operator There is no typical rural or small urban transit operator. The individual characteristics make each rural or small urban transit system unique; this makes developing compensation strategies for a particular type of organization a challenge. You might ask yourself, is my agency more like other transit authorities? Or, more like other systems with over a hundred employees? Section 2 will help you make those judgments. Consequently, your employees are less likely to fit into standard molds with regard to job func- tions and your staffing levels may be very different than those at larger/urbanized operators. If you’re like many rural and small urban managers, you simply may not have the resources to implement the type of compensation solutions that may have been developed, as well as exten- sively studied and documented, at large urban systems. Compared with transit management in larger transit systems, you are likely to have to perform many roles—operations, planning, mar- keting, risk management, maintenance direction, and sometimes even dispatching or driving. Your system may rely on you, the manager, to perform a wide variety of functions, with little or no specialized staff to help. You may be the Human Resources Department. On the other hand, many rural and small urban managers are more likely to innovate and look for new ways to accomplish unique tasks. This means that some of the more innovative strate- gies for managing compensation packages will be attractive to you. Guidebook Development The primary purpose of the project was to collect and analyze compensation data and develop guidelines for employee compensation so that rural and small urban transit managers have a meaningful resource to use when making wage and benefit decisions. The audiences for this Guidebook include local transit agencies, their boards, and local elected officials. The project panel also recognized that transit agencies may be able to use the compensation data to influ- ence contract rates under various human services programs (e.g., Medicaid). The secondary project purpose was to provide transit managers with information for use in attract- ing and retaining employees in the unique environment of rural and small urban transit systems. The Guidebook and computer tool were developed based on quantitative and qualitative information gathered from various sources, such as a review of literature and previous research, a survey of transit operators, and one-on-one interviews. The research team focused on (1) obtaining information and data from a geographically diverse sample and (2) including the needs and perspectives of rural and small urban transit systems. Literature and Previous Research The research team conducted a literature review to assess reports, documents, papers, and other published materials relevant to employee recruitment and retention strategies. This was supplemented with “best practices” identified during stakeholder interviews. Research on employee recruitment and retention strategies continued during the survey effort and follow-up calls were made to solicit additional information from survey respondents with best practices in these areas. The primary literature sources for the research team were TCRP publications. The Bibliography lists the key publications reviewed. Panel and Stakeholder Inputs The TCRP project panel held two meetings with the research team that were invaluable to the research process. In addition, the team contacted rural and small urban operators via telephone 4 Employee Compensation Guidelines for Transit Providers in Rural and Small Urban Areas There is no “typical transit operator” in the rural and small urban arena. The primary purpose of the project was to collect and ana- lyze compensation data—addressed in Section 2.

to review how they currently make compensation decisions and explore how the Guidelines would be useful to them. Collectively, the panel and other stakeholders expressed a desire to make meaningful peer comparisons on wages and benefits based on factors such as type of orga- nization, size of system, size of service area, and geographic area. These potential users of the Guidebook wanted it to include a range of salaries for various key rural and small urban transit agency positions in particular states and regions. The stakeholders also were interested in explor- ing how wages, benefits, and training affect employee retention. Finally, the stakeholders were interested in collecting information on the use of overtime wages among their peers. Job Benchmarking As preparation for the data collection effort and as an important part of the research for the Guidebook, the research team developed consistent job descriptions for typical positions at rural and small urban transit systems. “Benchmarking” refers to matching an organization’s jobs to an external job of similar content. Benchmarking is used to help set compensation levels for organizations and to ensure that you are comparing compensation levels for employees with equal responsibilities, training, and skill levels (2). Some organizations hire consultants to perform benchmarking studies; others develop pay structures internally. The benchmarked job descriptions are provided in Section 3 of the Guidebook. Review of National Compensation Data National data on wages were reviewed, primarily from the Bureau of Labor Statistics (BLS) Compensation Survey and the APTA Wage database. These data are described in Section 2 to help explain regional and state wage variations from the survey data. The research also explored if there is a relationship between the cost of living in a particular state/region and the prevailing wage rates. Unfortunately, few data are available on cost of living specific to rural and small urban areas. Further, cost-of-living data were found only for specific metropolitan areas, not for states as a whole. Thus, rather than building cost-of-living factors into the computer tool, Section 2 of the Guidebook directs users to online cost-of-living tools to allow users to make comparisons specific to their local areas. Survey The primary source of data for the computer tool was the project survey of rural and small urban operators across the country. The research team developed and revised the survey with input from the TCRP Panel. A copy of the survey is included in Appendix A. The survey and survey process were tested in one state before being distributed to all rural and small urban operators nationwide. Distribution Given that, as part of the research project, the team developed a list of email addresses for most of the 1,871 rural and small urban operators to be surveyed, the survey invitation primarily was distributed via email. The remaining 184 operators were sent a survey via U.S. mail.1 Transit operators had two options for completing and returning the survey: (1) complete the web-based survey and submit the survey online or (2) complete a paper copy of the survey and mail or fax it back. Introduction 5 A description of jobs by category (and wages for each) are presented in Section 3. 1 The research team developed a database of rural and small urban public transit operators that included agency name, a contact person, address, phone number, and email address (email addresses were identified for over 90% of the operators—all but 163 rural operators and all but 21 small urban operators).

Promotion Efforts to encourage operators to complete the survey included notifying national organiza- tions such as the Community Transportation Association of America (CTAA), Multi-State Tech- nical Assistance Program (MTAP)/American Association of State Highways and Transportation Officials (AASHTO), and Rural Transit Assistance Program (RTAP) about the survey effort and sending each State DOT an announcement that described the project and the survey. Many State Program Managers sent emails to their grantees encouraging them to participate. The project team made presentations at conferences on the project, and distributed blank surveys that generated additional survey responses. Responses Figure 1-1 shows a distribution of the locations of the 360 survey respondents (a 19% to 20% response rate). We obtained data from a good cross section of operators with agencies in 45 states responding. Generally, states with no responses were smaller states with statewide operators/ grantees (e.g., Delaware, Connecticut, and Rhode Island). No responses were received from Massachusetts or Hawaii. The transit systems that responded to the survey operate various transit services in various circumstances and all regions of the country. The map also indicates that data were received from a good cross section of agencies representing the nine divisions used in the BLS National Compensation Survey. 6 Employee Compensation Guidelines for Transit Providers in Rural and Small Urban Areas Figure 1-1. Locations of responders to TCRP F-12 employee compensation study.

Guidebook Organization The Guidebook has the following sections: • Section 2, Wage and Benefit Data, includes wages and salary levels from the project survey and selected national databases. • Section 3, Guide to Compensation Decisions, includes procedures for setting and adjusting employee compensation levels, standardized job categories and selected wage data for each, and discussion of the interactive computer tool that can be used to conduct a peer analysis for your system. • Section 4, Recruiting, Hiring, and Retaining Staff, includes a review of current and best prac- tices from the survey, industry interviews, literature search, and follow-up calls with selected operators. The Guidebook is organized to present compensation guidance in various ways. Any partic- ular strategy for improving compensation practices may be described in multiple places—this repetition is intentional. Sections 2 through Section 4 complement one another and are intended to reiterate the link between your compensation practices and your ability to hire and retain high-quality employees. Finally, an interactive computer tool supports this Guidebook. The tool, available on the TRB website at http://trb.org/news/blurb_detail.asp?id=9282, provides an easy way to explore salary and benefit characteristics of transit systems in rural and small urban areas, and is based on the survey data. By entering the basic characteristics of your transit system, service area, and oper- ating environment, you will be able to query the database to compute and report salary and ben- efit characteristics of comparable systems. Section 3 and the TRB website include details on how to use the tool. Introduction 7

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TRB's Transit Cooperative Research Program (TCRP) Report 127, Employee Compensation Guidelines for Transit Providers in Rural and Small Urban Areas explores salary and benefit characteristics of transit systems in rural and small urban areas. An interactive computer tool, produced as part of this project, is available online and is designed to allow transit managers to quickly and easily obtain compensation and benefit data from comparable transit systems.

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