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116 Strategies to Attract and Retain a Capable Transportation Workforce departments across the nation, it is important that the specific needs of your agency are used to guide the development and implementation of a program in your agency. Exhibit 16-2 Industry Strategies: Restructuring Benefits and Compensation Strategy Strategy Description Research Competitive Public agencies often find the salary differential between public and private Compensation sector jobs to be a significant factor in job decisions. To ensure public sector agencies remain competitive, they should conduct regular assessments to determine whether adjustments need to be made to the baseline as well as to determine the frequency of salary adjustments. Recent research indicates that improving compensation practices such as the structure and timing of wages can increase employee retention (KFH Group, Inc., 2008). Organizations who participated in our benchmarking study indicated that wages are a primary tool for affecting retention. Participants from both public and private organizations used salary surveys to determine how much employees in a particular job are typically paid. Organizations have started using different salary scales in parts of the state where there are a lot of private industry competitors. At times, when market research identifies significant compensation differentials, adjustments can lessen the competitive advantage of private industry. Some organizations are able to offer matching compensation for in-demand skill areas. If a potential candidate can provide evidence that they have been offered a stronger compensation package, the organization may attempt to match the offer. Supplement with Organizations have begun to supplement their traditional benefits with Alternative Benefits telecommuting, schedule flexibility, and job autonomy. Employees might see Packages these benefits as a reason to remain with the organization even though they have an opportunity to make more money elsewhere. Some organizations indicated that an effort to redesign their benefits programs helped to retain their younger workers (e.g., school options, technology training, and schedule flexibility). These redesigns include allowing employees to pick the benefits that meet their specific needs (i.e., cafeteria-style benefits). Retirement and development (tuition) benefits were also mentioned by organizations as strong solutions to retention challenges. 16.3 Workforce Practices. Fourteen workforce practices that were designed to assist in making the process of "Restructuring Benefits and Compensation" within transportation agencies efficient and effective were reviewed, and we identified two workforce practices that were the most noteworthy within this context: Santa Clara Valley Transportation Authority (VTA) Medical Opt-Out Program North Carolina DOT Competency-Based Pay Program For these two practices, we conducted a case study. Summaries of the two case studies are presented below. The full case studies can be found on the TRB website at

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Restructuring Benefits and Compensation 117 as part of Volume II: Supplemental Materials. The full case study descriptions detail each practice's background, implementation, maintenance, evaluation, and transferability.

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118 Strategies to Attract and Retain a Capable Transportation Workforce Santa Clara Valley Transportation Authority (VTA) Medical Opt-Out Program. The Santa Clara Valley Transportation Authority (VTA) employs roughly 2,100 people, of which 650 work in Santa Clara Valley Transportation maintenance. In addition, VTA is combined with Authority (VTA) Medical Opt-Out Program the Congested Management Agency (CMA), which adds another 800 employees to the total workforce. Job Type: All ROI: Short-term VTA's Opt-Out program has been in existence for Generation: All 10 years. VTA has a policy that all employees must Key Program Highlights: have health insurance to be employed. Originally, employees were required to enroll in VTA's health o Addresses a desire by employees to insurance. The Opt-Out program was intended to have a choice when it comes to health address a desire by employees to have a choice insurance options and to not be when it came to health insurance options and to not required to pay for health insurance be required to pay for health insurance when they when they are already covered by are already covered by another plan. another plan o Offering greater flexibility when it VTA's Medical Opt-Out program provides full-time comes to health insurance coverage employees with the opportunity to choose not to has increased morale and participate in the agency's health insurance program satisfaction among employees and receive a taxable monthly payment if they have o Effective method of addressing high other coverage. For example, employees may have costs while ensuring that all other coverage through their veteran status or employees have health insurance because they are covered under the health insurance coverage of a family member that works outside of the agency. The option provides an incentive of 50% of the employer cost meaning that if the employee (1) has other coverage and (2) chooses to opt out, he/she will be receive the extra money in his/her paycheck. Around 1998, the HR Manager for VTA developed a written proposal and submitted it to the General Manager of VTA for evaluation and approval of the Opt-Out program. In the proposal, the manager included evidence of the program's success at another agency (i.e., BART), the cost savings to employees, and the potential cost savings for the agency. The manager also highlighted the potential for increased morale and satisfaction among employees who were given more flexibility when it comes to health insurance coverage. Once approved, employees were notified by an agency-wide memo explaining the new Opt-Out program. New employees learn about the program during new hire orientation. The program has produced the desired results. From anecdotal conversations with employees, VTA has concluded that all employees are more satisfied that they have an option when it comes to health insurance and the 5% of employees that use the Opt-Out option because of alternative coverage are even more satisfied due to their financial incentive. This program is an effective method of addressing high costs while ensuring that all employees have health insurance coverage. This program is specifically useful during periods where health insurance costs are increasing.

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Restructuring Benefits and Compensation 119 North Carolina DOT Competency-Based Pay Program. The North Carolina Department of Transportation (NCDOT) employs roughly 13,000 people, of which 7,500 work within the Division of Highways. NCDOT's competency-based pay system was implemented based on an unfunded mandate by the Office of State Personnel (OSP). The OSP was seeking to implement a system that could North Carolina DOT Competency-Based Pay be used across all state offices. When they Program realized the skill block system implemented in Job Type: All the late 1990s could not be used across state ROI: Short- to Mid-term jobs due to its specificity, the blocks were Generation: All generalized and broadened into competencies. Key Program Highlights: The five skill blocks were collapsed into three groupings of competencies. The OSP chose to o Applies to transportation workers, pilot the program first with NCDOT before supervisors, engineers, technicians, and moving to other state agencies. the information technology group o Competency blocks were developed For the competency-based pay system, there are based on the initial skill block system in three levels within three competency block order to be used across state jobs groups: contributing, journeyman, and o Due to a lack of funding, competency advanced. For example, a contributing blocks are only used for personal career transportation worker can be a Level 1, Level 2, development or Level 3. Employees are granted the competency once they demonstrate proficiency in the competency. Some of the agency's competencies have a specified time frame before the competency is obtained. For example, for a lead worker, the competency blocks require specific training and demonstration of the competency for 6 months prior to the employee being granted the competency block. Competency-based pay for transportation workers is based entirely on function. Competency blocks are set up based on the complexity of the function performed. For the agency's supervisors, there are four different competencies. These competencies include: Planning and Organizing Work, Human Resource Management, Fiscal/Budget, and Technical Competency. NCDOT wanted to have a less subjective rating scale for the competencies than the "never," "sometimes," "always" convention so the agency conducted focus groups with workers and identified work examples that helped to define each of the competency blocks and make the process of assessment both more flexible and more refined. While the time required to develop these work examples cost the agency money, NCDOT has not specifically tracked the cost of the program. One of the challenges with the success of the program is that no funding has been provided to allow NCDOT to compensate employees who have achieved specific competency blocks. Thus, at this time, the competency blocks are simply used for personal career development and not used to make administrative decisions. At this time, the program only applies to transportation workers, supervisors, engineers, technicians, and the information technology group. The agency is still working through their accounting and clerical classifications. The ultimate goal is to have all the jobs and all of the state government positions switched to competency-based pay.

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120 Strategies to Attract and Retain a Capable Transportation Workforce Other Example Practices To serve as an additional resource for agencies interested in "Restructuring Benefits and Compensation," we have included a list of other practices that transportation agencies have implemented for this purpose. Additional information on each of the following practices can be found in one- to two-page summaries within the supplemental materials. Application of Malcolm Baldrige National Job Benchmarking Quality Award Criteria Performance Evaluations and Individualized APTA Solutions for Workforce Challenges Training Plans Digest Salary Survey Compensation and Benefits Packages Telework Florida DOT Deferred Retirement Option Santa Clara Valley Transportation Authority Program Complete Compensation HealthQuest State of Kansas Health and Workforce Development for the U.S. Wellness Program Freight Railroad Incentive Premiums The practice summaries include information, such as the lead organization, practice description, practice purpose, targeted participants, return on investment (ROI) timeline, influence of the economy, innovativeness, and resources to find out more information on the individual practices.