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Chapter 6.7

Reduce Human Resource Staffing


Summary

The Texas Department of Transportation (TxDOT) operates with more human resource (HR) staff than private sector firms, other Texas state agencies and other states’ Department of Transportation. Human Resource staff levels at TxDOT should be reduced to the benchmark staff-to-employee ratio of 1:100.


Background

TxDOT had 20,272 full-time equivalent employees (FTEs) during the agency’s staffing peak in 1969, continuing with between 18,000 and 21,000 FTEs during the 1970s and early 1980s. Today, complying with the legislatively mandated staffing cap, TxDOT has around 14,726 FTEs.[1] Despite this reduction, TxDOT currently has a turnover rate of 9.84 percent, the lowest of large agencies and one of the lowest among all state agencies.[2]

During the 1970s and early 1980s, the Personnel Division at TxDOT employed 13 to 15 FTEs—a ratio of one division staffer to every 1,300-1,400 TxDOT employees. Since the 1980s, however, human resources functions have become increasingly complex with greater responsibilities and liabilities, with more staff doing professional rather than clerical work. Thus, the number of FTEs at TxDOT performing human resource duties has grown to 287 FTEs.[3]


Human Resource Functions at TxDOT

TxDOT’s Human Resource Division (HRD) employees establish and maintain policies, procedures and human resource (HR) manuals, conduct and administer training, provide support to the district and division offices on policy interpretations, and review employee relations and progressive discipline issues to assure consistency, appropriate documentation and due process. HRD employees also act as liaisons between TxDOT headquarters, employees and the Employees Retirement System of Texas. HRD staff administer the sick leave pool and extended sick leave programs, the Family Medical Leave Act, the Americans with Disabilities Act, military leave requests, emergency leave and jury duty programs, and coordinate policy issues with respect to worker’s compensation issues as they relate to other leave programs.

Human resource functions at TxDOT are divided between the 28 divisions located in Austin, including HRD, and 25 district offices throughout the state. TxDOT employs 115 FTEs, or 40.1 percent of total HRD employment, in the HRD headquarters in Austin. Of the 115, six serve in an administrative capacity, four support PeopleSoft software, the Business Operations Management Section has 19, the Employee Relations Section has 11, the Employment Opportunities Section has 13, the Personnel Administration Section has 12, the Training, Quality and Development Section has 36, and the Classification Section has 14. In addition, 140 FTEs, 48.8 percent of the total HRD workforce, work in district offices, and the remaining 32, or 11.1 percent, are assigned to TxDOT’s 28 division offices.[4] Human resources officers (HROs) in the district and division offices do day-to-day activities such as recruiting, new employee orientation training, and basic benefits counseling fairly autonomously.[5]

TxDOT’s equal employment opportunity (EEO) policies and procedures are based on the premise that detailed oversight is necessary to assure EEO compliance and to ensure that the department is meeting requirements of the Texas Commission on Human Rights. TxDOT believes hiring decisions based on uniformly applied, step-by-step processes increase their chances of selecting a good employee while complying with all applicable EEO laws.[6] However, less prescriptive methods exist to accomplish the same organizational goals and should be pursued in light of today’s highly competitive job market. For example, at Metropolitan Property and Casualty, a division of Metropolitan Life Insurance Company, “HR now views its role as a change agent and facilitator. HR’s work is to identify processes it has historically owned and put those processes in the hands of its managers and employees with the express intent of raising the employee’s level of performance through ownership and responsibility.” Its key performance measures include employee satisfaction scores, HR satisfaction scores, percentage completion of HR plan, cost of HR services provided and retention of highest potential employees.[7] In today’s flatter organizations with downsized staff, organizations achieve strategic objectives by effective sharing of knowledge and best practices.[8]

Additionally, the current hiring process at TxDOT came as a result of recommendations for streamlining the interviewing and hiring process from a work group formed in December 1997. The group, which included representatives from both district and division offices, reviewed selection procedures at other state agencies as well as best practices from the private sector. The resulting interviewing and hiring policy was approved by the Texas Commission on Human Rights in 1998.[9]

However, this streamlined interview and hiring process can involve as many as 32 steps: 18 during the pre-interview phase, six during the interview phase and eight during the post-interview phase.[10] Each of these phases requires extensive procedure-driven, prescriptive work by the supervisor, with many review and approval steps that can delay application processing, candidate screening, interviews, hiring decision and the eventual job offer. While thorough, the process creates delays, extending the hiring cycle by as much as 60 to 90 days, by which time the selected candidate may have accepted another position.[11] Even the most streamlined TxDOT interviewing and hiring process takes 35 to 45 days, and still requires entry of the applications; review and approval by HROs; knowledge, skills and abilities screening; scoring and ranking of the interviews; and finally, hiring recommendations to HROs. Because of this time-consuming procedure, a “rapid hire” streamlined process has been created for current staffing shortages in critical areas like engineering and information technology.[12]


Evolution of Human Resources

In the 1960s, companies typically had large corporate staff support groups in areas like human resources. These support groups set policies and established extensive programmatic and procedural requirements that were imposed on the business units. Their mission was to establish the policies and procedural requirements, some legal and some self-imposed, make the business units implement them, and audit the business units to ensure they conform. These large corporate support groups focused inwardly and diverted valuable resources away from a company’s core operations, its markets and customers. The policies and requirements often created large amounts of administrative work, that added no value to the company’s customers, its competitive position or shareholder wealth. W. Edwards Deming in his classic book on quality management describes fourteen (14) points for management that are critical success factors for being competitive. These 14 points establish the foundation for changing supervisory roles, empowering employees and eliminating bureaucratic barriers as key to improving an organization’s productivity and quality of service. [13]

This organizational model has all but disappeared from corporate America. In their breakthrough book, Reengineering the Corporation, Hammer and Champy describe why traditional organizational structures are no longer effective and how some of the world’s premier corporations have radically reengineered themselves, flattening their organizations and eliminating layers of managerial hierarchy and elaborate controls that made them sluggish and unresponsive to changing market and customer requirements. In a follow-up book, Beyond Reengineering, Hammer gives an update on how corporations have continued to re-engineered their work processes, management systems and employee roles and responsibilities to improve productivity, quality and customer services.[14] Under this new model, the primary role of human resources has shifted from dictating and enforcing polices to organizational and employee development.[15] While the need to administer the traditional compensation and benefits, recruiting and hiring, career development, and employee/labor relations continues, HR has shifted from providing detailed programs and procedures to acting in an advisory role, while transferring responsibilities to executives and managers in the business units. In general, corporations are decentralizing. Often organizations with diversified lines of business, support areas such as human resources maintain a small policy group at corporate headquarters while placing support staff in the business divisions.[16]


Best Practices



Private Sector

Many private sector construction and engineering organizations administer HR activities with small HR staffs. The staffs of these private entities are responsible for the full spectrum of HR activities, including benefits administration, labor relations and collective bargaining, and workers’ compensation insurance. These functions for state government are administered by specific state agencies, such as the Employees Retirement System of Texas rather than individual agency HR departments. Moreover, line managers in private sector organizations typically have the authority to make hiring and firing decisions directly and are not required to go through the exhaustive paperwork and approval processes to which state agencies are sometimes subject. Exhibit 1 lists firms surveyed and their corresponding HR staff to total workforce ratios.[17]

Exhibit 1

HR Staff-to-Employee Ratio

Private Sector Organizations

State
Total FTEs
HR FTEs
HR Staff-to-Employee Ratio
Champagne-Webber
590
4
1:147
Reliant Energy
15,600
141
1:111
Foster Wheeler
248
3
1:83
Parsons
630
3
1:210
TxDOT*
14,726
287
1:51

Source: Telephone interviews with firms December 2000.

*Note: HR employee levels as of October 2000, total FTEs based on legislatively mandated employee cap.

Human Capital Benchmarking Report 2000, published by the Saratoga Institute, reports an average HR staff-to-employee ratio for all industries of 1 to 106.[18] The “Bulletin to Management,” published by the Bureau of National Affairs, reports, “The median ratio of HR department staff to total headcount for 2000 is 1.0 HR worker for every 100 employees in the organization, up slightly from 0.9 per 100 in 1999 to the same level recorded in 1998 and 1997.”[19]


Texas State Government

A 1999 salary parity study of the state’s human resource employees by the Texas State Auditor’s Office (SAO) indicated that the average HR staff-to-employee ratio for the studied agencies was 1 to 78 which is below current benchmarking standards, as mentioned above. In the study, agencies were classified according to complexity level—high, medium, and low—based on total number of employees in the agency, workforce complexity and the executive director’s not-to-exceed salary rate. TxDOT was classified as having a high complexity level. Many other complex agencies like the Comptroller of Public Accounts, Department of Public Safety, Department of Protective and Regulatory Services, Texas Department of Criminal Justice and Texas Parks and Wildlife Department were operating with more efficient HR staffing ratios.

The complexity of an agency’s HR function is influenced by several factors. SAO used the total number of employees as the primary indicator of agency complexity. In addition, the diversity of the workforce contributes to the complexity, as many different occupational groups and salary levels require more sophisticated HR programs. Exhibit 2 summarizes how TxDOT’s HR staff-to-employee ratio compares with other state agencies categorized by the SAO as complex.[20]

Exhibit 2

Human Resource Staff to Employee Ratio

Similarly Categorized State Agencies

Agency Name(High Complexity Level)
Number of HRStaff
Total Number ofEmployees
HR Staff-to-Employee Ratio
Rehabilitation Commission
64
2,422
1:38
Department of Insurance
24
1,013
1:42
Workforce Commission
87
3,717
1:43
Workers’ Compensation Commission
25
1,107
1:44
General Services Commission
15
759
1:51
Natural Resource Conservation Commission
47
2,729
1:58
Department of Mental Health & Retardation
408
23,883
1:59
Youth Commission
95
4,373
1:46
Department of Transportation*
225
14,399
1:64
Department of Health
87
5,654
1:65
Department of Human Services
188
14,780
1:79
Texas Education Agency
10
794
1:79
Department of Protective & Regulatory Services
78
6,239
1:80
Office of the Attorney General
34
3,586
1:106
Railroad Commission
8
859
1:107
Department of Criminal Justice
308
41,650
1:135
Parks and Wildlife Department
23
3,149
1:137
Department of Public Safety
42
6,831
1:163
Comptroller of Public Accounts
15
2,820
1:188

Source: State Auditor’s Office, Salary Parity Study of the State’s Human Resources

Employees, January 1999

*Note: Employee levels as of January 1999.


Other States

Human resource staff-to-employee ratios at TxDOT are much lower than at departments of transportation (DOTs) in several other states. The average HR staff-to-employee ratio for DOTs in Arizona, California, Florida, North Carolina, Pennsylvania, and South Carolina is 1 to 159. Exhibit 3 lists other states surveyed and their corresponding HR staff-to-workforce ratios.

Exhibit 3

Human Resource Staff at Selected State DOTs

State DOT
Total FTEs
HR FTEs
HR Staff-to-
Employee Ratio
Arizona
5,633
18
1:313
California
23,602
272
1:87
Florida
9,493
125
1:76
North Carolina
14,000
57
1:246
Pennsylvania
12,350
112
1:110
South Carolina
5,200
18
1:289
Texas
14,726
287
1:51

Source: Interviews with above states’ Departments of Transportation, October – December 2000.


Recommendation

TxDOT should reduce its Human Resources staff to the benchmark staff-to-employee ratio of 1:100.

TxDOT is operating with many more HR staff than peers in the private sector, current benchmarking estimates, other comparable Texas state agencies, and other state departments of transportation. Modifying its HR processes should allow TxDOT to reduce the staff resources allocated to current industry standards. TxDOT should reduce the ratio of total employees involved in HR functions to TxDOT staff from the current level of 1:51 to the benchmark average of 1:100. With this recommendation, a total of 140 HR positions would be eliminated.


Fiscal Impact

The average HR compensation level at TxDOT is $3100 per month, or $46,500 per year including a 25 percent benefit level.[21] Assuming the reduction in force would be across all HR positions and half of the reductions would occur in the first year and would be completed in the second year of the biennium, savings can be estimated at $3,255,000 in fiscal 2002 and $6,510,000 for each year thereafter. The estimated savings below represent amounts of the State Highway Fund revenue that could be redirected to other Texas Department of Transportation roadway construction and maintenance programs to bring the highway system into the 21st Century.

Fiscal Year
Savings to the State Highway Fund Available to Redirect
Change inFTEs
2002
$3,255,000
-70
2003
$6,510,000
-140
2004
$6,510,000
-140
2005
$6,510,000
-140
2006
$6,510,000
-140

Endnotes

[1] Texas Department of Transportation, Moving Texas into the 21st Century: Strategic Plan (Austin, Texas, June 1, 2000), p. 25; and telephone interview with Les Clark, executive director, Human Resources, Texas Department of Transportation, Austin, Texas, September 12, 2000.

[2] Texas State Auditor’s Office, An Annual Report on Full-Time Classified Turnover for Fiscal 1999 (Austin, Texas, March, 2000), p. 22.

[3] Telephone interview with Les Clark, executive director, Human Resources Division, Texas Department of Transportation, Austin, Texas, September 12, 2000; and letter from Cathy J. Williams, PHR, assistant executive director for Support Operations, Texas Department of Transportation, to Clint Winters, Research and Policy Development Division, Texas Comptroller of Public Accounts, October 18, 2000; and email from Pamela Bailey Campbell, consultant, to Glenn Nestel, consultant, October 25, 2000.

[4] Letter from Cathy J. Williams, PHR, assistant executive director for Support Operations, Texas Department of Transportation, to Clint Winters, Research and Policy Development Division, Texas Comptroller of Public Accounts, October 18, 2000.

[5] Interviews with Diana Isabel, director, Human Resources Division; Esther Gottwald, Human Resource Officer, Austin District; Deborah Jackson, Human Resource Officer, Dallas District; Ella Mason, Human Resource Officer, Corpus Christi District; Schelly Radcliff, Human Resource Officer, San Antonio District, and Jodi Zandt, Human Resource Officer, Houston District, Texas Department of Transportation; May 2-4, 2000.

[6] Letter from Cathy J. Williams, PHR, assistant executive director for Support Operations, Texas Department of Transportation, to Clint Winters, Research and Policy Development Division, Texas Comptroller of Public Accounts, October 18, 2000.

[7] Lia Smith, American Productivity and Quality Center “Aligning Human Resources to Business Objectives,” June/July 1994 (http:.//www.apqc.org/free/articles/story04.htm). (Internet document.)

[8] Richard McDermott, Ph.D. and Carla O’Dell, Ph.D., American Productivity and Quality Center, “Overcoming the Cultural Barriers to Sharing Knowledge,” (http://www.apqc.org/free/articles/km02001). (Internet document.)

[9] Letter from Cathy J. Williams, PHR, assistant executive director for Support Operations, Texas Department of Transportation, to Clint Winters, Research and Policy Development Division, Texas Comptroller of Public Accounts, October 18, 2000.

[10] Texas Department of Transportation, Interviewing and Hiring Policy and Training Manual (Austin, Texas, September 1997), pp. 10, 29 and 36.

[11] Texas Department of Transportation, Interviewing and Hiring Policy and Training Manual, Austin, Texas, September 1997, pp. 1-46.

[12] Telephone interview with Diana Isabel, director, Human Resources, Texas Department of Transportation, Austin, Texas, May 2, 2000; and Letter from Cathy J. Williams, PHR, assistant executive director for Support Operations, Texas Department of Transportation, to Clint Winters, Research and Policy Development Division, Texas Comptroller of Public Accounts, October 18, 2000.

[13] Massachusetts Institute of Technology, Center for Advanced Engineering, Out of the Crisis, by W. Edwards Deming (Cambridge, Massachusetts, 1986) pp. 23-24.

[14] Michael Hammer and James Champy, Reengineering the Corporation: A Manifesto for Business Revolution (New York: HarperCollins, 1993), pp. 1-50; and Michael Hammer, Beyond Reengineering (New York: HarperCollins, 1996), pp. xi – xv.

[15] Jon Katzenbach and Douglas Smith, The Wisdom of Teams, (Harvard Business School Press, 1993), pp. 1-10.

[16] Rahul Jacob, “The Struggle to Create an Organization for the 21st Century,” Fortune (April 3, 1995) (http://www.organizationdesign.com/pages/articles2/fortune.html). (Internet document.)

[17] Telephone Interviews with Sandy Baccinelli, personnel manager, Parson’s Construction; Jim Hall and Charlene Overland, Champagne-Webber; Sarah Jarvis, Reliant Energy; and Carolyn Seifert, Foster-Wheeler Corporation. May and December 2000.

[18] Saratoga Institute, Human Capital Benchmarking Report 2000 (Santa Clara, California, 2000), p. 90.

[19] Bureau of National Affairs, Bulletin to Management: 1999-2000 Human Resource Activities, Budgets and Staff (Washington, D.C., June 29, 2000.) p. S-5.

[20] Texas State Auditor’s Office, A Salary Parity Study of the State’s Human Resources Employees (Austin, Texas, January 1999), pp. 15-16.

[21] Texas Department of Transportation, “Employees with Business Titles in the Human Resource Series,” Austin, Texas, January 24, 2000. (Computer printout.)