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For the first time in a couple of years, I will actually use my Masters Degree!

October 8, 2012

It has been a long time. There was so much I wanted to write, a post about the TIA failure, but I didn’t have a heart; something about the GM candidates, but I didn’t want to offend anyone who might later get the job; frankly, anything, but I needed a break. It has been a very long year but I’m back and ready to pick up where I left off with all sorts of snarky commentary you probably didn’t want to be subjected to, but bam! You’re here. Sucks to be you.

It took me two years, but I have finally figured out how to combine my new love of transit with my actual educational background in Industrial/ Organizational Psychology, and that is to rip to shreds the recent KMPG audit of MARTA. I/O is the study of applying the principles of psychology to the workplace, as in, why do employees behave the way they do and how can we use that to strengthen business. Or as I like to call it, glorified human resources.

There are some key takeaways from the audit, including the fact that if something doesn’t change soon, MARTA will run out of reserves in a few short years by 2018, (we did not need to pay someone to tell us that), that MARTA could save money by outsourcing some of its operations (privitazation is a misnomer since tax dollars built and fund MARTA, so as tax payers, we shouldn’t want to see it be sold off. Look for another post on that topic soon), and that in a study of our peers, when comparing seven financial constraints MARTA is the most hosed but still manages to operate on par with other cities (meaning we do really well with what little we got. Take that, Fayette County). However, what I take issue with is the fact that report accosts MARTA for spending over the national average on benefits, a fact that the papers have gleefully run with on their neverending campaigns against MARTA.

Yes, MARTA spends over $50 million more than the national average on benefits including health care and retirement costs, but MARTA also pays below the national average in terms of wages. In fact, if you dig well into the report (page 33 to be exact) you will see that MARTA pays 3.5% more in benefits and 3.5% less in salary than the national averages, which mitigates itself entirely and shouldn’t even be an issue. Math is fun, unless you’re a politician or a newspaper.

But it’s important to note why an organization would find itself in a pay structure like this. Historically, you find organizations with a weaker pay structure and stronger benefits being those with an aging workforce. Younger employees want higher pay while older employees want security, meaning better insurance and retirement, younger employees rarely use the health benefits and most of the time don’t plan that far ahead. Over time, organizations that have to compete for new talent shift to a higher pay structure while those that retain their workforce shift to paying out more for benefits.

While all of this is just fine and dandy, this trend becomes more significant when we consider the cost of turnover. When an employee leaves an organization it costs the agency money in the overtime paid to cover their shift, staffing costs while HR searches for a replacement, administrative overhead to complete the paperwork, enroll new benefits, train the new employee, etc. It is estimated that these costs run up to 150% of the annual salary of the departing employee, so for an operator who makes $40,000 a year, they would cost MARTA $60,000 to replace. Given the hundreds of operators MARTA employs, imagine the costs of losing even 100 employees a year. The fact that MARTA is able to retain so many of their employees is significant to the bottom line, despite the fact that they may take more time off to go the doctor.

Own that retention rate, MARTA.

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5 Comments leave one →
  1. October 9, 2012 12:27 pm

    Low turnover is cool and all that, but my first thought reading this is that a pay structure heavy on benefits is really not welcoming to new and younger employees. I’m all for stability in an organization, but I can say for sure that here in Cincinnati, some of our transportation agencies are….*ahem* ..much too stable. As a recent grad with a planning degree, it literally seems like I’m waiting for people to die or retire, because they certainly aren’t going anywhere otherwise. That’s so incredibly bad for innovation.

    • October 9, 2012 3:28 pm

      Well, that was more in reference to bus operators, but when we’re talking about the bottom line, you do want high retention rates.

      Start sending poisoned candy?

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    • October 9, 2012 3:26 pm

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