When Moving Forward is Risky
By Mary Faulkner
I work for a 100-year-old water utility in Colorado. We
are a public sector entity, meaning our employees are afforded
additional constitutional protections. Our average employee
tenure is more than 14 years, an average driven down by the
number of retirements in recent years.
For much of our history, we have operated like many
other government entities with a very generous pension, good
benefits, guaranteed pay increases and changes in wages based
on changes in the marketplace. This was predictable and
stable, and it created a very high long-term liability for our
pension plan.
The previous CEO left after over 25 years at the helm. In
his place, the Board selected a person to help bring the orga-
nization into the 21st century and run it more like a business
than a government agency.
We knew change was needed to support and
sustain our organization both financially and in
our efforts to attract the right talent. We knew if
we didn’t do something significant, our future
would be at risk.
Our organization was healthy, well-functioning and one
of the more respected in the industry, but it had been do-
ing things the same way for a very long time. Technically a
monopoly, we still compete in Colorado and beyond for top
talent. For every engineer and water treatment tech wanting
to work for us, there are plenty of IT, Finance and Market-
ing professionals who are looking for a more modern, agile
employer.
With an aging workforce and plenty of employees eligible
for retirement in the next five years, it was time to adapt.
34 July 2017
The Problem
Our utility must provide ratepayers with high quality wa-
ter while being mindful of finances. Because we accept no tax
funding, we have to be acutely aware of spending. The liability
to our pension was becoming onerous and to keep it funded,
it was necessary to review our pay practices to ensure wages
did not increase too quickly or for the wrong reasons. This
meant some significant changes to something near and dear
to employees: their earning potential.
Traditional, public sector pay structures are built to
ensure every employee receives a pay increase, regardless of
overall performance. Time in grade, re-assignment of duties
or market changes can result in increases to wages regardless
of an employee’s performance.
As you can imagine, many employees found comfort in
this. They could reasonably anticipate wage increases and
enjoyed the stability of such. The problem was, wages often
increased for purposes other than performance or demand.
Our Solution
The first step to reduce ineffective inflating salaries was
to move away from automatic pay increases. Moving forward,
an employee’s performance rating impacted his or her merit
increase. Furthermore, it was tied to a very specific budget
which executives could not exceed. As one could imagine, this
disrupted the employees’ satisfaction.
The next step was to ensure jobs were effectively and
realistically defined. This was a very large undertaking as it
required the entire organization to update, organize, com-
pare and contrast job descriptions for every position in the
organization. Employees and managers alike were disrupted
as the figurative magnifying glass was pointed towards their
everyday activities. We worked with a consultant and used job
questionnaires to better identify and distinguish one job from