Office of Injured Employee Counsel

Office of Injured Employee Counsel

Internal Audit Audit of

Employee Retention

#19-001

October 10, 2019

This report provides management with information about the condition of risks and internal

controls at a specific point in time. Future changes in environmental factors and actions by

personnel will impact these risks and internal controls in ways that this report cannot

anticipate.

19-001 Employee Retention

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AUDIT AT A GLANCE

Purpose The purpose of the review was to assess the processes and programs

developed by the agency to reduce the agency’s employee turnover rate. The objective was to evaluate if the current management environment addresses the agency’s turnover rate, specifically employees leaving the agency for other job opportunities or transfers to the other state agencies.

Scope September 1, 2017 through February 28, 2019. Focus

• Ombudsman Associate Training Program • Customer Support Specialist Training Program • Human Resources Hiring Process • Human Resources Retention Programs

Recommendations

• The agency should use the opportunity to add one or two questions to the internal employee satisfaction survey that is specific to measurement of the relationship between the management team and their staff.

• Prior to the administration of the internal employee satisfaction survey the management team should have an established goal of the survey completion ensuring the data retrieved is representative of the agency population.

• The agency should consider developing team building programs to address the relationship between the management team and their staff.

• The agency should develop a spreadsheet documenting information being captured in CAPPS, survey results, and comment captured in the physical paper files maintained. When the information is combined it creates the ability for management to be able to determine key factors for why employees are leaving the agency on a consistent basis. The information will also allow the agency to determine trends and metrics to determine benchmarks related to employee retention and the reduction of turnover.

ACKNOWLEDGEMENT

We wish to thank all staff involved in the audit for their time and efforts. Without their assistance, we would not have been able to complete this audit.

INTRODUCTION

McConnell & Jones LLP (MJ), serving as the outsourced internal audit function (Internal Audit) for the Office of Injured Employee Counsel provided consulting and advisory


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services to evaluate the agency’s employee retention and training programs. MJ Included this audit in the approved FY 2019 Internal Audit Plan.

McConnell & Jones LLP (MJ), serving as the outsourced internal audit function (Internal Audit) for the Office of Injured Employee Counsel provided consulting and advisory services to evaluate the agency’s employee retention and training programs. This engagement focused on providing an independent assessment of the program developed to address employee retention to determine if the programs developed address the root cause issues related to employees leaving the agency for other opportunities.

This analysis was conducted to identify current employee retention data along with an independent review of the agency new training and retention programs and did not a focus on internal controls. For this reason, this engagement falls under the consulting and advisory services definition because the purpose was to improve operations.

We conducted this consulting and advisory service in conformance with the International Standards for the Professional Practice of Internal Auditing (IIA Standards) and with the Texas Internal Auditing Act (The Act). The IIA standards allow internal auditors to provide consulting and advisory services when the engagement has the potential to improve management of risks, add value, and improve the organization’s operations, provided internal audit has no conflict of interest and internal audit personnel have no management responsibilities for the area in-scope. When providing advisory or consulting services, internal auditors are required to establish an understanding with consulting engagement clients about objectives, scope, respective responsibilities, and other client expectations. Additionally, the established scope must be sufficient to achieve the objectives of the engagement and must include consideration of relevant systems, records, personnel, and physical properties, including those under the control of third parties.

The Act defines internal auditing as an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. Sec. 2102.003 of the Act defines consulting services as advisory and related client service activities, the nature, and scope of which are agreed upon with the client and are intended to add value and improve an organization's operations. Consulting services include counsel, advice, facilitation, and training.

OBJECTIVE

The purpose of the review was to assess the processes and programs developed by the agency to reduce the agency’s employee turnover rate. The objective was to evaluate if the current management environment addresses the agency’s turnover rate, specifically employees leaving the agency for other job opportunities or transfers to the other state agencies.

Our review focused on assessing the following process and tools in place by OIEC to assist in increasing employee retention:


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❖ Agency employee surveys and exit interviews. o Surveys tools used collect information directly related to employee turnover issues. o The exit interview process used to capture information on the reason the employee is

leaving the agency and use the data to addresses root causes. ❖ Agency hiring practices.

o Processes in place to assess if the candidates being hired by the agency have the skills required in the job description along with an understanding of job requirements.

❖ Training. o Training program designed to provide employees with the tools and skill sets needed

for success. o Employee training benchmarks to provide measurement of the trainee’s success. o Follow-up performed with trainees to ensure continuous improvement of training

programs. o Tenured employees training opportunities related specifically to their job functions.

❖ Retention programs. o Agency communication and employee understanding of the agency’s retention

programs. o Professional development programs offered by the agency.

SCOPE

The scope period for this audit was September 1, 2017 through February 28, 2019. We performed some of our test procedures as of the date of fieldwork. This work product includes our evaluation at a specific point in time, and cannot address the inherent, dynamic nature of subsequent changes to the process and procedures reviewed during our audit process.

PROCEDURES PERFORMED

We gathered documentation, conducted interviews, reviewed employee survey data, reviewed the agency’s training program and tested employee separation data for the scope period.

BACKGROUND

The Office of Injured Employee Council operates in a multi-location environment with 21 offices located throughout the State of Texas to meet statutory geographic requirements as well as striving to ensure the most convenient and effective assistance for the injured employee. These offices are organized into eight geographic regional locations. Each location is managed by a regional manager and staffed with Ombudsman and Ombudsman Associates who assist with injured employee cases and customer support specialists who are responsible for taking the initial information needed for a case to be filed with Office of Injured Employee Council. OIEC’s central office is in Austin, Texas. Figure 1 provides a summary of the number of current employees at OIEC. As of April 1, 2019,


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OIEC employed a total of 144 individuals of which, 33 are Customer Service Representative (CSR) and 65 are Ombudsman.

Field Office CSR* Ombudsman Other Total

Abilene 1 2

3

Amarillo

2 2 4

Austin 1

1 2

Beaumont 1 2

3

Central office 8 3 18 29

Corpus Christi

2 1 3

Dallas 3 5 1 9

Denton 2 2 1 5

El Paso 1 5

6

Fort Worth 4 8 4 16

Houston East 3 7 2 12

Houston West 2 3 7 12

Laredo 1 2

3

Lubbock

1 3 4

Lufkin 1 2

3

Midland

2 2

San Angelo

2

2

San Antonio 3 8 2 13

Tyler 1 2

3

Waco

2 1 3

Weslaco 1 5 1 7

Total 33 65 46 144

Figure 1 OIEC Staffing by Office Location

OIEC’S EMPLOYEE RETENTION EFFORTS


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This section of the report provides an overview of the agency’s employee retention activities.

OIEC’s leadership team recognized there was a need to enhance employee retention efforts. To this effect one of the measures taken was modifying the required ombudsman training program. The curriculum was changed to focus on core knowledge and skills required to perform their job functions. This shortens the length of time they are in the classroom training program before being released for practical training on-the-job.

OIEC’s Human Resources function also implemented actions to increase employee retention. A discussion of the training program and HR actions follows.

Ombudsman Associate Training Program

The purpose of the Ombudsman Associate Training Program is to prepare OIEC’s new hires are provided adequate knowledge to perform their required responsibilities. OIEC’s General Counsel and Legal Service Coordinator coordinates the training program. The Ombudsman associate training program was reduced from 6 month or more to 18 weeks. The main reasons of the change were to get new employees into their positions quicker and the content of the new learning material.

The Ombudsman Associate performs workers’ compensation claims work and is responsible for assisting, educating, and advocating for injured workers throughout the dispute resolution process. Work involves reviewing claims for benefits, studying case histories, gathering and evaluating information including medical records, reporting and referring complaints, and referring for financial assistance and other appropriate services. The Ombudsman Associate assists injured workers in completing forms then tracks and provides information on claim status, as appropriate.

Each trainee is provided a STAR PACKET which includes the detailed information about the training program. OIEC Ombudsman Associate training program lasts a total of 18 weeks which consists of:

✓ Self-study ✓ Classroom training (2 weeks) ✓ Field office observations ✓ Conducting case development preparation appointments, benefit review conferences, and

contested case hearings under observation.

The following performance measures are utilized to ensure trainees successfully completed the tasks during the training.

✓ Ombudsman Skills Review ✓ Case Development Skills Review ✓ BRC Skills Review ✓ CCH Skills Review ✓ Appeal Skills Review ✓ Mentor Observation Survey


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✓ Biweekly Survey

OIEC Ombudsman Associate trainees are evaluated during the training program. Obtaining their license at the end of the training period is requirement for OIEC new hires to officially start working as an Ombudsman Associate.

OIEC’s current employees can join the program and the learning materials are available for any employees who are interested in self-improvement.

Customer Support Specialist Training Program

The purpose of the Customer Support Specialist Training Program is to prepare OIEC’s new hires to gain adequate knowledge to perform required responsibilities.

The Customer Support Specialist assists and educates the injured employees of Texas. They provide information and assistance to injured employees about the workers' compensation system and answer general questions regarding workers' compensation benefits, laws and rules, and policies and procedures. OIEC Customer Support Specialist Training Program eight weeks and consists of:

✓ Self-study ✓ Classroom training (2 weeks) ✓ Field office observations ✓ Answering the telephone calls under observation ✓ Processing disputes under observation ✓ Completing field office administrative tasks under observation

The following performance measures are utilized to ensure trainees successfully performed the tasks during the training.

✓ Skills Review ✓ Mentor Observation Survey ✓ Biweekly Survey

Human Resources Hiring Process

OIEC’s Human Resource (HR) function has the following responsibilities:

✓ Ensure Compliance with Labor Laws ✓ Recruitment and Training ✓ Record Keeping ✓ Payroll and Benefits ✓ Employer-Employee Relations ✓ Employee Performance Improvement Plans ✓ Retention Programs

Several functions, including TDI, are involved in the hiring process, which is as follows:

1. Manager requests for a new hire


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2. Job vacancy is posted online. 3. Job applicant’s application is received through CAPPS. 4. HR performs initial candidate screen for minimum qualifications. 5. HR provides a list of qualified candidates to the hiring manager. 6. The hiring manager coordinates and conducts interviews. 7. The hiring manager provides hire recommendation to HR. 8. Final decision made by the Public Counsel, HR and the hiring manager. 9. HR performs a review of the job candidate’s packet to ensure completeness. 10. TDI conducts final review of job candidate forms and background check. 11. TDI informs OIEC of the file review completion. 12. OIEC’s HR informs the hiring manager about the final decision. 13. The new employee is on-boarded and trained.

Human Resources Retention Program

National studies show that today’s workforce is aging and millennials comprise the largest segment. Studies also show that millennials are less loyal to employers. Millennials are known to frequently change jobs. A study conducted by Deloitte in 2016 concluded that 25 percent of the millennials currently employed would quit their job to join a new employer during the next year; 44 percent plan to quit within two years and two of every three respondents plan to change employers by 2020. Organizations are faced with the dilemma of balancing the needs of their longer tenured employees that have traditional motivational factors and those of the millennials that are motivated by factors such as ethical and social values that align to their own beliefs and values.

Given the current national and regional workforce population, OIEC must have processes in place to manage employee retention and reduce risks associated with employee turnover. OIEC’s leadership team worked with HR to implement the following actions to improve employee retention:

✓ Self-Review - Employees are encouraged to complete self-review which is then saved in the personnel file.

✓ Performance Review – Employee performance reviews include manager’s ratings and comments to help employees improve their future performance. Employee performance reviews also assist managers identify employees for future promotion opportunities.

✓ Administrative Leave for Outstanding Performance - Employees have an opportunity to request administrative leave for their outstanding performance.

✓ Benefit Poster - A copy of OIEC’s benefit poster is provided to OIEC’s employees to help them understand their current benefits.

✓ Merit Award Recommendation - Merit awards are provided to employees for outstanding performance.

✓ Longevity Rewards - OIEC provides longevity awards to employees. ✓ Longevity Pay - The state provides longevity pay to qualified employees. This pay is a

supplement on top of the base salary.


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✓ Stay Interview Questionnaire - OIEC HR department sends out questionnaires to certain employees to identify the reasons for staying with the agency. This process is not a formal process.

✓ Tuition Reimbursement - OIEC offers tuition reimbursement for qualified employee’s tuition expenses.

✓ Social Media - OIEC provides their current training program and work environment videos through online, Instagram and Twitter.

DETAILED OPPORTUNITIES AND RECOMEMNDATIONS

This section of the report provides a detailed discussion of opportunities we noted during the audit along with recommendations to improve internal controls or the business process.

Objective #1: The agency analyzes survey responses and employee separation data to determine corrective actions needed.

The agency attempts to capture employee separation reasons through exit interviews and surveys. A total of 82 employees (57 percent of total staff) separated from OIEC during calendar years 2015 through 2018. Thirty-seven employees (25 percent of authorized full-time equivalents) separated from OIEC in calendar year 2018. This is up from six employee separations (four percent of total full-time equivalents) in calendar year 2015. Figure 2 provides the total employee separations by calendar year between 2015 and 2018.

Figure 2 Total Employee Separations Calendar Years 2015 - 2018

When the SEE report provided the management team assurance their programs were addressing the needs of the agency the leadership conducted its own data review of turnover and determined the positions experiencing the highest turnover were related to the Ombudsman and Customer Service Representative positions. This led to the agency revamping the hiring and training programs for

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1920

37

2015 2016 2017 2018


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these positions which began in September 2017. Figure 3 provides the number of ombudsman and customer service representatives separations between calendar years 2015 and 2018.

Figure 3 Top Separations by Position Calendar Years 2015 - 2018

We selected a sample of 25 separations (30 percent of the 82 separations between 2015 and 2018) and reviewed the files. Of the25 sample separations covering the four-year period, 8 (32 percent) were termination decisions made by management, four (16 percent) were transfers to other state agencies and 13 (52 percent were for other reasons). Figure 4 provides a summary of the resignation reasons provided in the 25 samples.

Reason of Separation Resignation Percentage of Total Resignations

Inadequate Salary 2 15% Dislike/Unsuitability for Assigned Duties 2 15%

Personal Reasons Not Related to Job 5 38% Other (Please explain) 4 31% Total 13 100%

Sample Size 25 Percentage of Sample 52%

Figure 4 Employee Resignation Reasons

Recommendation #1

Ensure that employee separation reasons are consistently entered into information systems or tracking spreadsheets so that they can be analyzed to take appropriate actions to address root

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7

4

13

3

8

12

2015 2016 2017 2018

Customer Service Rep III Associate Ombudsman


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causes. It is common for separating employees to not divulge the reasons for leaving, in those instances, the reason code should be something along the lines of “not disclosed”.

Objective #2: Assess the survey and data programs used to determine employee satisfaction and retention to ensure it is providing clear information on the agency’s business needs.

The agency conducted a survey in the calendar years of 2016 and 2018 that corresponded with the 2017 and 2018 fiscal years to determine employee feelings toward the agency and its management staff. The following was information was noted during our assessment of the survey results.

• The report presents a positive picture of the agency overall performance of the programs and processes related to employee satisfaction but a deeper dive into the data indicates areas where improvement is needed.

• The testing population accessed was not 100 percent of OIEC labor force and was higher than the standard 2 to 3 percent of not taking a survey due to vacations and other events. OIEC percentage of staff not taking the survey was 10 percent in 2017 and 2018 which could indicate the management team is not ensuring the survey is completed or that the staff does not feel their input is valued so there is no urgency to ensure their opinions are being heard.

• The report documents areas of improvement when comparing the 2017 and 2018 fiscal years but the ranking of satisfaction was still below average which is a strong indicator of the relationship between the management team and their employees.

• There was no improvement as it pertained to the communication between the management teams and their employees.

When the survey information provided the management team assurance their programs were addressing the needs of the agency it conducted its own data review of turnover and determined the positions experiencing the highest turnover were related to the Ombudsman and Customer Service representative positions. This led to the agency revamping the hiring and training programs for these positions which began in September 2017. We completed our own analysis of turnover data since 2015 and noted that a decrease in turnover for the ombudsman and customer service representative.

Recommendation #2

1. The agency should use the opportunity to add one or two questions to the survey that is specific to measurement of the relationship between the management team and their staff.

2. Prior to the administration of the survey the management team should have an established goal of the survey completion ensuring the data retrieved is representative of the agency population.

3. Agency should consider developing team building programs to address the relationship between the management team and their staff.


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Objective #3: Determine if the exit interview program is a consistent program that addresses key areas to determine the reason the employee is leaving the agency.

The agency is doing a good job of capturing the pertinent information needed to determine why the person is leaving the agency. The limitation of the process is related to the manual process needed to gather an employee file to determine the entered designation represented in the CAPPS system.

We did note the agency does not have a formal program that is directly related to retention. Study and reviews are conducted when an issue occurs, but an effective program will allow the agency to be more strategic in the decision making as it pertains to the management of Human Resources.

The review of the documentation will assist in the determination of trends and provide insight into management performance as it relates to the managing of their staff.

We noted the following key information supporting the redevelopment of the ombudsman and customer service representative (CSR) training.

• 66 percent of the Ombudsman or CSR leaving the agency had positive comments on the agency and left due to new opportunities.

• 34 percent left the agency due to the fact the training program was able to determine they were not good candidates for the position because they were not happy with the job functions or could not perform the job function since, they could not meet the agency’s training standards. These types of losses are a positive for the agency to ensure the people performing the tasks meet the agency standards. The redaction of these individuals early in the training program also saves the agency resources being spent on an employee that was not going to meet their standards.

Recommendation #3

The agency should develop a spreadsheet documenting information being captured in CAPPS, survey results, and comment captured in the physical paper files maintained. When the information is combined it creates the ability for management to be able to determine key factors for why employees are leaving the agency on a consistent basis. The information will also allow the agency to determine trends and metrics to determine benchmarks related to employee retention and the reduction of turnover.

Objective #4: Review the agency’s hiring practices and determine if criteria has been established to ensure the best candidates are chosen for positions with high turnover.

The agency has developed an effective program of processes to ensure the best candidate is being selected for the open position. Our review of the job postings noted a very descriptive and transparent posting advising the applicant of the skills and expectations of the position. The agency has also adopted an effective process to review the applicants being processed.


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The current process begins with Human Resources (HR) screening out unqualified candidates in CAPPS. Once qualified candidates are chosen by HR, they are presented to the manager who reviews the resume to determine which candidates will receive an interview. Once a candidate is chosen based on documented recommendations from the interviewing manager, TDI completes a final audit of the candidates references with a full background check completed by the Department of Public Safety. Once they are cleared the manager is advised and the candidate is provided an offer letter.

We noted through the interview process and documentation provided that Ombudsman and CSR positions include further discussion advising the candidate of the expectations of the job to ensure they understand the requirements, which is completed prior to sending the offer letter.

Recommendation #4

No recommendations are made for the hiring practices.

Business Objective #5: Assess OIEC’s training program established to address key positions experiencing high turnover. The training program should ensure it provides an environment of success with developed metrics to ensure the trainee will be successful within the agency.

The agency has adopted a training framework that provides guidance on how training programs should be developed for the positions within the agency. The framework ensures the development of training manuals, learning materials and tests designed to develop the trainee. The agency provided packets related to the Ombudsman and CSR training which included the development of these documents and a training guide documenting the time of training. The Ombudsman training is currently eighteen weeks and the CSR training is eight weeks. The timing is based on the knowledge needed to complete the tasks related to the position. These training materials are supported with documentation completed on a progress report based on the follow-up completed by the trainers and the assigned regional managers ensuring employee progress. Interviews noted the training being completed has help the agency to develop a more qualified employee while ensuring employees that cannot performs the tasks are either reassigned or separated from the agency.

Recommendation #5

No recommendations are made for the agency’s Ombudsman and CSR training program.

Business Objective 6#: The agency has developed effective employee retention programs to promote employee satisfaction.

The agency has developed employee retention programs that ensure transparency to the employee of the programs available. This information is communicated through regular communication between management and associates, email, and promotional materials ensuring knowledge of the programs. The following programs have been developed and promoted by the agency:


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1. Opportunity to complete a self-review for development. 2. Performance reviews with management input and feedback. 3. Opportunity to gain additional administrative leave for outstanding performance. 4. Continuous promotion of benefits available to employees. 5. Opportunity to receive Merit Awards based on managerial recommendations. 6. Reward payments for longevity. 7. Annual surveys of satisfaction 8. Opportunity for working a flexible schedule 9. Remote work opportunities 10. Tuition Reimbursement for employee education

Recommendation #6

No recommendations are made for promoting awareness of the agency’s employee retention program and opportunities.

Documents

Office of Injured Employee Counsel