Municipal government strategies for controlling personnel costs during the fiscal storm Essay (Critical Writing)

The article begins by stating that indeed, the increasing personnel-related costs are stressing the city governments. Lately, America cities have experienced a decline in the number of resources, yet the public employees demand for benefits and pay rises every year (West & Condrey, 2011).

In fact, personnel- related costs account for about 80% of most city governments’ budgets. Therefore, the municipal budget officers have noted that reducing personnel related costs would play a great role in reducing the overall costs. Certainly, the escalating employee benefits are some of the personnel related costs that need to be slashed in a strategic manner.

The article also gives a stringent framework of the reasons as to why the city governments have experienced fiscal storms from time to time. Economic decline and financial mismanagement are two core factors to blame.

However, regardless of the causes of the crisis, the important thing is to find ways of addressing the concerns accordingly. The author admits that it is quite challenging to implement ways of reducing personnel costs with minimum resistance from the employees.

It will take strict considerations to ensure that the cost containment strategies to cut on the overall employee benefits are in line with the current economic conditions.

The article confers the following cost containment strategies to cut on the overall employee benefits.

1. Offering early retirement options: This strategy would enable employers to save a significant amount of money by replacing the highly paid retirees with low-paid workers.
2. Limiting overtime: This strategy will enable the employer to save on the overtime wages (Martocchio, 2012). The employees will have to work hard to finish their duties within the stipulated working hours.
3. Increasing part-time employment: This approach ensures that employers hire and pay for services during peak seasons. This is an efficient cost containment strategy that enables employers to reduce the number of permanent employees who demand high salaries and benefits (West & Condrey, 2011).
4. Delaying or limiting the merit salary increment to reduce the amount of merit salary.
5. Imposing a wage freeze as a punishment for individuals found guilty of being involved in financial fraud scandals.
6. Reducing monetary incentives by reducing bonuses and reviewing the salary scales.
7. Cutting on employee travel and conference allowances would enable employees to save of the related costs.
8. Cutting on healthcare costs: The employer cuts on healthcare costs by employing preventive strategies like provision of wellness programs and offering health education programs (Martocchio, 2013). Some employers use the cost shifting or cost sharing strategy, where, the healthcare costs are shifted from the employer to the employees.
9. Increasing employee benefit contributions: The employees are forced to increase their deductibles and co-pays.

To determine the workability of the above mentioned cost containment strategies, the article gives the results of a survey carried in 90 large cities in the United States. Indeed, some employees’ morale has decreased because of the cost containment strategies.

This mostly applies to permanent employees who were used to the high benefits at the expense of the city governments. However, some respondents noted that the cost containment strategies have helped in relieving the taxpayer. The allowances that government representatives could spend carelessly were slashed.

Certainly, the monies saved form the cost containment strategies have enabled cities to increase their investment levels. Moreover, the increased part time employment opportunities have enabled a number of people to earn a living in the cities that have already implemented the cost containment strategies.

The author of the article recommends that the survey be extended to smaller cities that contain less than 100,000 individuals to obtain more views than the current ones. Clearly, the cost containment strategies will play a great role in enabling cities to recover their economies in the future.

References

Martocchio, J. (2012). Strategic Compensation: A human resource management approach (6th ed.). Upper Saddle River, NJ: Pearson.

Martocchio, J. (2013). Employee Benefits: A primer for human resource professionals (4th ed.). New York, NY: McGraw-Hill.

West, J. P., & Condrey, S. E. (2011). Municipal government strategies for controlling personnel cost during the fiscal storm. Journal of Public Budgeting, Accounting & Financial Management, 23(3), 396-426.