– by Jim Hutton

Examining The Workforce

I’ve examined Owen Sound’s workforce in the past by comparing Owen Sound’s salary expense to that of other municipalities. My analysis can be reviewed in my Hub article Comparing Owen Sound Salaries and Benefits.

This review included some municipalities that contracted out either fire services or police services. Although the results clearly indicated that Owen Sound was overstaffed, the inclusion of municipalities with contracted protective services distorted the results.

As a result I decided to revisit the study with carefully selected municipalities.

How I Selected The Municipalities

I selected these municipalities using three criteria. First, I selected those with similar populations to Owen Sound. Then I reduced this list by eliminating rural communities and finally I reduced the list further by selecting only those municipalities with a similar number of inhabited dwellings.

To achieve this I used Statistics Canada’s databases.

As you can see in this chart, there are four municipalities with greater populations than Owen Sound and three with lower populations in the study group.

The average salary expense for these municipalities, excluding protective services salaries, was just about $9 million. Huntsville, Amherstburg and Owen Sound all have a salary expense greater than the average. 

Owen Sound spent $13 million on salaries and benefits, excluding protective services salaries. To reduce Owen Sound’s expense to the average of $9 million, an annual expense reduction of $4 million would be required. 

One Part Of The Problem

As I mentioned above this data was acquired using each municipality’s audit financial statements. These statements do not provide any visibility into the number of employees in each municipality.

However we can get a feeling the portion of each municipality’s salary expense involving management by looking at the numbers of managers with salaries greater than $100,000.

As shown above the average number of managers, in municipalities in the comparative group, on the Ontario Sunshine List is 12.8.

Amherstburg, Essex and Owen Sound all have more that the average number of employees earning more than $100,000 with Owen Sound having the greatest number at 19.

This seems to confirm that when it comes to managerial salary expense, Owen Sound leads the pack, at least in this group of municipalities. 

An interesting side note is that the total number of employees earning more than $100,000 in 2021 was 73. Therefore, 54 or 74 per cent, of Owen Sound’s employees earning more than $100,000 work in protective services. Perhaps protective services will be examined for cost savings in a later study.

Verifying The Results

These results strongly suggest that a portion of the excessive salaries and benefits expense is due to the overstaffing of managers. One method of verifying this would be simply to count the number of managers in each of the comparative municipalities. 

Most municipalities post either their organization charts or staff directories on their websites. Using this information along with their budget books we can get an estimate of the number of managers employed at the municipality.

This information was only available on the above five municipality’s websites. It’s important to note that these sources give us only an estimate of the actual numbers since this information is often outdated. The most reliable data was from those municipalities that had their current organization charts on their websites.

The results are show in the graph below.

As shown above, it is estimated that Owen Sound employs approximately 29 managers based on information gleaned from the city staff directory and confirmed by the 2021 budget book.

In contrast Strathroy, with a population slightly greater than Owen Sound, employs only 15 managers to manage its municipality. The fact that it appears that Owen Sound needs 14 more managers suggests that the workforce is top heavy and that the management ranks needs to be downsized.  

Although this is, at best, an estimate of the number of managers, it does correlate with data from more reliable sources such as the audited financial statements and the Ontario Sunshine List.

However, all of this data combined gives Council ample justification to begin the process of right-sizing the management team and examine the entire workforce for areas that can be downsized to bring Owen Sound’s salary expense more in line with similarly sized municipalities.

What Is The Right Size For The Management Team

The average number of managers in Figure 4 above is 20.2, so this should be the targeted size of the management team based on this comparison. This would require a reduction of 9 managers.  

When we examine the Sunshine List comparison in Figure 3, we see the average number managers were 13, which should be the targeted size of the management team.

Since Owen Sound had 19 managers on this list we would need a reduction of 6 managers. 

As a result it’s safe to say the Owen Sound management team is overstaffed by 6 to 9 managers. Based on an average salary of $130,000 the annual savings would be $780,000 to $1,170,000 after one-time severance or early retirement costs.

The average salaries and benefits expense in the study group was approximately $9 million. Owen Sound’s salaries and benefits in 2021 expense was $13 million.

If Owen Sound reduced its salaries and benefits expense to the average in the study group it would realize an annual savings of $4 million.

Based on the results of the analysis of the manager data 25 per cent of the reduction should come from the management team, leaving the non-management workforce to provide $3 million in staff reductions.

In Part I we look at the huge gap that is stifling Owen Sound’s growth.
In Part III everything is put in perspective.