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A New Way to Risk Assess
By Nathan Otto, Laura Reyes-Cortez, and Andy Hanau

Every organization needs a way to assess its risks. Many audit shops thoughtfully approach this in a systematic fashion, via an annual risk assessment. Auditors score different parts of an organization with varying risk scores, based on things like how big their budgets are, the number of personnel they have, etc.  
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These are good metrics, and help an audit shop identify on a big-picture level where the money is going and who has the most people. These assessments seek to declutter the auditors’ minds of anecdotes and one-off news stories, and instead to focus on data.

But in many of our organizations, the same departments tend to show up again and again. Department X always has the biggest budget. Division Y always has more people than Division Z.

Yet we know that risks can bubble up within any part of an organization. So, to shake ourselves out of complacency, are there other elements we can incorporate into our risk assessment?

What about the rate of turnover in different departments? High turnover can be a telltale sign that something is amiss. If lots of people are leaving, it could be a red flag for organizational culture issues, a troubled rollout of a new program, or something different altogether.

What about employee satisfaction? Disgruntled workers pose a number of risks, and satisfied employees are a key indicator of workplace engagement. Given that our workforces are meant to serve the public interest, low employee satisfaction can mean negative consequences for the public we are interacting with and supposed to be serving.

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In San Diego, our office embarked on an unconventional audit project, an overview of different elements of the City’s workforce. The project was modeled after Government Accountability Office work, which identified human capital management as a high-risk area within the Federal government. Our objective in San Diego was to provide an informative overview of the City’s workforce across a variety of dimensions, including investigating turnover rates and employee satisfaction.

One of the interesting takeaways over the course of the project was that although the Police Department was recently successful in garnering a 31 percent pay raise—which the department said was necessary to stem turnover losses from officers leaving to go to other cities—we found their turnover rates are actually lower than the citywide average. Additionally, of the officers who were leaving, many were simply retiring, not going to other cities.

On the satisfaction side, using respondent data from a recent citywide survey, we found San Diego’s overall employee satisfaction scored slightly better than the Federal government—74 to 68 percent. However, there was wide variation across departments. In addition, certain elements of satisfaction—such as people agreeing with the statement “Poor job performance is dealt with effectively”—scored very poorly. In some departments, less than 20 percent of respondents agreed!

We used the information we learned from this project to identify and prioritize areas of risk and future audit work. For example, the departments with the lowest employee satisfaction scores may face audits in the near future to see what they have been doing to try to improve some of those numbers.

Even with increasing technological change and service automation, much of what our organizations do is ultimately employee-driven: public safety workers interacting with their communities in high-stress situations, planners and engineers making decisions about development and code compliance, parks workers leading citizens through popular programs and addressing maintenance issues. High rates of turnover or low satisfaction scores can be important signals in alerting auditors to areas of risk.

So this year, why not shake it up? What is the turnover rate of your public safety workers? How satisfied are your parks staff? You may encounter risk areas that had previously flown under the radar.


ABOUT THE AUTHORS

Nathan Otto, Laura Reyes-Cortez, and Andy Hanau are performance auditors with the City of San Diego. They scored fairly well on satisfaction, and their collective turnover rate is 0%.