Managing the total workforce

by 10 Nov 2009

Contractors are a part of the federal workforce, but it is unclear whether their deployment is more often strategic or simply convenient, writes Allan Schweyer

The US Bureau of Labor Statistics (BLS) estimates that about 30 per cent of the American workforce is made up of contingent labour (freelance, temporary or self-employed) – a number it expects will grow to about 40 per cent by 2019. In the Federal Government, the contingent and contract workforce is already many times larger than the civil service, which numbers between 1.8 and 1.9 million. The Congressional Research Service reported in September 2008 that the “federal workforce of contractors and grantees grew by more than 50 per cent between 1999 and 2005, when it reportedly included more than 10.5 million jobs …. That figure is more than twice as large as the combined total of all three branches of government: the US Postal Service, the intelligence agencies, the armed forces, and the Ready Reserve.”

Contractors are obviously a vital part of the federal workforce but it is unclear whether their deployment is more often strategic or simply convenient. Hiring processes in the Federal Government are complex and often inefficient. Recruiting can easily take a year from requisition to hire. Contractors, on the other hand, can be engaged and on the job within a few weeks, depending on the contracting vehicle.

With ever-changing and more demanding business dynamics, looming demographic challenges and a desire to save money, organisations in the private and public sectors are looking for ways to benefit from the skills, flexibility and variable cost structures offered by the contract workforce. However, true success is likely to come only with close management of the process and a strategic approach to determining the optimal composition of the workforce.

In government, as in other organisations, care must be taken not to outsource core decision-making, nor roles or processes that are considered inherently governmental and central to the organisation’s competitive advantage. Where organisations outsource those roles and processes, they run the risk of developing an over-reliance on external talent, losing institutional knowledge, and, in some cases, inappropriately delegating responsibilities, access to intellectual property and/or protected information.

Total talent management – starting with workforce planning that considers the whole workforce – is critical in determining the right mix of federal public servants and contractors. The process is also necessary to ensure that the right choice (employee or contractor) is made for each position or project.

As the Executive Office of the President noted in a July, 2009 memo to heads of all Federal Government departments and agencies: “Agency management practices must recognise the proper role of each sector’s labor force and draw on their respective skills to help the government operate at its best. … Too often agencies neglect the investments in human capital planning, recruitment, hiring, and training that are necessary for building strong internal capacity. In many cases, agencies lack the information that would allow managers to understand how contractor employees are deployed throughout their organisation and integrated with federal employees. The full potential of our total workforce – both contracted and federal – often goes unrealised due to insufficient or ineffective management attention.”

The mission, priorities, goals and objectives of the government as a whole must drive agency and departmental strategic plans. Those plans must inform the documented human capital strategic plans in each department and agency. An analysis of the skills, experience and competencies required to execute the human capital plan will reveal gaps. A department or agency can fill those gaps either by acquiring talent (civil servants or contractors) or by developing and redeploying current human capital. Where the decision is made to acquire the skills needed, the planning process should guide the decision as to whether a regular employee is recruited or a contractor engaged. This decision rests on a number of factors depending on the nature of the work (Is it strategic? Is it a core competency? Is it a temporary need? How difficult is it to find the talent? What are the comparative costs in hiring an employee versus engaging a contractor?)

Total workforce planning allows proactive talent acquisition in which contractors are deliberately identified ahead of time for appropriate roles and projects. Whether this leads to more or less use of contractors should be less relevant than the resulting make-up of the whole workforce, which will be better optimised to execute the government’s mission.