How Local Government Vendors Can Help the Employee Retainment Crisis
Picture by Charnchai
The post-pandemic Great Resignation has hit local government hard.
According to the Bureau of Labor Statistics, quit rates rose from 6.1 percent in 2010 to 9.7 percent in 2016 - then shot up to 11.7 percent in 2020.
On top of that, between 2019 and 2021, applications to local and state governments jobs decreased by 32 percent.
As jobs open up due to retirements and resignations, fewer people are applying to fill public sector roles.
But these challenges in recruitment and retention are nothing new. According to the Rockefeller Center, resignation rates have doubled from 2010 to 2020, indicating that challenges with employee turnover have existed long before the pandemic exacerbated them.
Why is local government retention a problem, and how does it impact potential contractors?
The most common reason state and local employees leave their employer is retirement.
Other reasons local government employees leave include:
Advancement with another public organization
Lack of competitive compensation
Lack of advancement opportunities
Advancement with a private employer
While this may appear to paint a grim picture for local governments and the government contractors who wish to do business with them, with the right industry knowledge, a smart vendor can transform retention challenges into mutually beneficial opportunities.
Municipal government retention issues already affect your chances of winning contracts.
First, let’s dispel the myth that a recruitment and retention crisis in local government always means a pay day for contractors.
Though demand for lower value, emergency contracts may increase in the short term, turnover problems create organizational disruption that can send organizations into a cautious, hesitant tailspin.
Turnover impacts the entire organizational environment - the same environment that affects your ability to engage in the procurement process, understand buyer needs and boundaries, and seal a government deal.
Here are some retention challenges vendors can turn into mutual benefits:
Changes to Spending Priorities
Employee retention is important for many reasons, not least of which is the fact that turnover is expensive.
The cost of replacing a staff member can total to between 90 to 200 percent of the employee’s salary, making retention the more affordable alternative to turnover, by far.
Government spending isn’t 1-1. There isn’t one single pot money is pulled from. But if an agency, such as a police department or department of information technology, has to dedicate funds to attract, hire and onboard new essential employees, that leaves less funding for purchases.
Retention rates for your potential buyer can influence their willingness to even start the procurement process.
How can a government contractor help? The cost of human resources are inherently unpredictable, hence the quickly ballooning cost of replacing an employee in today’s market. As a potential vendor, you can offer transparency, honesty and predictability.
Consider how your good or service can help an understaffed or cash-strapped team deliver services more efficiently and lean on that selling point when proposing a mutually beneficial relationship.
Understaffed Purchasing Professionals
Staff turnover impacts the procurement process all potential government vendors must go through to secure a government contract.
That’s especially true in the case of turnover in the procurement field. Back in 2013, a significant 40 percent of procurement directors surveyed by the National Association of State Procurement Officials described their offices as understaffed. That challenge has only been exacerbated.
When retention challenges hit core enterprise functions like human resources, information technology, and procurement, the shock ripples through all other agencies.
In the case of selling to government, no matter how motivated an agency may be to contract with you, their timeline is tied to that of the procurement department.
How can a government contractor help? Throughout the purchasing process, do everything you can to predict the procurement hurdles before they trip you, and your internal contract champion, up.
This means educating yourself on the basics of local government procurement and applying those principles to your B2G marketing strategy before they become an impediment to doing business. You won’t be able to replace the agility provided by a well-staffed procurement department, but officials will be grateful that your process is aware of the tight boxes they must operate within.
Less Time and Capacity for Vendor Management
On every local government’s procurement scoresheet is a significant section for implementation and maintenance. If there isn’t, there should be!
Ensuring whatever good or service you’re selling can also be implemented and maintained by the organization is vital to securing the longevity of the contract - a practice frequently referred to as governance in some government circles.
Governance becomes challenging when employees cycle out of departments at an unprecedented rate.
How can local governments make a long term commitment to your good or service if it’s questionable whether staff will be around by the end of the year?
In the eyes of a government decision maker, lack of capacity for long term governance is a good reason to delay a contract or forgo it altogether.
How can a government contractor help? Your relationship with public servants can actually increase their desire to stay. If they are considered part of the governance plan for your product or service, what might that work have to offer them?
For someone with little experience in the field, maybe ongoing management of your contract offers leadership experience, evidence of financial responsibility, or even new hard skills.
Emphasize these benefits to team members as you interact with them throughout the procurement process, and you’ll not only be coaching an internal contract champion, but you’ll also be helping the organization retain a motivated employee.
Loss of Subject Area Expertise
Though the trend of Baby Boomer retirement reared its head before the COVID-19 pandemic began, the “silver tsunami” has greatly accelerated over the past two years.
According to the findings of ICMA’s 2021 State and Local Government Workforce Survey, 38 percent of governments responded that their retirement eligible employees accelerated their retirement date in the past year, compared to just 20 percent in 2018. 52 percent of those respondents agreed that “the largest anticipated number of potential retirements will take place over the next few years.”
How will the ‘silver tsunami’ affect your effort to do business with local government?
Experienced and tenured employees bring valuable institutional knowledge and subject matter expertise to the workplace. Their accelerated retirement is certainly a blow to governments, but it can be detrimental to the vendor as well.
Whether retirees were your contract champions or not, their institutional knowledge can influence decisions and can come in handy when determining how best to navigate the world of government procurement.
How can a government contractor help? Your product might not replace decades of experience, but in what ways can it make the silver tsunami more bearable for a changing organization? Can your offer formalize institutional knowledge into systems or practices?
Keep your ear to the ground for trends in local government retention.
It is clear that worker retention is an increasingly high priority for forward-thinking governments as the nation recovers from the economic and public health impacts of the pandemic.
When asked how important certain issues are to the organization’s future, respondents to ICMA’s survey ranked recruitment and retention fourth behind improving employee morale, offering a competitive compensation package, and engaging employees (each one of these part and parcel of an effective recruitment and retention strategy).
But this doesn’t mean that local and state governments will prioritize the employment areas you may see reflected in the public workforce now. Spending and recruitment priorities will change, and industry experts are already predicting the adjustments we’ll see.
This helpful infographic produced by the Center for State and Local Government Excellence indicates that local governments will deprioritize administrative roles and prioritize personnel investments in the sciences and information technology.
You can use insights like these to your advantage. They illustrate government spending priorities and, simultaneously, indicate knowledge and capacity gaps that you and your team can fill through government contracting.
Helping the public sector helps your business too.
Ultimately, there is one reliable path forward for local and state governments who want to minimize turnover and maximize attrition: make the public sector a fantastic place to work. As a potential vendor, you have a role to play in this mission, and your business will benefit from it.
Organizations with high employee engagement, general morale, and a pride of purpose recruit and retain dedicated, talented public servants. As a potential government vendor, your offer can empower these trends in your client organization or agency, whether through increasing efficiencies, boosting quality of life, or even reducing busy work for overburdened staff. The public sector serves us all; let your mission serve theirs as well.
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