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5 Predictions for Recruiting From Government Shutdown, Sequestration

by Oct 22, 2013, 6:45 am ET

Screen Shot 2013-10-17 at 2.25.19 PMThe predictions are below. You can skip the introductory setup and go right to them — just scroll down to “Predictions”

Recruiting professionals and departments across the federal and government contracting sector didn’t know what to expect from the recent federal government shutdown — the most recent shutdown was more than a decade ago, and most recruiters in this space weren’t around back then.

What we’ve heard is that some leaders of the recruiting industry propose that now might be a good time to go after that top talent that works for the federal government, and some have said that the shutdown was going to make it more difficult for federal government and federal contracting recruiters to entice private-sector employees to come into the federal sector.

But the truth is no one really knows the large-scale effect of the shutdown on recruiting departments across the entire federal sector. Though for the sizable government contracting industry supporting the federal government the answer is much more complicated. That’s where we should focus our attention for a little while.

The best we can do is look at anecdotal evidence of some of the trends that took place over the last two weeks, and that (thankfully) are now over, at least for a little while.

I put together, based on numerous conversations with peers, contacts, and clients that work in this space, a list of predictions. Although, they’re mostly guesses, there’s a lot of anecdotal evidence behind them.

We know what happened to actual government employees, but what’s happened with the contractors?

Generally, most of the government contractors that have the majority of their business geared toward providing products to the federal government or defense haven’t really felt much of a change, at least permanently, when it comes to open positions or recruiting methods — yet. Their business is and will always be secure as long as there is a federal government. After all, no politician wants to be seen as weak by trying to cut federal spending on security and homeland defense products like tanks or IT infrastructure. But in general, from the conversations that I’ve had with recruiters and hiring managers in the products industry of the federal sector, there is an understanding that everyone is going to have to tighten their belts. The days of unlimited funding for whatever project any mid-level manager can dream up are coming to an end … at least that’s the political message that both houses of Congress and the executive branch are communicating to the federal bureaucracy.

On the other hand, some of my clients in the federal services industry are engaging in long-term strategic restructuring and reorganization of their firms because they believe that what we commonly refer to as the “sequestered environment” is going to be a political trend that will continue for at least the next 10 to 15 years. They are being asked by their customers, i.e. the federal government, to find ways to get more value for reduced funds. This is all understandable because the federal government can’t continue to spend money long-term that it has no way of making up through revenue.

The interesting questions for us as recruiting and HR professionals are: 1) Will it affect the way that we go about recruiting on a daily basis, 2) Will we have to make changes to say, the number of requisitions for any given recruiter, or to the number of recruiters we might have on staff at any given time.

Unfortunately there is no simple answer to these questions because it’s hard to isolate the trends of the sequestration and government shutdown from the rapid changes that are already taking place in the recruiting industry. Changes have been taking place in the way recruiting is being done for the last (at least) 10 years, constantly, and are driven by a lot of factors such as the Internet, HR technologies, new federal or state laws, and the standardization of the recruiting function. This makes being able to see the trends in the long-term of how recruiting will change in the federal sector much more difficult.

Predictions

Some guesses, based on several conversations with my peers and clients here in D.C.:

There will be an increasingly heavy reliance on contract recruiting: This makes for a more flexible recruiting workforce and creates a market of flexible contract recruiters that can be used by whatever government contractor just happens to be winning more contracts any given time.

Sequestration will force mid-level managers to figure out how to do more with less payroll: This will result in two recruiting-related trends:

  • There will be a general downward trend in government contractors’ and federal workers’ salaries: Rolling out salary changes will probably take some time, as turnover in the government and related field usually tends to be lower than in the private sector. But already, in the last six months alone, at least half a dozen medium and large government contractors are attempting to completely restructure their salary grade(s) and compensation systems.
  • Because the work still has to get done, managers will be forced to request more talents and more skills in any given job than ever before: This will make filling positions a little bit more difficult which will likely mean that cost-per-hire and time-to-fill type metrics will have a general upward trend.

Government workers will begin to entrench: Federal workers were reminded these past two weeks that some of them are considered essential, and some of them are considered nonessential. This will create a trend of managers requesting their direct reports to be classified as essential employees, just in case government shutdowns become a regular part of Washington’s daily business in the coming months and years. In other words, they will try to entrench themselves and protect their own employees from both being furloughed and from being laid off in the long term. This will reduce the number of requisitions that come to recruiters’ desks that are considered “replacement requisitions,” because in the long term the entrenchment will actually reduce both voluntary and involuntary turnover.

Reduced overhead costs: In order to reduce overhead costs, quasi-governmental agencies (such as brandusa.gov or the Washington Metro), and even full federal agencies will have to rely more on low-cost external companies (such as RPO service providers, for example) for recruiting services solely for the purpose of being able to shut off those services at any given time. No recruiting leader wants to lay off his or her own employees — (this trend that has been driving recruiting department sizes in the federal sector over the last 5 to 10 years and now it will become even more important). This means that the portion of recruiters who work in federal space will lean more towards being housed under agency and RPO services than corporate recruiting compared to the current market demography.

Finally, the push to lower overhead quickly, definitively, while reducing overlap and redundancy in corporate jobs, will ensure more consolidation in the form of mergers and acquisition. Already, CACI International, a company that had received many recruiting awards at ERE and elsewhere, has just made its largest acquisition ever when it bought Six3 Systems. These acquisitions will cut recruiting jobs just the same as any other jobs would be cut, and a smaller minority of recruiters working for federal contractors will be put back on the market involuntarily.

The whole federal sector will be moving toward doing more for less, and tightening its belt. Recruiting departments will have to do the same, and they can expect that they will be asked to do more, with fewer people, and for more difficult requisitions in the aggregate.

If you like a challenge, you may want to consider the federal field (both government and contractor side) for employment opportunities in the next few years. You’ll certainly find it.

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

  • Derek Zeller

    I have to say if you live in the DC Metro area and you are a recruiter you should read this post. The “contract recruiter” piece has been a normality for a while here. BAH, Accenture, GDIT, and others have been using the “contract recruiter” model to show a reduced overhead. Once they lose a large contract or need to show revenue increase poof you are gone. This has added to the lack of true good recruiters staying in the area as there is no stability. I am lucky enough to have a small company that allows me to where multiple hats in BD. This in turn lets me help out and makes my position that much more valuable.

  • http://www.thebesttalentservices.com Phil Ojalvo

    I agree with Derek Zeller, the ‘contract recruiter’ model has been in place since before sequestration. Companies like Booz, and smaller companies have staffed up with contract recruiters when demand is high, and cut back when demand is reduced. Fortunately, this is a great trend for my business, which supports businesses that have peak demand (either for proposal efforts or staffing new projects). Business is better than ever.

  • Keith Halperin

    @ Derek and Phil: It’s interesting to see how the Greater D.C. recruiting community ahs joined the SF Bay Area (and perhaps a few other locales) in the “loyalty = cash-flow” world of contract recruiting.

    Cheers,
    Keith Halperin, Sr. Contract Recruiter