I’m going to lay out some circumstances for you and then ask you what you would do. The situation:
2. Your company is bleeding cash and your debt revolver balance with the bank keeps increasing. You can’t seem to turn the cash flow trend around.
3. The economy stinks. You’ve got no confidence the economic situation is going to turn around.
4. Back to #1. You’ve got some work that HAS to get done…
Now the question. You’ve got work that has to be done. Given the circumstances, what would you do?
1. Hire full-time employees to address the need in question.
2. Hire contractors to meet the short term need. You get the work done and remain nimble in terms of your options…
Which one did you choose? Right, #2. You live in the real world. The US government doesn’t and is making the move to shed contractors and hire full-time employees. More from this article at Workforce Recruiting:
“Fiscal year 2011’s budget reflects the intent to hire more federal employees as soon as possible.
“The money spent on salary and wages for government employees is increasing and the money for contractors is decreasing,” says Ray Bjorklund, senior vice president and chief knowledge officer of FedSources, a consulting firm in Washington, D.C. that specializes in the contracting activities of the federal government. Bjorklund performed an extensive analysis of next year’s budget and reported his findings in the FedSources document, “Federal Budget Analysis 2011.”
The hiring shift represents a change from the “contractors can do everything better” philosophy of the Bush administration, which Bjorklund says didn’t work well. The policy shift was formally announced in a March 2009 memorandum from President Barack Obama that stated, “… contractors may be performing inherently governmental functions. Agencies and departments must operate under clear rules prescribing when outsourcing is and is not appropriate.”
Aside from the problem of defining inherently governmental functions, the difficulty with returning jobs to civil servants is that there aren’t nearly enough of them.
“There are about 2 million civil servants and about 6 million contractors,” Schweyer says. “That’s a big ratio, and Obama wants to swing it back.”
Fiscal responsibility knows no political affiliation. Regardless if you’re a Democrat or Republican, you can’t look at the math related to the Federal Deficit and think this move makes any sense. Even if your total staffing spend is the same, any company that knows what they’re doing sticks with contractors in the current financial environment to maintain maximum flexibility.
Isn’t that Business 101? Shouldn’t that apply to government as well? You’d get fired as a HR Pro for managing the headcount budget in this fashion.
Kris Dunn is a Partner and CHRO at Kinetix, a national RPO firm for growth companies headquartered in Atlanta. He’s also the founder Fistful of Talent (founded in 2008) and The HR Capitalist (2007) – and has written over 70 feature columns at Workforce Management magazine. Prior to his investment at Kinetix, Kris served in HR leadership roles at DAXKO, Charter and Cingular. In his spare time, KD hits the road as a speaker and gives the world what it needs – pop culture references linked to Human Capital street smarts.