Does an impending demographic disaster overshadow government for the next five years? Will half the workforce retire as suggested by the GAO's 2001 Human Capital Management report? Is there a retirement cliff that government will soon fall over? Does government have the tools in place to reinvigorate its workforce with new employees who have the skills needed to continue government's important work?

At a recent meeting of the advisory board for the business school at the College of William & Mary, one of the nation’s oldest and most prestigious universities, business leaders and faculty sat around a polished table and discussed the school’s placement rate for graduates. It was excellent, with virtually all students headed to Fortune 500 businesses or Top 10 graduate schools. When one of the board members asked what steps the school was taking to encourage business BAs and MBAs to consider government service, the silence was deafening. Finally, a faculty member asked, “Why would any of our graduates ever consider going into government?”

Government is facing yet another problem that is connected to the issues raised in the GAO’s 2001 report on Human Capital Management and its offspring over the past three years. With the potential for an exodus of retiring workers looming, how will the federal government recruit the people needed to continue essential services without a drop in quality?

The Partnership for Public Service’s July 2002 report, Tapping America’s Potential, noted that between 2003 and 2004, the government would need to hire more than 250,000 employees both to replace retiring workers and to carry the burden of an expanded Department of Homeland Security. Given the importance of the government’s missions and changing demographics in the national labor force, the new hires would have to be highly skilled, diverse, and motivated to perform public service.
The 2003 report by the National Commission on The Public Service points out that public service today draws, at best, an indifferent response from young people and talented private citizens. Perceptions of the government workforce are consistently negative with a belief that the best are underpaid and the worst overpaid; that too many of the most talented leave public service too early and too many of the least talented stay too long.

Among its wide reaching recommendations, the report suggests that Congress and OPM simplify and accelerate the recruitment of federal employees. To a large extent, the need for a new approach to recruiting is driven by the profound changes that have occurred to the federal workforce over the last 50 years. In 1950, the government was a “government of clerks.” Work was process-oriented and routine, requiring few specialized skills: 62 percent of the workforce was in GS grades 1 through 5, and 11 percent were in the top five grades. Compensation was determined by job description and longevity, not by performance.

Today, the work of government is infinitely more complex. Technology is ubiquitous, and so are the demands for specialized skills to deal with an increasingly differentiated and complex national infrastructure. Only 15 percent of the workforce is now in the bottom five grades, and 56 percent are in the top five. This is not just “grade inflation.” Government is fundamentally different.

Our analysis of the OPM’s hiring statistics for the past five years highlights both positive and disturbing trends. The challenge in interpreting the statistics is that government is in the midst of change, rather than looking backwards after it has passed. This means that much of the past years’ information will generate inferences, not certainties.

• In spite of the concern about a retirement cliff in 2005, OPM’s statistics do not indicate that a wholesale exodus of the federal workforce is around the corner. The actual departure of employees will likely follow a pattern that resembles a normal curve. Although the peak may quite high, the shoulders of this curve should be relatively broad, and the annualized retirement rate between 1999 and 2003 only increased by 0.1 percent from 2.7 to 2.8 percent. The proportion of retirements to the total separations from government did increase from 21.4% to 24.1%—a statistically significant by not cataclysmic change.
• Demographic numbers present a more disturbing picture of the disproportionate aging of the workforce. Between 1990 and 2002, the average years of service of government employees increased from 13.4 to 16.8 years, peaking at 17.1 in 2000-2001. The average age of government workers changed from 42.3 to 46.5 in the same period. If the target is to have a younger workforce, government is having problems achieving that goal.
• Finally, the 1999-2003 hiring statistics show why the average years of service are leveling off while the average age is increasing. In 1999, 59 percent of new hires were people with ages between 20 and 39, increasing to 62.6 percent in 2003. In the same timeframes, the percent of new hires between 40 and 59 increased from 29.7 to 37.4 percent—a rate of change double that of the 20-39 group. More older people are joining government presumably because they have existing skills that they can immediately bring to the job, unlike new university graduates.

These statistics become more meaningful when we consider the three different sources of recruits. Each demands a substantially different approach:

• Experienced, mid-career experts who need little or no learning curve - As the workers who have spent decades becoming expert in their fields depart, some portion of them will need to be replaced by people who understand how to do their jobs with little training. This implies the need for a targeted recruiting plan that specifically pursues people with defined skill sets, and assumes that a scattershot approach to recruiting will be ineffective.
• "Generic" workers - The government recruiting system as it currently exists is effective in finding people who have generic administrative skills. If there were no demographic or quality pressures on the federal workforce, the existing approach to recruiting would be good enough to meet staff needs. As a part of a broader approach to recruiting, the generic sourcing ability of government is sufficient to meet the ongoing needs for this type of candidate.
• Top tier recent university graduates with strong academic credentials - Over the long run, government will need an infusion of "the best and the brightest" to meet its changing missions and deal with the uncertainties of an unstable world. The private sector has found that the best sources for these people are the top universities and the best academic programs. Government needs strategies and tactics for obtaining its share of these people.

Government is not going to solve its demographic problems by continually replacing older workers with contemporaries—at best, this simply shifts the problem a few years into the future. New university graduates should be a major source of federal workers, but many of them are hindered by negative attitudes toward government service. A 2001 poll commissioned by the Partnership for Public Service and the Council for Excellence in Government showed that only one in six college graduates had significant interest in a federal job. They felt that private business was better than government at offering interesting and challenging work (40 percent to 9 percent) and allowing employees to take initiative (69 percent to 3 percent). Both the assumptions inherent in these results and the reality of life in government service need to be changed to attract the best students. The situation is not made any easier by an obsolete and convoluted hiring process.

The approach that most federal agencies take to communicating job openings and evaluating candidates makes this problem even worse. New graduates who are interested in public service often come away from the recruiting process confused, discouraged, and angry. College students who intern with the government—who should be the easiest target for government recruiters—have a particularly dismal record of converting from internships to permanent employment relative to interns in the private sector. The 2003 statistics from the National Association of Colleges and Employers show that only 19 percent of government interns were hired into full time positions, while the hiring rate in industry is 45 percent.

Comparing government to industry can be depressing:

Drab and tiny workspaces, inadequate room for storage and record-keeping, and aging lighting, heating, and air conditioning systems—too common in the federal government—seem to many employees emblematic of the low value in which they as workers are held. – The National Commission on the Public Service

Several factors contribute to the government’s recruiting difficulties, particularly:

• Its image as a stodgy and boring place to work where rules are paramount and nothing moves fast.
• The sense that a career in government is for a lifetime, not a “tour of duty” on the way to other opportunities and challenges.
• Non-competitive compensation and the lack of disproportionate rewards for significant successes.
• The age demographics that make the workplace less attractive to the young and the ambitious. Most people would not describe life in the government as hip or cool.

Government is also at a disadvantage since the private sector is competing for exactly the same people that government wants and needs. However, industry has a lead of several decades in creating tools for recruiting top candidates. For government to be competitive, it has to adapt those tools to its own environment and find unique messages for potential recruits that differentiate government positively from industry.

Human capital management is the key. In private sector services companies, the mantra “our people are our most important asset” is constantly repeated. Many companies in industry move beyond lip service to this ideal and are actually serious about making this a reality. How does a company treat its people as if they are its most important asset? It:

• Offers challenges that excite the individual and have a reasonable chance of successful completion.
• Provides them opportunities to grow professionally through their job assignments.
• Allows them to grow financially.
• Is open to suggestions and changes that can periodically transform the company.
• Makes time and budget available for training.
• Offers flexibilities that may include benefits, job assignments, geographical preferences, and more.
• Provides the technological tools for excellent performance.
• Fulfills an important and meaningful mission.

How do government and industry stack up against each other in a head-to-head comparison?

As the competition for recruits heats up, government has started a few initiatives that allow it to be more competitive:

• Leveraging executive charisma. Agencies such as USAID and Veterans Affairs are using a tactic that has been in the consulting industry’s playbook for decades. Rather than making recruiting a solely HR function, senior leaders are expected to take a prominent leadership role in developing relationships with academic sources of top rank candidates. It has been a common practice among services firms to assign a school manager to a university that is a particularly good source of candidates—not an HR administrator, but rather a line manager or executive—usually one who attended that school—and who spends a noticeable amount of time developing relationships with faculty and students, speaking pro bono at career events, and serving on university advisory boards.
• Using technology creatively. Following in the footsteps of industry, federal agencies are starting to use online applications and communication tools to expedite the administrative process of applying for a job. Government is playing catch-up since over 90 percent of the 500 largest companies in the world are already using the Web for some or all of their recruiting. At the less sophisticated end of the spectrum, the State Department lets candidates download its application form and fax it back. Interior and OPM, among many others, have gone a step further and have set up the entire application through the internet.
• Recruiting for specific jobs, not just “government service.” Most top candidates are interested in meeting a particular challenge, not in performing generic work. The government has a wide variety of truly exciting opportunities that, if communicated correctly, will attract the talent needed. Consider the difference between “working for the government” and “using your microbiological skills to defeat SARS at CDC,” “tracking and stopping the flow of illegal drugs,” or “making our country stronger by leveraging the DOD budget.”

There are many other great ideas that are being tested to address the recruiting problems. All of them rightly have a focus on Return on Investment (ROI)—a term that is increasingly heard in the halls of government. Without the right people, ROI is never going to be excellent, or even good. The emerging government human capital management strategies are helping the HR department and its recruiting activities become a strategic contributor to the performance of the agency. Government can increase its ROI by adopting the recruiting practices that the private sector has pioneered, and by being aggressive in its communication of the excitement, benefits, pride, and honor of public service.

Pivotal Insight will be conducting research in the future that focuses on the emerging best practices for recruiting university graduates into government. If you are interested in participating or would like to receive a copy of the results, contact us at 703-914-2760.