Recruiting & Retaining Top Talent in the GovCon Sector

Opening

Joe Young:

Good afternoon, and welcome to the September edition of the GovCon HR Round-Up podcast. Welcome to all of our subscribers. My name is Joe Young. I am the president of GovConPay. We are the only outsourced payroll and HR technology company exclusively focused on serving the government contracting marketplace. As always, we are coming to you live from the beautiful studios here of BLC Digital Strategies in Tysons Corner, Virginia.

They are the media affiliate of Berenzweig and Leonard. And as always, we are under the direction of our great producer, Todd Castleberry. Before we get started, I always do want to recognize our sponsor, the folks from Berkshire and Associates, Berkshire are HR compliance experts with over 50 years of experience with a focus in affirmative action planning, pay equity, and DEI services.

And welcome to any of the Berkshire clients who are joining us today, and thank you again to them for their support. As always, I come to you here with my friends and partners. They're the founding partners of Berenzweig and Leonard, Seth Berenzweig and Declan Leonard, our employment law experts. Good to see you guys. Give us a little introduction.

Seth Berenzweig:

Sure. Hi, everybody. Seth Berenzweig, co-managing partner of the firm, and I lead our corporate practice. Great to see everybody today.

Declan Leonard:

And I'm Declan Leonard. I'm also co-managing partner of the firm. I also head up our firm's employment law practice. Joe, great to be here with you again.

 

Introduction

Declan Leonard:

You know, normally in the lead up to this, we spend some intensive show prep before we come here into the studio. Today, we're going into week three of the NFL. I think we spent the whole time talking about, well, first off, we were consoling you for your Eagles Monday night mourning, your loss, unfortunately.

Joe Young:

Yes. And in our intense preparation, I actually just did my picks for this Thursday, and I was afraid I was going to miss it 15 minutes ago while sitting here in the studio.

Declan Leonard:

Yes, yes, yes, yes. I think we could talk for half an hour about that. But we've got a good topic today.

 

Current Topic Discussion

Joe Young:

We do have a good topic today. Yes. You know, last month we drove into a very kind of targeted issue with FLSA. Today, we’re going a little broader. It’s a topic we could do a one-day seminar on covering multiple topics, but we're going to get into the ongoing challenges of recruiting and retaining top talent.

This obviously has some unique challenges in the government contracting space. So, why don't we just we just dive into it? Declan, why don’t you lead us off: What are some of the things that you see with your clients and some of those unique things that we know they're all dealing with?

Declan Leonard:

Yeah, recruitment and retaining top talent. It is a perennial challenge. You talk to any government contractor, I know you're out there all the time. Seth is out there all the time. I'm out there all the time with our clients. It is a perennial challenge. I mean, we all have fresh memories of not so long ago things like the great resignation.

People were leaving, sometimes leaving in droves for greener pastures. I think, you know, maybe a few years on, looking in the rearview mirror now, maybe that didn't always pan out. But I think people are always, always looking. We'll talk about today some of the reasons why top talent knows what their competitors are doing. And so, companies have to stay on their toes.

They have to be able to do the things that are necessary as best they can to retain top talent. So, we've got so many things that we're going to be talking about here today and processes and best strategies for this.

Seth Berenzweig:

One of the things that is an interesting common denominator to some of the things that we'll also be talking about today, especially as it relates to the differences in the marketplace for hiring and retention for government contractors, are the unique challenges that companies in the federal space are dealing with every day post-COVID in terms of retaining top talent and having a firm culture.

It's already been difficult at the starting block because a lot of us have to deal with a hybrid workforce policy, and sometimes blending back into that after bringing people back in the office who were remote is difficult enough. But as we'll talk about during the show today, that's especially a challenging issue in the federal space because, of course, remote is very important as well.

I think it's important for letting the younger staff understand that, in addition to having intellectual capital that's important for their job, that they also have to invest in social capital. And quite frankly, although I've seen this sometimes be a taboo topic, that's a theme that I would certainly suggest be top of mind for executives as they're dealing with some of these post-COVID challenges for recruiting and retaining talent.

Declan Leonard:

Yeah. And of course HR is obviously huge in this area and we've got AI now coming in, these platforms that are dominating. We talked about this in some of our prior roundups, but that AI is a huge component of that. Seth, we see that challenge with some of our clients.

Seth Berenzweig:

Yeah, absolutely. And you know, it's interesting because a lot of the conversation around retention and overturning of staff relates to a question that I hear sometimes of, “Is AI going to replace your position?”

And I think the more accurate way to ask that is if someone who knows a AI better going to take your position, or if you take a look at it within the competitive procurement landscape, are companies with better staffing solutions with high tech alongside going to present additional challenges to the procurement cycle?

But absolutely, AI has definitely become one of the common denominators of the scenarios that we see coming in the door.

Joe Young:

Yeah, I mean, I'm in the HR technology business and probably AI has influenced and been built into the solutions throughout the marketplace in the recruiting and applicant tracking systems more than any other. And, you know, there are tools in there to help match candidates with jobs.

I know you guys have said, okay, those are great tools to facilitate the process, but they can create other challenges, too, if you rely on those too much–from discrimination and other issues that you still have to be aware of.

Declan Leonard:

Yeah. And the best way to get top talent is to increase the relevant labor pool. We talk about DEI all the time. DEI is not quotas; DEI is trying to expand the relevant labor pools. And so, if you're using AI and you don't know what you're doing, you could inadvertently be basically– they call it discrimination, of course–but you could be narrowing the relevant pool.

You're not going to attract top talent that way. If you have got a very narrow labor pool, you're just not going to be attracting the best and the brightest out there.

Seth Berenzweig:

Yeah, definitely.

Joe Young:

And there's also the challenge of a lot of government contracts, they're hiring large numbers of people all at one time, too, which creates the challenge of finding them and then onboarding them as well.

Seth Berenzweig:

That highlights an interesting distinction that the hiring and the retention of employees in the federal sector is markedly in a different world from the federal sector relative to the commercial sector. In the federal space, as we all know, you have a largely off-site workforce that creates additional HR challenges. You don't get to set your own parameters as you would in the commercial space.

You have to fit the requirements of the contract, which then requires you to also make additional assessments of not only who do you need, but where do they need to go. From an HR perspective, that not only requires you to have the right talent in place, but to understand what kind of rules apply in different states. As we know, different states have different rules of the game.

Someone asked me the other day on a call, “Are there any general observations that you can say geographically about the HR rules and how they how they apply in the United States?” And I said, “Well, the one thing that comes to mind is that they become a little bit more complex and a little bit more employee-friendly the further you get to the West Coast.”

Because when you look at Colorado, when you look at Washington, when you look at California, what do you think about that?

Declan Leonard:

Well, I think that's true. And maybe what it is, is the coast in general, because then you come over here and you look at New York, you look at Massachusetts with their pay transparency laws that are coming on the books, and even here in the good old Commonwealth of Virginia which a couple of years ago you would have said employment laws we're pretty much nonexistent.

Now, some people will joke that it's California light here in Virginia. I don't think it's that bad because I don't think the enforcement is there. But the laws on the books in Virginia really make it pretty potent, too. So I think it's probably a coast thing. But you're right, California led the way. Colorado is doing its best to emulate it.

And many other states are kind of getting in line.

Seth Berenzweig:

The other difference that I will highlight relative to the federal sector is the application of affirmative action plans, so-called AAPs.

Declan Leonard:

Which is Berkshire's forte.

Seth Berenzweig:

Yeah, exactly. They do a great job and they're a great resource for AAP plans. So not only in terms of the recruitment and the retention, but the collection and the analysis of data really makes it very different. But also, I find it very interesting when you have a remote workforce, how do you apply traditional retention modes when you're talking about company culture?

And I've always found that to be something that can be pretty challenging. Certainly the internet can help create a bridge to that gap, but that's one of the interesting challenges that's faced by the world of HR today.

Declan Leonard:

Here's a mistake that I see government contractors make. They do not integrate human resources in the bidding process enough. So, for instance, we talked about it before. You're not just going out like in the regular private sector where you're making a hire and then you're making another hire. Oftentimes you're hiring, you know, a handful or dozens of employees at one time.

And what happens is, you know, you've got contracts over here, bidding proposals over here, and then you got HR over here. And then an email comes over and says, “Hey, we think we're going to win this” or “We just got a notice of award. We need you to ramp up.” And that's not the way it should be.

HR should know about these things well, well in advance. They should be able to build a talent pipeline. This should be a consistent thing that they do throughout the year. And I think I see the disconnect happen time and time again with government contractors.

Joe Young:

Business development and government contractors and HR, we see that all the time. Give us give us a heads up of what we're working on. What could be coming down the pike?

Declan Leonard:

Yeah, yeah. The overused cliché: stay in your lane. Really, it should not be that way for government contractors. There should be so much more overlap. And, I hate to say it, but for HR folks listening out there, I think you've got to be vigilant about this. I think you can't wait for this to come to you.

I think you've got to go to it.

Seth Berenzweig:

That's a good point.

Joe Young:

So, let's switch a little bit about compensation. Declan, how can gov con companies keep their top talent happy from a compensation standpoint when a lot of this is so much dictated by contract terms?

Declan Leonard:

Yes, I touched on this before. The difference between government contractors and the rest of, you know, private sector employees, private sector can do what they want. I mean, they can hire who they want. They can change the parameters or the requirements or the application process. They can pay however they want. I mean, if they see somebody who is just really, really a great candidate, they can go above and beyond.

Government contractors, on the other hand, are married up to the contract. And so much of compensation is going to be dictated by the terms of contracts. They only have so much leeway. So, they really have to be a lot more vigilant and creative as they go through this process. They've got to be conducting regular salary surveys to make sure they're competitive.

We're going to talk in a second about pay transparency. I think that is maybe a bit of a blessing and a curse. I think so far, companies are looking at it and saying, man, this is a pain. I mean, Colorado and like we said, Massachusetts, New York, California, with all of their pay transparency laws, I think there could be a silver lining in some of it when it comes to finding out what are your competitors paying and it enables you to stay in the mix because doing regular salary surveys, it's still a little bit of an art than a science.

If you're looking now at job postings where you know what your competitors are paying within a range, that might be some valuable intel.

Incentive compensation. You've got to treat these employees as though they truly are employees, you know. And in the regular private sector, you see a lot of incentive compensation models. You know, hey, I'm going to give you this bonus or this commission or even equity or synthetic equity.

And I think, unfortunately, government contractors sometimes look at the employees the same way the employees look at them. We're just giving you your paycheck. You may be gone once this contract is over with. I think that's a big mistake.

Career path. Seth, you've talked about that. Why don't you chat a little bit about how opportunities for developing career paths for government contract employees?

Seth Berenzweig:

Yeah, I think it's important to mentor the employees and to let them know what career paths exist on a potential project and to keep them apprised of what the progress of their underlying project is as well. Sometimes employees don't have transparency with regard to funding and how much of a runway that has to give them an opportunity for career progression. Helping them understand within the labor categories and codes and the different opportunities that apply in a project, what their growth potential can be on that project or frankly in other opportunities within the company, is something that that can really add a lot of value.

Just because someone for the next 6 to 12 months has a certain role in a project, that doesn't mean that they're landlocked. Keeping that conversation open with HR is something that can help maintain the incentive for the employee.

Joe Young:

As I shared with you guys before, I've had the pleasure to be involved with the Moxie Awards, which is an award here in the DC area, awarding fast-growing, creative companies. I’ve had the opportunity to meet with a lot of CEOs and leaders at gov cons and this topic of retention and employees has come up a lot. Career pathing has been a big part of that conversation.

I think the companies I've met with it are you know have that culture and are being really successful, it’s something they’re really conscious about. It’s something they're really investing time in. Because the other thing is, too, for the younger employees, it's not just, what's the career path thing opportunity? What are some of the training opportunities and skills that they can build? So, it goes beyond compensation to those other things that those employees are looking for to create that loyalty.

Seth Berenzweig:

And also what's the growth opportunity for the project that they're working on? I mean, we have a lot of companies in the area that work on software-based projects. Some of them are in the R&D or potential initial rollout phase. What are the growth opportunities for the project that they're working on and what does that mean for how they can continue and increase their visibility with the customer?

So there's some really exciting, unique opportunities for intellectual growth and engagement in the federal space. And these days how we apply software, AI, national security, to help the employees have the mentored leadership and leaning into what their contribution on the project is, can be very helpful from a retention perspective.

Declan Leonard:

Yeah, I mean it's another difference between just regular private sector companies and government contractors. In regular private sector companies, there is such an emphasis on promoting from within, retaining, and really growing somebody. You know, what you really want is for them to stay with the company, assuming they're good performers, for the indefinite future and to progress all along.

And I think what happens in government contracting, you tend to view your employees as whatever category they fall under on any particular contract. And what they should really be doing, Seth, to your point, is trying to look at what is the progression within a particular contract because we're not talking really about headquarters’ employees for government contractors at this point.

They're a little bit easier to retain. They're usually closer to the leadership of the company. I think what we're really talking about is those off-site employees. If I was in HR for a government contractor, I would map out what is the progression within this and don't typecast somebody as, “Well, that's what they are. They're this particular position.”

They should have career paths that can go up the rung so that you can keep these people for the life of it. And maybe, who knows, they're the ones that can get the next contract. They'll be the key personnel. They may start off as run-of-the-mill billable employees.

Next thing you know, through training, through mentoring with veterans at the company, they could then become key personnel.

Seth Berenzweig:

They can help with sales, too. If someone is working on a project from a software development standpoint and they know how these things work, let them have an interplay with the sales team and maybe ultimately they could even be included in meetings with the customer because that would keep them very motivated and then they'd be able to discuss, you know, what the prospects are from a software development perspective.

Declan, one of the things that you mentioned a couple of minutes ago, which I've always had a hard time getting my head around, are the pay transparency laws. Can you talk a little bit about that?

Declan Leonard:

They are huge. We've talked about them at our government HR Forum dinners that we're also involved in. They're really top of mind with HR leaders in this day and age. And so, in a nutshell, what they are is various states have come in basically as a way to combat pay discrimination that data shows has historically taken place, whether it's gender, whether it's minorities.

And so this is a way to combat it. And basically, what these laws do and –they come in all shapes and sizes–but they all basically have the same goal, which is transparency. When you post a job on the various platforms–Indeed, all these other platforms that people are using to fill government contracting positions–you have to post a good faith range of what that job is going to pay.

Seth Berenzweig:

Based on the laws of certain states.

Declan Leonard:

Yes. Yes. So, usually California's at the forefront. Colorado was actually the first one to do this one. California has followed suit. You mentioned Washington State, Massachusetts, New York. And so each one is different. Unfortunately, that's another headache for HR leaders. But basically what it says is like, you know, so you have to have good faith.

So, let's just say you have a job, and it's going to pay anywhere from $80,0000 to $100000. You've got to put that on your initial posting. I mentioned earlier, it's a little bit of a pain. Companies are resisting that. They're like, “Why? I don't want to give that much. I don't want to give the public our inside information.” But now you've got top talent who is looking at this.

They can see what their competitors are paying. And so, I think it's going to cause companies to probably move a little bit quicker into more competitive ranges, but they're going to know what their competitors are doing, too. So I mean, they're not going to sleep on it. There's nothing worse than when an employee leaves and you don't know why they left until after they left.

They were like, “Well, I wasn't being paid enough.” Well, at least now again, pay transparency. It's all on the table now. I think it's going to help.

Joe Young:

And in addition to that now, you know, compliance burden in some areas of knowing, “Hey, where am I posting these jobs? What states are going to be seen as compliant?” You also have the issue that your current employees can see these job postings, and now they're seeing their job maybe being posted and questioning if that range consistent with their range.

Declan Leonard:

Yeah.

Joe Young:

What challenges does that create that previously maybe didn't exist?

Declan Leonard:

You're going to see a lot of right-sizing in the compensation world. There's no doubt about it. I do think that while it is a potential competition for keeping top talent, I think if a company looks at it the right way, they can see it actually as a competitive advantage.

They need to keep their eyes and ears open. They should be they should be scouring these posts.

Seth Berenzweig:

You know what? That's a great point. I never thought of that. It's free intel, right? Make sure that you keep your eyes and ears open, because if it's out there, then you get a peek under the hood of your competitors, right?

Declan Leonard:

Yeah, yeah, yeah.

Seth Berenzweig:

Interesting.

Joe Young:

Seth, we've talked about recruiting and some of the challenges there. Let's switch the focus to retention here a little bit more. From a culture perspective, what are some of the things that again, gov cons with these disparate workforces, experience as unique challenges?

Seth Berenzweig:

It’s definitely a unique challenge. You know, it's pretty common for us to have some of our federal sector, our government contracts clients be in the majority of states. They may have two employees in one state and 22 employees in another state. So, how do you get uniformity and communication of culture? Well, there's a couple of things that can help.

The onboarding process, of course, is something that can create uniformity at the front end, making sure that the company speaks through one voice and one onboarding process. That's one way to instill a consistent messaging and culture when somebody starts at the company and to let them know what the mechanisms are so that they can stay connected within the company.

Declan Leonard:

And Seth, just to stop you there. I hear companies call this the rebadging process. They should never, ever say that. That is the most informal, impersonal…

Seth Berenzweig:

Antiseptic.

Declan Leonard:

Yeah, yeah, yeah. It's just like, you're feeding into this concept that this is just…

Joe Young:

Just the paycheck.

Declan Leonard:

Yeah. You're just the person who's signing my paycheck. That's the whole point of retaining, is you need to combat that.

Seth Berenzweig:

I love that. Yeah. It's like they're not a person; they're a badge.

Declan Leonard:

Yeah.

Seth Berenzweig:

You're just going to slap another thing on the badge and then just get the butt to the seat and get to work. Yeah, That's such a good point.

Bring new hires to headquarters. Let them come in. It doesn't cost that much to fly them in for the day. And if they want to stay overnight to meet the team over dinner, then just find a reasonably priced hotel room and let them come back.

I think that would create a lot of cohesion.

Declan Leonard:

Quick war story there before you move on. I was dealing with a situation recently and the employee was saying that they had never met anybody that was at issue in the C-suite of the company. And this is not unique to this particular company. It happens all the time. If you have that one-on-one, I believe…

I mean, look, in today's day and age, it's going to be Zoom or Teams most of the time… if you can afford to have one just kind of a get-together, you know–doesn't have to be a scavenger hunt like Berenzweig Leonard did not too long ago… pretty sure my team won but maybe we didn't.

Seth Berenzweig:

Yeah, but who's counting?

Declan Leonard:

Yeah, that's right. The firm administrator's daughter won. How do you imagine that happened?

Seth Berenzweig:

I wonder how that happened.

Declan Leonard:

But stuff like that. You can be creative about it, but I don't even think they think of it half the time.

Joe Young:

It's interesting you bring that up because, again, in some of these interviews I did recently, I heard numerous times about leaders saying, “I'm taking the time to meet with all of our new employees.” It gets to a point where that becomes undoable if you’re 700 employees. But it’s amazing the effort that is being made.

And again, it's a 15-minute Zoom call. It has to be. But it's really impactful in that onboarding process to be like, “Wow. The CEO of the company took 15 minutes to welcome me and let me know what the culture of the company is.”

It just sets a tone going forward that is different from what most people are seeing in the space.

Seth Berenzweig:

I'm kind of an archaic guy, you know, Zoom's fine. I’m a more in-person sort of person. And I know most of us inherently are. But just as, and to follow up, Joe, on your point, just as we can periodically bring folks into headquarters, the senior executive team can jump on a plane and visit them over there as well.

Declan Leonard:

So, it's much more efficient.

Seth Berenzweig:

Just so instead of having if you've got 22 people in California, go to California. Buy one ticket instead of 22, invite them out for an early dinner and just say, “Talk to me and let me know what are your challenges and what are your concerns?”

Also, team the new employees with a veteran employee.

Sometimes some companies refer to that as a mentorship program just so that they feel that they have someone they can reach out to, just to create more connective fiber between everybody in the company is something that can really go a long way.

Declan Leonard:

Joe, you had a great point about just this notion of connection and in-person connection. Every December, we know HR is focusing on holiday parties, and you had an experience.

Joe Young:

Met with the CEO, and he shared that, you know, last December he traveled all over the country, to I think seven or eight different holiday parties.

Declan Leonard:

Yeah.

Joe Young:

And just the impact of that and how everybody was just so impressed and moved by the effort to be there. And it is the little thing sometimes and creating that personal relationship. So, you know, the recommendation is to find those times and do those things because those are the things that people remember. They're going to remember that more than the $250 bonus check or holiday bonus.

Seth Berenzweig:

I wonder how frequently those trips involve or somehow include the director of HR. I just kind of throw that out there because, you know, yes. You want the CEO to get out there, you want the COO to get out there, but I think it would also send an interesting message if the director of HR also got on the road once or twice a year.

Declan Leonard:

Chances are those employees are going to make contact with HR or need to make contact with HR about questions, benefits, anything like that, way more so than they're ever going to reach out to the CEO.

Seth Berenzweig:

Why have that be an unfamiliar face? Just let the person go in and just say, “Listen, if there's anything I can ever do for you, you've got my direct line.” I mean, how long does it take to send that kind of message to somebody?

Declan Leonard:

Yeah, I remember one just about this issue of holiday parties. I do remember, because government contractors and their employees are spread out so much, they did give them the option to come into town. But it was during the holiday season. It was like probably the weekend before Christmas in this particular case. And most people were like, I can't do that.

And they still held the party. And basically most people who went to the party were headquarters people because they chose that city to do it in at some venue. You not only have to have the idea, but you got to think it through and make sure it's not going to turn morale against the company even further.

That one in particular, there was a big groundswell of complaints because they basically said, “Yeah, you paid lip service. You said we could come into town, but it was not convenient for anybody, and it would never have worked out.” You’ve got to be smart about how you do it.

Seth Berenzweig:

And the messaging. It's so interesting, I guess, that the company would say no good deed goes unpunished. Yeah, but they didn't really think it through. That's one of the aspects of HR is just to take an extra breath and think about what's the messaging on that?

Joe Young:

We do have one question we will try to get to in our remaining time. The question that came in is: How transparent should we be about things like contract renewals to make sure we're not scaring people off?

Declan Leonard:

Yeah, this is a great question. Thank you for that. And it's a little bit of a tightrope that you're walking in some respects because on the one hand, you're going through the bidding process. It's a competitive process. It's also a confidential process. But you can be sure that these employees who are working on-site with government personnel already know, perhaps even before you do, what's the deal with these particular bids and whether or not you're going to get it again?

And so, I think the more transparent you are, and it can be uncomfortable, too, because you may be telling them things like, “Hey, we may not get this,” but you'll build more loyalty and maybe those people will say, “Hey, do you have any other opportunities for me? You know, I see you have this other contract vehicle over here. I'd love to work for you. I love the fact that you're open. I love the fact that you came to us, and you didn't hide the ball on this.”

I think they can use that as an opportunity, too.

Seth Berenzweig:

Yeah, I agree. The transparency is something that can really help generate a lot of goodwill. And if you have someone who can potentially even roll off to another project, and having given that person a line of sight to their opportunities for career advancement within the company, sends a really positive message.

Joe Young:

Absolutely. Well, thank you, guys. It's always a pleasure. Thank you to everyone who joined us today. Thank you for the questions. As always, we appreciate your time. We hope you got some value out of your spending some time with us today. We look forward to hopefully having you join us next month. We actually called an audible right before this.

Declan Leonard:

We did. Football theme.

Joe Young:

Football. And then we're like, hey, there's also this election.

Seth Berenzweig:

So unlike Philadelphia, it'll work this time.

Declan Leonard:

Oh, man. Okay, we've run out of time.

Joe Young:

We have a new co-host next month, but we're going to get into the potential impacts of the pending election on the federal space. Should be plenty of things to talk about.

Declan Leonard:

In a half an hour? How are we going to get to that?

Joe Young:

We'll pick our topics wisely.

Declan Leonard:

Everybody gets 2 minutes with a 30-second rebuttal and we're turning Seth’s mic off when he’s not talking. We're going to negotiate that into it. Todd, write that down, please.

Joe Young:

And we'll have to get rid of our huge live studio audience here.

Declan Leonard:

Yeah.

Seth Berenzweig:

That's right. Keep it down, folks.

Joe Young:

So, thank you, everyone. Enjoy your September. We look forward to seeing you next month. Take care.