Staffing and outsourcing contractors who focus on providing a conducive work environment and producing real results will compare favorably to increasingly hostile public-sector workplaces.
Compensation of state and local government employees will comprise as much as 65% of the $1.8 trillion in expected spending at these levels in the current fiscal year. So, it's no surprise that, during a time of financial distress among the states and localities, public employees become pawns in the budget-balancing game, paying for the fiscal sins of their elected bosses. If they aren't laid off, they are bought out or forced to take vacation days without pay. If they are lucky enough to get a pay raise, it's probably well below the rate of inflation. Benefits are reduced for new (and, increasingly, current) employees. (Next up: retirees.) Everyone's workloads increase as a result of hiring freezes.
Most recently, Gov. Arnold Schwarzenegger (R-CA) proposed reducing the pay of his state's employees to the minimum wage! All of these political decisions produce a type of unintended consequences that are also known in politics and economics as "perverse incentives." For example, Gov. Schwarzenegger's bluster was intended to intimidate the legislature into passing a budget that addresses the state's $15 billion budget deficit within the next few weeks. Of course, if his gambit proved successful, it would most likely drive the legislature to make short-term compromises designed to put reality off until after the next election rather than address the state's structural financial issues. That's a perverse incentive from the citizen's point of view.
Of interest to vendors are some of the long-term unintended consequences. When you look at the list of common measures to reduce compensation expenses, one major consequence comes to mind. Each of them serves only to make public service less rewarding and attractive. That's not to say that government employment--even at its worst--isn't better than many of the options available in the private sector. But, just because government has been able to "find the money" to "fill the slots" to this point, doesn't mean this will always be true in the future. Given certain economic and demographic trends, there's no reason to believe that the downward pressure on public employment expenditures will let up any time soon. In fact, it will get worse...much worse.
Vendors who provide on-site staffing and proximity-based outsourcing services should be thinking about how their employment environments compare to public-sector employment. Better? Worse? About the same? Ask those former public-sector workers who have come over to the "dark side." Can such vendors be honest with themselves? (Is it about doing it on the cheap with non-unionized labor or greater efficiency and better results?) If they strive to provide a superior work environment where employees will feel they can make a real difference for the public benefit and get paid for it (novel idea!), these vendors will be well-positioned to take advantage of the economic and demographic trends of the next ten to 20 years.
