Within the competitive government contracting world, organizations are battling not only for lucrative government projects, but also for the talented employees who can give one company an edge over its competitors.
Midsized organizations have to compete with Fortune 500 companies as well as smaller organizations for contracts. In this industry, the focus is on identifying, attracting and retaining a skilled workforce – a goal that’s made more difficult because of the current insourcing trend, where government agencies must internally complete tasks deemed inherently governmental functions.
This rule requires the government to conduct many functions formerly completed by contractors; therefore, government looks to hire contractors’ staff. Over the long term, insourcing could affect the industry’s bottom line because it will result in cuts to the number of contracts the government will issue. In the near term, however, the trend increases the government’s appetite for already scarce talent, especially highly qualified candidates with security clearance, such as engineering talent with any skill set with a high clearance or specific training that only the military provides.
To stand out in the crowd, midsized government IT solutions provider American Systems provides employees with an employee stock ownership plan (ESOP). As part owners of the company, employees receive generous benefits and have a stake in the work that they do. With focused recruiting, an ESOP and strong employee incentives, American Systems has been able to capitalize on a spirit of ownership.
Top Recruits Are Essential
The competitive atmosphere in the government contracting industry differs considerably from that of most other industries. Companies may be competing for a contract one day and then partnering with the very same group of competitors the next. This “coopetition” – a common industry term blending “competition” and “cooperation” – intensifies pressure to hire the best candidates because top-notch candidates with sought-after security clearance and engineering or technical skills can tip the scales in a company’s favor when other larger contractors are seeking teaming partners for a contract bid.
Once a contractor wins a contract, its employees are responsible for the design, deployment and implementation of services for government customers. These responsibilities require that employees be out in the field interacting directly with customers. For example, 62 percent of American Systems’ nearly 1,500 employees are based at customer sites, effectively making each employee the face of the company. Therefore, it’s imperative that employees positively and accurately represent the organization.
Finding technically skilled talent can be tough, however. In today’s private- and public-sector job markets, it’s a good time to be an engineer and a great time to be a cleared engineer. Individuals with the valuable combination of technical skills and security clearance often have their pick of jobs. American Systems has thrived in part because of its ability to attract and retain star candidates and get them to act as brand ambassadors and recruitment champions.
The company has been using an employee referral program for more than a decade. Throughout the years the program has expanded, and today it offers a $10,000 incentive to fill positions that have high security clearance requirements. Leveraging current employees’ networks of subject-matter experts allows the company to expand its recruiting pool and gain access to pre-vetted top performers while rewarding current employees. To date, referrals make up 60 percent of American Systems’ hires and give the company a lower cost per hire versus using a headhunter or placement firm.
Externally, American Systems has implemented targeted advertising campaigns to reach potential recruits. While an ad on Monster.com may reach millions of people, American Systems focuses on a unique approach to reach its desired niche group of qualified candidates. In 2010, the company’s corporate communications teams created a “Got TS/SCI?” campaign, a riff on the popular “Got Milk?” campaign. The ad runs along the metro D.C. bus routes of specific federal agencies and government contractors to attract candidates with security clearances. Focusing outreach and developing an understanding of the target audience has helped the company deploy its marketing budget more effectively and attract highly qualified candidates. Although it’s too early to measure the effects of the “Got TS/SCI?” campaign, the buzz and conversations generated by the ads are positive.
Retain Stars by Sharing Profit
It can be difficult to find incentives that entice every employee and benefit the company as a whole. American Systems has leveraged the ESOP, a supplemental retirement fund comprised solely of company stock, to address its employees’ diverse needs and create incentives that align its workforce under common goals.
Contributions are allocated based on an employee’s overall compensation and years of service, and employees become fully vested after five years. The investment continue to grow tax-free until an employee receives a cash distribution after retirement, death or disability.
An ESOP provides financial and intrinsic motivation as well as supplement employee income, which along with 401(k) or personal savings, can be used as a retirement program. It also gives employees a personal stake in the success of the company, strengthening the link between exceptional performance and financial compensation.
In August 2010, the ESOP Association and the Employee Ownership Foundation released the results of a survey conducted among the association’s 1,400 corporate members that found:
a) The average age of the ESOP is 15 years, demonstrating sustainability.
c) Eighty-four percent of respondents agree the ESOP improves motivation and productivity.
An ESOP also can be a great incentive with which to attract and motivate employees. The ESOP Association estimates there are 11,500 ESOP companies in the U.S. that employ about 10 percent of the private-sector workforce. As one of the nation’s 100 largest ESOP companies and one of a handful in the government contracting area, American Systems’ plan is a clear differentiator when recruits compare organizational benefits and culture. Further, by offering a motivator that aligns productivity with company success, both employees and the company benefit from exceptional performance and growth as well as the contributions to financial success that come from a motivated, united workforce.
In 2009, the Employee Ownership Foundation published its 18th annual “ESOP Economic Performance Survey,” and findings suggest that employee-owned companies perform better overall. When comparing 2008 performance to 2007, the survey data showed:
a) Eighty-eight percent of respondents said creating an ESOP was a “good business decision that has helped the company.”
b) Sixty-five percent indicated the ESOP positively affected overall employee productivity.
c) Fifty-eight percent reported an increase in revenue over the prior year.
American Systems has enjoyed similar results since the inception of its ESOP in 1990.
Several years ago, American Systems commissioned its own blind survey of 125 customers. The results confirmed that “quality of service” ranked as the single most important criterion among factors that customers evaluated during their contractor selection process. Survey findings also revealed that almost 50 percent of respondents believed that employee-owned companies provide higher-quality services than their non-employee-owned competitors.
Little Things Promote Employee Enthusiasm
Since American Systems employees are dispersed across more than 100 work and customer sites, it’s important that employees understand how to represent the company and that they take pride in doing so. Corporate messages and mission are refined twice a year by the company’s president during in-person visits to corporate field sites. To keep everyone up to date, American Systems also uses videos to promote consistent corporate messaging, as well as put a face to the leadership team. Videos are shown at every in-person new-hire orientation and pushed electronically to new hires at field locations via the company’s learning managing system. The same videos are used as recruitment tools at job fairs.
The company also offers community outreach activities that bring employees closer together. These offer employees an opportunity for increased corporate visibility through leadership roles in charity activities such as the Light The Night walks across the country, for which employees raise money for the Lymphoma and Leukemia Society, as well as local educational outreach programs, such as reading to schoolchildren at neighborhood schools.
Employees also are given the opportunity to share their thoughts in annual feedback surveys conducted by each functional area as part of the company’s continuous improvement initiatives and ISO 9000 registration requirements. Aside from the annual survey, employees are encouraged to express any opinions or suggestions through feedback outlets, such as the electronic suggestion box, where employees’ comments are vetted by corporate management. Responses are sent directly to the submitting employee or, if the submission is made anonymously, the response is posted on the company’s electronic feedback forum on the corporate intranet.
Employees are encouraged to praise their peers in the Values and Culture Recognition Program for living the company’s values. Recognized employees are featured in the company newsletter, “Perspective,” alongside those who have service anniversaries and those who have been recently promoted.
While an ESOP may contribute to an individual’s decision to join American Systems, the company’s ongoing efforts to keep employees engaged aim to create a positive corporate culture. Despite the economic climate, American Systems has no plans to cut back any of its employee benefits. By recruiting top talent and leveraging benefits to motivate the team to exceed expectations, the company has a win-win situation benefiting the company, the employees and the customer.
by Teresa Baskerville | Talent Management