War for Talent Rages On – Human Capital Management Snapshot from 11th Annual Deltek Clarity Study
By Amy Champigny, Senior Product Marketing Manager, Deltek
The most consistent human capital management trend that the Deltek Clarity Government Contracting Industry Study has reported year-over-year is unchanged for 2020:
Seventy-three percent (73%) of participants are struggling to find and secure qualified talent.
With unemployment numbers in flux due to the challenges of the COVID-19 pandemic, this finding may be a tough sell to the human resources community as a whole, but within government contracting spheres, it is a pervasive problem.
When the 11th Annual Deltek Clarity Government Contracting Industry Survey concluded on March 2, 2020, the United States had not yet entered a nationwide shutdown. The leaders surveyed reported on how their government firms performed in 2019, as well as their predictions for the 2020 fiscal year. This year’s Study saw more than 380 completed survey responses across nine business areas. The findings provide a comprehensive snapshot of the market and include additional insights on the potential effects of the pandemic from Deltek’s experts.
Clarity on Human Capital Management
Talent Acquisition Challenges
The in-depth webinar Clarity on Human Capital Management analyzes the key acquisition, human resources management, engagement, retention, and development trends and challenges reported by government firms of all sizes. Similar to years past, the top three talent acquisition challenges are mostly unchanged:
- Availability of good candidates in the market place
- Attracting better qualified talent
- Matching qualified talent to open positions.
Most contractors also report an increase in the number of open positions, primarily due to growth, and that for a majority of small, medium and large businesses the average time to fill a position takes between 31 and 60 days. Contractors are working to find internal bottlenecks so they don’t miss out on right-fit talent. Other strategies noted for addressing talent acquisition challenges include outsourcing of recruitment, increasing employee referral incentives, and rebranding to reach better qualified talent.
Human Resources Management Struggles
Human resources management has its own impediments, as detailed in the Clarity Study. Retaining top talent is on the minds of 59% of contractors, with implementing effective performance management and strategic workforce capacity and planning rounding out the top three reported by firms. Retention woes could be attributed to expired contracts, generational shifts or passive recruiting from other contractors or commercial businesses. One startling result shows 69% of employee engagement surveys are taking place as part of exit interviews/surveys for employees. This is likely contributing to retention issues in profound ways, because, by the exit interview, top talent is already lost.
For medium and large businesses, the reported full-time equivalent composite turnover rate is concerning. Both note that they are experiencing a 16% or higher rate, medium 32% and large 47%. Small businesses seem to be having more success, with more than half showing zero to 5% turnover. With rates on the higher end of the spectrum, contractors are likely struggling with consistency across projects and management.
Though most contractors reported not having formal career development plans in place (79%), human resources managers point to offering more career development programs as the top avenue to address some of these challenges. Creation and communication of human capital management metrics is another course of pursuit for leaders, as is overhauling reward and recognition programs. Some of the top human capital management metrics, or key performance indicators (KPIs), that were identified as consistently important are:
- Time to fill positions (56%)
- Voluntary turnover (56%)
- Employee retention (55%)
- Involuntary turnover (44%).
While these metrics are traditionally tracked, they are not the most actionable and organizations seeking improvement should look to metrics that test the success of hiring and retention practices more directly. Other human capital management business indicators that emerged from the Clarity Study include average new hire to bill time – 23 days – and with a 40% decrease year-over-year, the average annual training spend per full-time equivalent employee is slightly less than $1,200 per year.
Human Capital Management Technology Trends
Moving up from last year, the most identified technology trend in human capital management is continuous performance management (72%), which is a positive trend given the changed circumstances resulting from remote working arrangements. Total workforce planning is the second most noted (61%), with candidate relationship management solutions rounding out the top three.
In terms of the last time human resources solutions were significantly added to or replaced entirely, a majority of small and medium businesses (total of 60% and 64% respectively) reported this had taken place within the last one to three years or more than five years ago. Large businesses showed they are the most likely to have made changes within the last five years, a slight majority of which (32%) making changes within the last year.
Keeping Human Resources Teams Compliant
Compliance continues to be a moving target for human resource leaders within government firms. A majority of small, medium and large businesses stated they found staying on top of changing human resources compliance issues either challenging or very challenging.
- Small businesses – 65%
- Medium businesses – 65%
- Large businesses – 84%
Topping the list of concerns for human resources compliance are keeping up with ever-changing regulations, understanding new regulations and their impact, and incorporating emerging technology into existing processes.
Even More Results
What is unchanged in the 11th Annual Deltek Clarity Government Contracting Industry Study are the challenges of finding, recruiting and retaining qualified talent within the sector. Talent shortages and the lure of commercial work have many human capital management leaders evaluating the competitiveness of compensation packages, the strength of formal career development programs, and reward and recognition approaches to maintain critical staff levels in key roles during this period of uncertainty. COVID-19 was the monkey wrench few expected for 2020, and its impact on the day-to-day of human capital management continues to be murky at best.
Helping to clear up some confusion are additional results from the in-depth Clarity on Human Capital Management webinar. Download the complete session to hear takeaways like how the COVID-19 pandemic response so far has the potential to shape human capital management futures, why performance management practices are not effective, and how annual surveys and staff development are important keys to talent retention.
Still hungry for additional Deltek Clarity Government Contracting Study results? Explore the complete, in-depth webinar series.
You can also download the full Deltek Clarity Government Contracting Industry Study at any time.
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