Pay freeze could affect employee attrition

Federal agencies at risk of losing top talent should focus on ramping up their recruitment and retention strategies, particularly in light of a two-year civilian pay freeze, according to human capital experts.

Overall federal attrition remains low, but agencies could face a number of challenges if the pay freeze prompts workers to consider retiring or leaving for the private sector, according to a report from the nonprofit Partnership for Public Service and consultant firm Booz Allen Hamilton, released on Wednesday. Proposals to freeze federal hiring could leave agencies even more short-staffed, so leadership must focus on retaining top talent, the report recommended.

"We're in an environment where you have all sorts of pressure on government's ability to recruit for talent," said Partnership President Max Stier. "With a pay freeze, budget cutbacks and hiring limitations, managers need to double down on retaining the best talent they have today."

The Partnership in a November 2010 report found that while overall federal attrition has declined, nearly a quarter of government hires from fiscal 2006 to fiscal 2008 left their jobs within two years. Agencies also are losing large numbers of mission-critical employees such as nurses and Border Patrol agents, while 13 percent of Senior Executive Service members retired between 2008 and 2009, the report found.

Unwanted attrition has many negative consequences for federal employees and managers, according to the report. For example, it leaves coworkers demoralized, forces managers to reorganize existing work and could cost agencies 50 percent to 200 percent of an employee's salary to fill a single position.

There are several factors affecting an agency's ability to retain top talent, the report noted. According to Stier, government typically does a good job matching employee skills with agency missions but falters when it comes to performance management and rewarding workers for their contributions. Agencies also need to ensure leadership is carefully selected and trained and continue to invest in employee development programs, he said.

"Agencies ought to be examining where they are strong and where they are weak," Stier said. "There are ways of doing it better and ways of doing it worse. We need to hold managers accountable in those [organizational] units."

The report also said tension exists between human resources professionals and line managers in addressing recruitment and retention, and managers reported a lack of support from HR staffs. Line managers and HR employees must collaborate on broad retention strategies, including improved hiring and onboarding, additional training and advancement opportunities, workplace flexibilities and increased pay, the report concluded.

According to Stier, agencies have tools other than compensation for recognizing employee contributions. Managers still can award bonuses and promote workers, but they also can use career development, meaningful feedback and work-life programs to retain top talent. Agencies should use data collected in the Office of Personnel Management's annual Federal Employee Viewpoint Survey to drive better management strategies, he said.

"There's some evidence to suggest the 'go decision' is often based on the tangibles at work, things like pay and physical working conditions," said Ron Sanders, former chief human capital officer at the Office of the Director of National Intelligence and currently a senior executive adviser with Booz Allen Hamilton. "The stay decision is often based on intangibles, things like the relationship to a boss and coworkers and a strong connection to the agency's mission and its culture. In this day and age, when there's talk about pay freezes and hiring freezes, retention strategies that focus on the intangibles can be really successful."

"We have to look at it holistically," Stier said. "Government always is going to need to do some hiring. In an ideal world, [that means] creating a work environment so powerful that great talent wants to come and great talent that's there wants to stay."