Contractor Staffing Economics

This article explains the shifting trend from private contracting to staffing solutions and why the change involves more than just economic calculus.

Private military contractors get a bad rap but is it justified? If you ask Erik Prince, owner of the firm formerly known as Blackwater, he will surely tell you the blowback is overhyped. That being said, a few operators formerly employed by the now non-existent company face the outcome this week of a jury trial in Washington, D.C. related to their involvement in the Sept. 16, 2007 shooting in Iraq that killed at least fourteen Iraquis and injured another eighteen. This is the private contractor world the public sees.

The reality is that private contractors accomplish more than conventional military forces in a shorter timeframe with better results. This is why private contracting for military and security efforts has proliferated in recent years. In today’s climate of reduced government spending and less public appetite for ongoing wars, it is necessary for security and military operations to not just be effective, but also cost-effective. Private security and military contracting satisfy the need.

Even the U.S. Special Operations Command utilizes private contractors. This is not surprising since many of the elite private contractors come from the ranks of this elite command. Human rights advocates argue that it is a dangerous trend. In a conflict where the enemy glibly beheads journalists to broadcast publicly while at the same time challenging the American President, it is safe to assume the USSOCOM will continue to do what is necessary to defeat these forces.

The Blackwater trial confirms this and private contractors will forever be held to a higher standard. The governments that sponsor them will still enjoy plausible deniability in the event something goes wrong, but the companies employing the contractors will not and they must maintain strict performance and documentation standards. Will this cut into profit margins? It certainly will. But higher standards will ensure the long-term viability of private contractors not only in more effective execution of objectives but also in encouraging positive public sentiment, both of which are necessary to maintain support from Washington.

Accomplishing these improvements requires a shift in perspective at all levels. Rather than viewing the operator as simply a gun-for-hire he must now be seen as a partner in solving a staffing shortcoming.

The contractor’s obligations will include proper vetting, training, and continuing education of contract personnel both before and after deployment. Liability exists at an international level and contractors must maintain thorough and complete documentation on all operators from the start to justify qualifications when the time comes.

The employer’s obligation is to ensure it engages only with contractors that maintain such standards. Employers can no longer look the other way and hope to escape liability from the actions of sub-standard contractors, as well as aboard various U.S. merchant cargo ships employing piracy protection.

Ongoing communication between the employer and the contractor is essential. The relationship should be viewed as a holistic staffing solution and in order to have an effective staff, communication of expectations and performance critiques should be continual. It becomes the contractor’s responsibility to provide corrective action where necessary. This frees the employer to do what it does best – running its business.

While costs in the short-term associated with operator vetting and training may rise, long-term we will witness a retention of qualified, high-level operators. This ensures a force with understanding of the company culture and comprehension of the overall objective. For the company, this means fewer liability issues, less training in the long-term, and the added benefit of employing a contract force that can be increased or reduced commensurate with economic realities. The long-term economics clearly favor this new paradigm of partnered staffing solution.

The Cost-Saving Solution of Outsourcing Training

Want to know a quick way to increase profitability? Control your staffing costs.

One of the fastest ways to improve a company’s operating margin is by addressing it’s staffing strategy, after all, one of the largest expenses to a company is it’s staffing.

Aside from profitability, why should a company choose third party staffing solutions?

Generally, companies are not in the business of training, however, they need well-trained individuals to perform the duties of the job as well as represent the company’s core values. Using a third party provider with a proven track record with well-designed systematic processes will significantly reduce the added cost of designing and implementing these processes themselves. Savings comes down to efficiency. Sending a new contractor through a third party training pipeline allows contractors to seamlessly integrate into a company without expending any additional resources of the parent company.

One of the biggest benefits to outsourcing training is the improved quality control for a company. Sending contractors through a proven vetted program can dramatically reduce a company’s exposure to risk. By outsourcing training the parent company is no longer responsible for screening, testing, interviewing, record keeping or reference checking, which, frees up time to focus on the competencies that drive it’s business. The reduction in insurance premiums coupled with a reduction in ancillary failure costs can certainly provide a platform for increased profitability by removing the fixed expense of having to keep a full time training cadre on hand rather than outsourcing and converting your fixed expense to a variable one based on training needs and flow of new hires.

The private contracting world is laden with a multitude of various backgrounds. Individuals with varying skillsets, ages, personalities, physical adeptness etc, all culminating in a structure-less environment who, are then expected to assimilate together without ever training together under a single protocol. This amorphous system is a recipe for disaster, creating an environment, which, breed lawsuits and failure.

According to Bersin and Associates, who co-conducted a study, coined the “Economics of Outsourcing Training Technology and Operations”; found that companies who outsourced their training saved 31% in total costs.

A solution exists. With the right staffing strategy, you can significantly reduce cost, reduce risk, and most importantly, increase organizational performance.

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