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How State Governments Can Address Their Workforce Talent Crisis

Technical fixes can help, but there are other ways governments can make public service more attractive. Here are four promising approaches.

"Be a NJ State Trooper" sign
New Jersey is using traffic information signs along the New Jersey Turnpike and other roads to recruit state troopers with a message appealing to a strength of public service: a sense of purpose. (New Jersey State Police)
One kind of crisis comes out of nowhere, like COVID-19. Another comes in the form of a slow burn, getting worse gradually. State governments generally coped well with the onset of the pandemic, adjusting operations quickly. Now they face the second kind of crisis: a large and growing workforce talent gap.

Since the pandemic began, the number of job vacancies in state and local governments has more than doubled. In late 2022, 59 percent of state and local government workers said they were at least considering leaving their jobs. From 2016 through 2021, the number of applications per government job fell every year, declining by almost half. No wonder that, in a recent McKinsey/National Association of State Chief Administrators survey of chief administrative officers (CAO) from 29 states, almost two-thirds named bridging the near-term talent gap a top-three priority.

Some technical fixes, such as the integration of data into HR processes, can help. One federal agency created a central workforce planning function to forecast skills gaps. But if governments are working from the wrong premises, even the most precise analytics and responsive technology will not achieve much.

To meet current and emerging workforce challenges, both public- and private-sector experience suggest four approaches that can make a difference:

Formalize flexible work. The trend — and demand — for remote, flexible and hybrid work is the single biggest change wrought by the pandemic, and it is not going away. State employees name workplace flexibility as a top-five reason to stay (35 percent) and lack of it as a top-five reason to leave (30 percent). Of course, for some state government jobs, such as in public safety or corrections, on-site work is essential. That said, in many situations flexible work works.

To concerns about whether remote or hybrid work models are as productive as traditional practices, there are two answers. First, one needs workers in the first place for them to be productive. And second, some states have created operating models that seem to be effective. At least one, for example, has migrated statewide performance management tools to the cloud so that managers, department leaders and the governor’s office can see them wherever they are. Another state agency adapted staff and managerial training to the hybrid work environment, condensing more than 400 pages of complex onboarding materials into a simplified set of digital job aids. The result: faster hiring and improved productivity.

Emphasize purpose. The public sector has a strong starting position for talent attraction. Today’s workers are placing a greater value on purpose — something that is (or should be) embedded into public service. “Meaningful work” is the second most important reason (after compensation) that state and local government employees give as a reason to stay on the job. Purpose should be a highly visible part of the employee value proposition, especially as many private-sector employees, including in many technology roles, consider their next steps.

Explore unconventional talent sources. In a tight labor market, it can be useful to cast a wider net along two dimensions: people and place. In terms of people, one approach is to hire for skills rather than credentials. Software coding boot camp graduates, for example, may have the computer skills an agency needs, though not a college degree. McKinsey research has found that skills-based hiring is a much better predictor of job performance than either education or experience, and there has been a distinct shift in the private sector in this direction. A number of state governments, including Colorado, Georgia, Maryland and Pennsylvania, have reviewed and then removed degree requirements for a big share of jobs; it will be worth evaluating the results.

Public agencies are also well positioned to liaise with state institutions to identify possible hires and leverage connections that may be less accessible to the private sector. For example, states are linking job vacancies to the labor agency database, working with corrections departments to train individuals for government jobs and conducting targeted searches among recently arrived refugees.

In terms of place, expanding the search for talent sources outside the state capital region can also help to diversify the candidate pool and lower real estate costs. Our survey of CAOs found that several states have started to reprioritize their target recruiting regions following the pandemic and linking the strategy to the state government’s real estate footprint.

Create a cross-functional talent team and equip it with both data and decision-making authority. Ideally, this team of recruiting, hiring and functional experts will have a physical and/or virtual operational space; it certainly should have access to relevant data and performance indicators, as well as clear goals. One federal agency, realizing that it wasn’t keeping pace with its hiring needs, created just such a team and gave it the mandate to accelerate hiring. The team got the data it needed to understand where the bottlenecks were. In response, it created a new hiring plan and metrics that track actual versus planned hiring. It’s in its early days, but so far the results are encouraging.

Demands on government are growing, the labor market is tight, and many state government employees are restless. There is a common thread, and solution, to all these challenges: improving the recruitment, development and retention of talent. By building on their strengths, and learning from both the private sector and each other, state governments can cool down this slow-burning crisis.

Richard Choi is an associate partner in McKinsey & Company’s Chicago office. Drew Erdmann, a former chief operating officer for the state of Missouri, is a McKinsey partner in St Louis.
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