What federal contractors are doing to keep employees from quitting

Last Friday, Jamie Brandenburg, CEO of Transylvania Vocational Services, a North Carolina based-firm that employs around 160 federal contractors, met with employees in the company’s cafeteria to address a pressing concern: the government shutdown.

Federal contractors — unlike federal employees — are not eligible for back pay when the government opens up. With paychecks not coming in, companies are growing concerned that employees might look for work elsewhere if the government remains closed.

But TVS, which supplies products to the U.S. Department of Agriculture to distribute to food banks across the country is not concerned about losing its employees.

Brandenburg explained to his staff that for now, the assembly line will continue humming because the company will dip into its own reserves to make sure everyone gets paid.

Along with continuing to pay everyone, the company has made an effort to be very transparent with its employees during this time, says Ann Buchman, vice president of marketing and growth at TVS.

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An American flag flies outside the Capitol building in Washington, D.C., U.S., on Thursday, June 21, 2018. Senate Democratic leader Chuck Schumer and House Minority Leader Nancy Pelosi want President Trump's administration to "exhaust all necessary resources" to reunite asylum-seeking families split up under his now reversed zero-tolerance immigration policy. Photographer: Al Drago/Bloomberg

In the cafeteria break room, Brandenburg detailed to his employees how the shutdown is affecting the company’s contracts and the company's expectations for being able to stay open, Buchman says.

“I was in the meeting and saw a lot of heads nodding, like, ‘OK, great, thanks for taking care of us,’” Buchman says. She added that the employees “really trust our team because we're open and transparent.” Another meeting is scheduled for mid-February if the shutdown continues.

Companies like TVS are on the right track for best handing the shutdown, says Alan Chvotkin, executive vice president and counsel at the Professional Service Council, a trade association for federal contractors.

“Communication is key,” he says. “Tell the employees what you know as best you can to reassure them that you have their interest [at heart.].”

Overall, the shutdown has been a big concern for these companies, and made them think fast on best methods to retain federal contractors. While the government has been shutdown 21 times since 1974, this one is the longest on record with no clear end in sight.

Federal contractors are losing up to $200 million a day in lost or delayed revenue according to data compiled by Bloomberg. With the unemployment rate the lowest it’s been since 1969, the stage is set for employees to leave if shutdown drags on.

“Companies are doing everything they can to hold onto their employees in a paid status for as long as possible,” Chvotkin says. He notes companies are asking employees to take paid leave and holding annual training sessions now rather than later in the year.

“They're trying to find if there's other work within the company that the employee can be assigned to instead of being in a position that has been denied work,” Chvotkin says. He adds that other companies are reducing salaries across the board, so there’s more cash available for payroll to keep contractors on the books.

“It is easier to retain an employee than it is to recruit a new employee,” Chvotkin says. “I think that that's true of government contractors; I think that's true of all marketplaces.”

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