Bridging the talent gap in state government postpandemic

| Report

State Chief Administrative Officers (CAOs) across the United States are grappling with talent management challenges in the wake of the changes brought on by COVID-19 pandemic. Often referred to as the “Great Attrition,” tighter labor markets and changing work-life priorities are altering the dynamics in the nationwide race for talent, with workers increasingly demanding meaningful jobs and greater workplace flexibility.1‘Great Attrition’ or ‘Great Attraction’?” The choice is yours,” McKinsey Quarterly, September 8, 2021; “Gone for now, or gone for good? How to play the new talent game and win back workers,” McKinsey Quarterly, March 9, 2022.

To help CAOs navigate this new landscape, the National Association of State Chief Administrators (NASCA) and McKinsey have collaborated on a new report: Bridging talent gaps in state government: A postpandemic priority for CAOs. The report draws on previous NASCA reports on talent management in state government, ongoing McKinsey research regarding postpandemic employment issues in the public and private sectors, and three sources of primary research: the NASCA state chief administrators survey and CAO interviews, conducted between August and September 2022, and the NASCA Nashville survey, conducted at the NASCA conference in November 2022. The report offers insights state leaders can consider for strategic talent management, including the relationship between improving customer experience and attracting candidates with highly sought-after skills. Here is a summary of the report’s key findings:

An acute talent gap is affecting all functions under CAOs’ purview

State and local government job openings rose by more than 150,000 between June 2021 and June 2022, while hiring rates remained stagnant.2‘Great Attrition’ or ‘Great Attraction’?” The choice is yours,” McKinsey Quarterly, September 8, 2021; “Gone for now, or gone for good? How to play the new talent game and win back workers,” McKinsey Quarterly, March 9, 2022. In addition, 72 percent of public- and social-sector or not-for-profit workers who left did not return to the same industries or left the workforce entirely between April 2020 and April 2022.3The Great Attrition is making hiring harder. Are you searching in the right talent pools?,” McKinsey Quarterly, July 13, 2022. Demand for talent in the public and private sector was particularly acute in healthcare, law enforcement, corrections, IT, and engineering.4 These talent challenges resulted in critical resource shortages that have restricted various government services. The NASCA Nashville survey identified “attracting and retaining talent” as the top priority that would improve customer experience for state procurement and IT services.

Employees want more flexible arrangements, including hybrid or remote work

“In an employee market, the first question a prospective employee is asking is whether this job is remote,” said a state leader, highlighting the importance of workplace flexibility. States are currently providing a remote option to roughly 50 percent of workers, compared with less than 5 percent before the pandemic, which represents a particularly significant shift because many state government jobs cannot be performed remotely, such as the work of corrections officers. Our CAO survey indicates that extending flexible or hybrid work is a top three priority for their state’s recruitment and retention policy, which is in line with what employees value. CAOs could make state government positions more attractive by offering workplace flexibility to the modern talent pool for positions in which remote work is feasible. For example, one state enacted a statewide initiative for hybrid work, tasking the state’s CAO to coordinate across all state agencies. The CAO team held collective-labor negotiations and embedded telework into policy throughout the COVID-19 pandemic. As a result, 57 percent of staff were deemed eligible for telework, and 92 percent of eligible employees started working remotely for at least part of the week. CAOs could also proactively support other agencies in adopting flexible work environments by understanding agency-level culture, management practices, technology, and operating models.

Leadership, career development, and diversity are other employee value propositions that attract talent

In addition to workplace flexibility, CAOs could focus on other aspects of their employee value propositions (EVPs) as they seek to boost hiring and improve retention. In a McKinsey survey, for example, US civil servants who were thinking of leaving their jobs cited a lack of career development opportunities, unhappiness with their leadership, and compensation as their top reasons.5The Great Attrition is making hiring harder. Are you searching in the right talent pools?,” McKinsey Quarterly, July 13, 2022. In contrast, our survey with NASCA indicated less than 30 percent of CAOs said career development was a priority, and only 10 percent intend to emphasize developing empathetic leadership. Government agencies could emulate the private sector by offering more tailored training and development opportunities, such as virtual asynchronous training, to upskill employees.

CAOs are exploring unconventional sources of talent to help close the gap

States are casting a wider net for talent recruitment. For example, the number of states expanding priority recruiting to non-state-capital metropolitan areas has increased by 20 percent since the onset of the pandemic, while the number of states prioritizing state capital hiring has declined by 30 percent. Some states are tapping into talent pools that aren’t accessible to the private sector, such as partnering with their departments of corrections (DOCs) and refugee organizations. One state’s CAO organization partnered with its DOC to provide people who were incarcerated with new skills, including computer coding and other skills that were in critical shortage within the state government. After release and with appropriate screening, they were then offered job opportunities into state agencies, with a focus on web development and webmaster jobs. Another state had a large number of Afghan and Ukrainian refugees relocated to the state. The state proactively promoted open job postings to the refugee community to recruit refugees who were highly skilled and seeking new opportunities within the United States.

Inspiring government workers with meaningful work may improve customer experience with state services

There are clear links between talent management and improving customer experiences with state services. In the NASCA Nashville survey, CAOs identified talent attraction and retention as a top priority for delivering improved customer experiences with state services. CAOs could target specific talent challenges such as hiring enough staff to meet the needs of customers and attracting qualified employees who will deliver quality service to ensure that more customers have a positive experience with state services. Furthermore, CAOs can help frontline staff see that their daily work with citizens, residents, and businesses is meaningful. McKinsey research shows that today’s workers want their jobs to have meaning and purpose, and that 41 percent of public-sector employees who plan to stay in their role cited “meaningful work” as the primary reason. CAOs intuitively understand this employee expectation: 57 percent of CAOs responding to the NASCA survey considered “meaningful work” to be a top three element of their EVP for state employees. CAOs could build on the public sector’s bedrock proposition of meaning and purpose that appeal to today’s workers.

Talent management is among the biggest challenges facing CAOs today. As states seek to fill near-term job vacancies and create a stronger talent foundation for the future, CAOs have a critical role to play in attracting and retaining the committed and inspired civil servants the nation needs.

Download the full report, Bridging talent gaps: A postpandemic priority for state CAOs, on which this article is based.

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