An integrative organizational model for federal contractors

November 3, 2016

 

Picture the following scenario. You're a technical resource working for a mid-sized federal contracting company. You're in an all-hands meeting where management discusses company wide results. You contemplate two paradoxical scenarios: company as a whole may be doing great, but your particular contract is in jeopardy (A). Or conversely, company may be doing poorly, but your contract is safe and sound (B). In either scenario, you could care less about the state of the company: you aren't safe in case A, and chances are you will be just fine in case B. Your own personal interest is not just misaligned with those of the company; it is inversely aligned! 

 

This apparent paradox points to a de-facto reality in federal contracting: most such companies are collections of contracts and nothing more. More-over, each contract is oftentimes a loose collection of skills. Contracts act as skill warehouses, while companies themselves can be regarded as contract warehouses. Each technical resource is his or her own silo, and the workforce as a whole bares strong similarities to a group of professional mercenaries. 

 

The fragmentation underlying the typical business model leads to a lose-lose labor-management dynamic. There is no mechanism to incentivize or allocate labor the time to integrate front-end knowledge horizontally and up the chain. Management therefore doesn't benefit from customer facing insights that could be turned into profitable actions. If knowledge were to be integrated and leveraged into profit, there is no mechanisms for circling a share of the benefit (profit) back to knowledge originators. The result is federal contracting companies that remain frozen at the same size for decades. They neither grow nor vanish.  They are train stations unable to recognize and retain great talent before it embarks on a train to a new destination. They simply exist by extracting marginal value from an ever-transient workforce. 

Turning this reality around would mean reversing the fragmentation behind much of the federal contracting business model. An integrative approach could achieve a win-win labor-management dynamic. Here's how this could work in practice. Management would consistently and strategically reallocate a portion of overhead back to the front-line technical resources (rather than using overhead for the sole purpose of hiring well-connected executives). Something akin to the Google 80/20 rule could be applied to give certain technical resources time outside direct billable hours. This time would be used for knowledge integration - distilling company wide value from task specific and contract unique day-to-day insights. Management would then be challenged to package and commercialize newly generated knowledge constantly flowing upward. The result might be anything from improvements to internal processes, to public sector seeded solutions with commercial market potential, patents, branding, spin-offs, and the like. The bigger picture result would be unlocking of sustainable growth. Closing of the win-win circle would be achieved by mechanisms for sharing in the benefits of sustainable growth by front-line technical resources.

 

In this proposed integrative model for federal contracting, management would indeed value employees as the company's greatest resource; the employees themselves would attend all-hands meetings with the very real expectation of concrete and potentially substantial incentives. 

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