In The Public Eye: Navigating the Public Sector Workforce Crisis

Intro (00:00):
Welcome to the Alliant In the Public Eye Podcast, a show dedicated to exploring risk management topics and challenges faced by today's public sector leaders. Here is your host, Carleen Patterson.

Carleen Patterson (00:18):
I know it's been a while, but welcome back to another episode of "In the Public Eye." So anyone who knows me, I'm Carleen Patterson, and I am with Alliant Insurance Services. And I'm very passionate about total cost of risk and how our clients and prospects can help drive costs of insurance, and we always talk about a lot of the different elements, whether it's premiums and how can we impact your premiums. We talk about ways to control claims costs, but we're going to talk today about something that I don't talk about very often, which is the administrative costs and what goes into that. The biggest piece of it that I'm talking about here is the people. The people that are in your risk management program and impact that program, and when I talk about people today, it's actually going to be talking about the lack of people and the issues within public sector and the workforce crisis. To help me do that today, I am pleased to invite Scott McNea from Alliant Insurance Services to the podcast today. Scott, welcome.

Scott McNea (01:22):
Thank you very much. I appreciate you for having me.

Carleen Patterson (01:25):
Absolutely. So before we dive into the public sector workforce crisis, do you want to tell us a little bit about yourself and your background and how you came to be interested in this workforce crisis?

Scott McNea (01:39):
Absolutely. Well, I'm a 17-year veteran of the insurance business, having been with a very large single property carrier for the majority of my career. Starting in engineering, loss prevention, working my way into mentorship roles, into the account engineering and ultimately becoming an underwriter.

Carleen Patterson (01:57):
Alright. You've presented on this at some of the industry association conferences. So, how did you get interested in what's going on with the public sector and the challenges with the workforce?

Scott McNea (02:09):
Absolutely. As we started working with clients in the industry and hearing their difficulties with finding qualified and talented people to fill roles, it was determined that there was just more and more opportunities for people and less people filling them. The more the aging workforce. And as baby boomers retired, taking decades of experience with them, it really created holes in their workforce, and I kept hearing about it, getting more interested in finding out that this was a phenomenon that was globally.

Carleen Patterson (02:38):
Yes, absolutely. I’ve been talking to clients, and we've been talking about some of the workforce shortages when it comes to the vendors and trying to get around the challenges of having people to fill the roles that they're outsourcing and the challenges around that. So I'm really interested to dive a little bit more into the workforce shortages within public sector and how it's affecting our local government, state government, even the federal government. So maybe could you expand on what's caused it and how it's impacting public service?

Scott McNea (03:14):
Absolutely. As you said, this is a global workforce crisis, but it is disproportionately affecting the public sector for several reasons. The most obvious is that it's tough to compete with the private sector. Private sector can usually hire people faster, they can pay them more, and then many times they have benefits that can compete or exceed with public offerings. You take that as well as I said earlier, the baby boomers are retiring, the aging workforce and young people really aren't having as many kids as our previous generations did. In fact, 2020 was one of the lowest birth rates for our country. And so because of that, this disparity between qualified people and the need is growing. We started to see the participation rate in the labor force starts to deteriorate after 2008. It slowly started going down by percentages since then. But once the COVID-19 pandemic hit, that really just changed the game. The consequences that were suffered by the workforce, we have not come out of that yet. And to be honest, there's actually more open jobs than there are qualified workers in the country.

Carleen Patterson (04:22):
Yes. After the pandemic, everywhere you went, you saw help wanted signs, right? And your local city can't just hang up a help wanted sign on that front door. So, it's interesting you talk about the qualified workforce. Tell me a little bit about where you're seeing some of the deltas between the positions that are open and when you say "qualified."

Scott McNea (04:46):
Absolutely. And when you say where we're seeing it, the impact is throughout all facets of government help. Whether you're talking about public transit, utilities, power, water, infrastructure, sewer, maintenance, law enforcement, first responders, education, every one of these facets is being affected by the shortage. And when I say qualified, you have your senior personnel that are there to oversee, to manage, to train, to make sure that everybody within the organization knows what their role is and has the opportunity to grow into that role. Making mistakes, learning from them and being coached and taught. The more and more we don't have these senior leadership roles available and these qualified people that know the business and how to grow their workforce, that it negatively impacts, and it becomes a self-fulfilling prophecy where we don't have the people, we can't train additional ones. And then that weight of the job falls on the few people that are there, increasing their responsibility, which leads to burnout and additional turnover, and it just constantly begins to perpetuate into that motion until people eventually leave. As we said before, there's more jobs open than there are people to fill it. So if people are unhappy, they can always go down the road and find a competitive offer.

Carleen Patterson (06:11):
Yes, and even when you say people are leaving, how about we talk about the people who are retiring? When you're in public service, you can retire much earlier than the rest of us. There are folks that as that burden comes down to them, retirement looks more and more enticing. I have clients where they've seen complete turnover in some of their departmental leadership because of that very thing. They don't have the people anymore, it's fallen back on them and they're fed up. And so you're right, it's a continuing cycle, and it's a downward cycle when it comes to that. I think some of the areas where I've seen it and maybe when it comes to the fact that you have required services as public entities, right? There are services that you are providing to the public, whether it's trash pickup or law enforcement, public safety, whatever it is, and getting those people, the right people. I'll use an example where you have to pick up the trash, and so you want people who know how to drive those large trash trucks, right? And the hiring standards have had to be lowered to accommodate the fact that they need to have drivers. That impacts your workers' compensation, impacts your auto liability, it impacts your auto physical damage and the money that's going to have to be paid by the entity if they do have to lower those standards. So it is something that not only when it comes to having the people there, the appropriate people with the leadership, but also being able to fulfill the services that they're required to provide to the public. It does have a big impact exactly.

Scott McNea (07:50):
Yes ma'am, and you hit the nail on the head. And again, that example you just made, you could really see that to all these other segments of public service. There’s always the old adage about longer lines at the DMV, but you think about that same thing, longer wait pickups on your trash, which can lead to sanitary issues or smells or rodents or animals that want to get into it. Or longer wait times for assistance and support from first responders, deferred maintenance on critical infrastructure that are necessary for people, and then patients and the healthcare, decrease in student school output. That all just erodes trust in the community and in the government and then people leave, and that's less money coming into the facility from taxes. Like you said, it's this downward spiral that continues to bring down the trust and harmony within their civilization.

Carleen Patterson (08:43):
So what did you mean when you talked about, we talk about the services that can be provided. What did you mean by deferred maintenance, and how is that impacted by the lack of workforce?

Scott McNea (08:54):
Yes ma'am. There's been many instances where a municipality or a utility structure will unfortunately have to prioritize maintenance over standard inspection routines because of the lack of people, which at the time may not seem like enough. But when you're not doing your preventative maintenance checks and your preventative maintenance inspections and testing, the deterioration of that infrastructure can actually fail. For example, if you've got water pipes, you have to be able to do inspections on the water pressure at two different sections to make sure there's nothing causing an issue between the two. You got to check your water meters to make sure that they're working so that you know if there's a leak down the line or if you know how much business is utilizing. You have to turn your valves from time to time so you can move the lubrication oils within them, so if you need to shut them down in a hurry that you have the ability to do that without wasting water, causing more property damage to whoever's getting that water. And so when they fail big, it's usually death from a thousand cuts where it's not just one big break, but it's one big break that you have the inability to shut off the valve and you got to go downstream and you create two more issues because of pressure differentials. It can really exacerbate a problem, which is, like you said, cost of risk. The more money it's going to cost to fix it, the more money it's going to cost to come back and prevent these issues from happening. If you don't have the support and the assistance, you end up having to farm that work out to professionals in the private sector, which again can exacerbate the cost of getting this corrected. It all goes back to the trust in the government and trust in these organizations to take care of you because as we all know, these critical infrastructures and these critical services, they almost become dependent on them and they don't really feel them until they're gone. That’s when the consequences can really start to spiral.

Carleen Patterson (10:45):
Yes. I think you and I chatted a little bit earlier when a great example of that is what happened in Mississippi in Jackson and the issues that spiraled out of control. It started with the fact that they weren't taking care of their stuff, which is what we're charged with doing much earlier. It did spiral into something much, much bigger. When people pick up a phone and dial 911, they expect somebody to answer, and they expect to be hearing the sirens practically as they're dialing, right? They want that quick response time. You’re right, it's really impacted law enforcement being able to fill police academies and fill the classes. It does come down to the quality and the people passing background checks, and those are areas where you don't want to skimp and you don't want to carve back on the requirements for sure. It’s an issue. We've outlined that. We know that it is causing some problems with the public sector, so are there things that public entities can do about it? Back in the day they used to be able to attract people with very robust benefits, great pension plans, that kind of thing. We’ve seen that go away over time, or at least it's not as robust as they used to be. Are there things that public entities can do to help with this crisis?

Scott McNea (12:06):
Yes ma'am, there are. As you said, this is being felt by so many organizations that public policy experts have agreed that tackling the crisis is going to take some work. There's many different entities of public policy experts who have offered some, but they all seem to agree in about five solutions to this crisis and things that they can do to try to tackle it and get ahead of this issue.

Carleen Patterson (12:28):
Well, I was going to say, do tell me what are those five?

Scott McNea (12:33):
Oh, absolutely. I can dive right into it. The first solution that they all agree on is revising the qualifications and the educational requirements for the job. Obviously there are some positions that require a degree by law, but other ones may not need so much education. Does a four-year degree a requirement or will a two year or associate's degree or a certification of professional knowledge be able to do the job? Not only that, a lot of these high schools in Texas and the nation have many, many programs for professionals to start to develop these professional skills well before they even enter the college environment or the secondary education. The other aspect we talk to people about is really what matters to you for the job. When you're looking for a candidate other than just a requirement, do you look at things like previous work experience or previous military experience? Can they work together collaboratively on a team? Are they goal oriented and be able to solve problems? Can they communicate effectively? Are they work independently? Are they mature, responsible, show up on time? And these are the things that really, really matter. You can have an educated person that doesn't fit those models and really which one's going to be better for your organization.

Carleen Patterson (13:51):
Okay. Alright, what else?

Scott McNea (13:53):
The next one that they all agree on was building a better workplace culture through employee experience and engagement. These new generations, they don't really want what previous generations want and what was important to them may not be important to previous workers that came before them. Nowadays people want meaningful work, and they want to work with competent and responsible management. They'd like to work in a positive work environment, focused on things like health and wellbeing, work life balance. They want to know that they have an opportunity, and that there's growth in that role, and they have the appropriate training and the tools and the commitment from their leaderships to help them grow. When it comes to building that culture, we got to listen to our employees. And part of that, that employee engagement is how do you receive that feedback? Gone are the days of having the wooden complaint box that you put in there anonymously, even though everybody recognized your handwriting. Now we ask, are you doing surveys? Are you surveying your people? There's many free websites to create surveys for your employees that they can bring anonymously. And then not only that, you've got to take that information, and you've got to do something with it. Are you having town halls with your employees? Are you asking for additional feedback? Are you implementing some of the ideas and the things that they'd like to see in their workplace? Because remember, if they're not happy, they're going to go someplace else where they are.

Carleen Patterson (15:18):
That's the thing is actually taking the results from those surveys and actually turning them around and using the results from that and doing something like that. You touched on the culture and managers and upward growth and opportunity. There's a lot of different things in there that really do drive a positive culture. Unfortunately there's a lot of people who become managers because they were really good at the job that they did, but they're put into a management position, given a team with no tools on how to manage those people. That really can lead to some worse workforce disgruntlement. So there's a lot of things in those solutions that you just put up that an organization really has to invest in their people. That's really what it comes down to, is investing in the people that they have and hopefully they can attract that new talent. There's one thing that you didn't touch on when you were talking about those solutions. Where's money in that? I didn't hear you talk about money.

Scott McNea (16:22):
That's true. That's another one of the solutions is unfortunately the public sector, they are disproportionately underpaid as opposed to their private sector counterparts. Before the pandemic, it was around 13 to 14% of a difference in wages between the two. But because of that, it is now upwards of 18 to 20% difference that people can leave the public sector, go to the private sector and almost get a 20% increase instantly. Unfortunately, offering competitive salaries and benefits is part of that equation, but I would task the organizations to ask, it's not all about money, what are the other things that are the unique benefits of public sector employment? Many times the monetary value of these benefits are really still competitive. Having additional PTO days or the ability to have flexible work environments or the ability to take and do work home just so they can have that time with their families. Not only that, but also factor in those differences between having those benefits and having not. I would also say what's important to your city? What's special about your organization that you can offer, whether that's great museums within your city or the opportunities to get discounts on other items. These things do factor into an employment because people do have pride in their community, and they want to work, and they believe in public service. So sometimes a little bit more enticing, sometimes offering a little bit more on those sides can really attract the talent that you're looking for.

Carleen Patterson (17:59):
Have you seen, after a pandemic, we've seen more and more on the private side where there's a lot more hybrid virtual situations for working. Have you seen where public entities are being a little bit more lax when it comes to allowing people to work from home? Or what are your thoughts on that?

Scott McNea (18:19):
Yes, obviously there are some roles that cannot be done at home. Your first responders, your managers, your utility organizations, but being able to work with your employees that can work from home, or sometimes being able to do their administrative work on Mondays or Fridays from a home computer, that is a benefit that not everybody can get. We're seeing the ability of that actually overtake many organizations. There's still many public and private organizations who haven't really warmed up to that idea, and then there are some who are just full-fledged and believe in it. There's still fear from a lot of the organizations that people are going to stay home and slack and watch TV and not really get the job done. But we're seeing actually the opposite. People's productivity is really going up when they have full freedom of their schedule. When you take out things like long commutes and time to get your hair done and your clothes ironed and all that stuff, when you take that time out and you add that towards somebody's schedule, it really does brighten their day and productivity does go up. And so because of that, that increased productivity that we're seeing a lot more organizations are really allowing that and expanding it.

Carleen Patterson (19:29):
Oh, good. Do you think that AI is playing a role in contributing to this crisis? I know I'm jumping around a little bit, but some of the things that you say triggers some thoughts, but when you talked about maybe looking at your qualifications and the requirements in that, are you seeing that AI is playing a role in that first brush from applicants? That kind of thing, are you seeing that in the public sector?

Scott McNea (19:54):
Absolutely. It's no secret that AI is starting to work into the technology on almost all the platforms that we utilize every day. You mentioned that getting into the hiring process on that, and that's really something that the public sector is really getting left behind. On average for the time it takes for a public entity applicant to go through the interview process and get hired, an average is about 120 days. One hundred twenty days is almost a third of a year. Whereas the private sector can get that done in about 36 days on average, which means sometimes it's probably less than a month for them to get somebody, apply, interviewed and into the workforce system. AI's really helping that system and helping them weed out those applicants. That's actually the final of the things that we can do to fight this as public entities, is to really streamline that hiring process. Obviously we want to make sure we get the right candidate, but we can get the right candidate in the role earlier than a third of a year. Utilizing these tools, utilizing AI embedded software to help us get the people we need and make sure that they have the qualifications they need. Also, really going after the talent you want. Are you working with recruiters? Are you working with your online platforms? Are you working with your colleges and your universities that are in and near your cities and your states and your organization? Doubling down on internships and working with your local career fair? Remember, the next leader of your organization might be closer than you think, and they might need an opportunity to keep them in their city and keep them in their hometown with having that pride towards helping their community. They're going to be there for you, but if you're not looking for them aggressively, somebody else will.

Carleen Patterson (21:41):
I've heard people complain that they don't want to take the time with somebody who is inexperienced coming out of an internship or a college situation because they need them now and they may need them functioning now. There's something to be said for investing in someone who is inexperienced. I always say you can teach insurance and risk management or whatever else it is that public entity is looking for, and it's looking for the right people, the right personality, everything else. Qualifications can be a little bit more subjective then if you're hiring a person and not a degree.

Scott McNea (22:20):
That's absolutely correct.

Carleen Patterson (22:22):
So I think we touched on most of the things that public entities can do. What are things that as public entity leaders can do to help with this crisis? Is there a call to action, so to speak?

Scott McNea (22:35):
Oh, absolutely. You can't wait until it's too late. In sports, we used to say, you got to have a deep bench for critical positions. You can't just have one guy and one gal and a backup, right? You've got to have not only the backups, but you have to have a transition for growth for those younger, inexperienced personnel to work their way up to the ability to be able to not only teach but manage and then lead these organizations. I tell a lot of public entity leaders to really analyze your current needs, analyze and think about those future needs. Know who your people are, make sure that you're listening to your employees, listening to their feedback, and implementing the things that would make your facility better and make the quality of your work environment better. Talk about those discussions on benefits and growth, and then collaborate together with them on innovation. You never know when the great next idea is right there in your organization. By reaching out to the people that are on the front lines of your industry, they're going to be able to help and lead you in the right direction.

Carleen Patterson (23:40):
Just like you can't manage risk from your office, you can't lead an organization from your desk either. You really do need to know who your people are, trust those people, and make sure that you're listening to them and reaching out to them because they're the ones that absolutely, like you said, they're in the trenches, they're on the front line, and they understand the needs and what's going on within the organization. So that's a really, really good point. Any closing thoughts, Scott, with regard to this that we didn't touch on? Anything?

Scott McNea (24:11):
Well, I always say that one of my favorite quotes was Teddy Roosevelt, and I usually end a lot of my discussions about this with "do what you can, with what you have, where you are." You might not have a great budget to hire lots of people, and you might not have that employee culture embedded, but you can start today. You can start to work on your organization and make it 1% better every day by doing what you can, with what you have, where you are. People within your organization will feed off of your desire to make their lives and their work environment better. Your constant improvement attitude will bleed out to other people, and that's how your stars and your risk management leaders will start to identify themselves as your company grows. You'll learn the people that want to help you grow and the people that want to stay stagnant in their organization. Again, we need all walks of life, but as you're going to grow and start to develop additional leaders in your public entity, in your community, it takes that attitude of consistent improvement and making sure you're doing the best.

Carleen Patterson (25:16):
Well said. That is absolutely well said. Well, thank you Scott, very much for joining us today. It is a challenging time to be in public sector risk management and being in public sector in general. And we here at Alliant are focused on providing continued information and resources as we navigate these challenges today and in the future. So thank you very much and stay tuned for our next episode.