Trade-offs Are Inherent in Many Personnel Management Policies and Practices

The personnel cost savings we observed were achieved primarily by using fewer people and downgrading positions. Contrary to expectations, substituting capital for labor or lower wage and benefit costs did not appear to be important sources of personnel cost savings in the competitions we examined. To accomplish work with fewer people, both contractors and government managers employed a wide variety of techniques—multiskilling, organizational restructuring, civilianization, increasing labor availability, increasing labor intensity, and reducing the scope of work. Most of these personnel cost saving techniques were used by both contractors and in-house managers. This finding suggests that neither contractors nor in-house managers have an inherent advantage when reducing personnel costs.