Booz Allen puts new date on facility reopening as its 'Future of Work' takes shape
By
Ross Wilkers
Booz Allen Hamilton's workforce agenda has two main parts to it: reopening company facilities, which will drive its "Future of Work" vision, but there also is the challenge of the vaccine mandate.
How Booz Allen Hamilton vision for the post-pandemic future of work remains unchanged as the company expects the majority of its workforce to mix remote and in-person under a hybrid model.
But the timeline for a complete rollout of that vision has changed somewhat. During Booz Allen’s fiscal second quarter earnings call Friday, CEO Horacio Rozanski said the firm delayed the full reopening of its offices to Nov. 22 from the intended date of Sept. 7 given the COVID-19 Delta variant’s summer wave.
SIDEBAR: Contractors face vaccine challenges
Regarding Booz Allen’s internal dialogue with employees on the vaccine: we are certain such conversations are taking place inside other government contractors too.
Some of those contractors at least have in mind the possibility they will lose employees that decide not to comply with the vaccine mandate.
During Raytheon Technologies’ third quarter call Tuesday, CEO Greg Hayes said there will be some disruption to the supply chain and further amplify the ongoing labor shortage there too.
He put a rough number to what Raytheon is planning for in a television interview that day too.
“We’re going to potentially lose several thousand people who refuse to be vaccinated," Hayes told CNBC. "Now this is a tough thing, but we are preparing for it."
Roughly 83 percent of Raytheon’s 125,000 employees are vaccinated with another 6 percent “in the process” of doing so, Hayes added. The remaining 6 percent are divided equally between those seeking a religious or medical exemption and those who do not intend to receive the vaccine.
Both Raytheon and Northrop Grumman have said they are increasing their hiring efforts in anticipation of some losses of employees.
“It’s really too early to predict what those impacts might be, until we have a better sense of not just the pure quantity of employees who may not meet their requirements, but where they work and what they do in our company,” Northrop CEO Kathy Warden said in the company’s third quarter call Thursday.
At this juncture, the outcomes hang in the balance.
That will complete the phased reopening of offices that have stayed closed since March 2020, even though some spaces will likely never be fully occupied again.
“Our people did an extraordinary job staying connected over the past 19 months,” Rozanski said. “But just like Investor Day, there are times when being face-to-face is best.”
A key aspect of Booz Allen’s reopening will be the vaccination rate of its nearly 29,000 employees. Federal contractors are under a Dec. 8 deadline to get the COVID-19 vaccine, absent the limited religious and medical exemptions.
Internal discussions are ongoing about how Booz Allen is going to fulfill that mandate, of which Rozanski said the firm has a similar policy. Booz Allen also is aiming for a 100-percent vaccination rate and hence retaining every employee to keep its link strong between headcount and business success.
“Much like we've done everything, this has been a subject of rich, internal conversation. I personally held a couple of town halls,” Rozanski said. “The last one had several thousand people who attended, where we talked about it and took questions and had a very open and frank discussion, which was challenging at times but important. All of our leaders have done that, too, in their respective businesses.”
Booz Allen’s headcount as of Sept. 30 was 5.8-percent higher than that over the prior year period and the company added 1,500 employees in its fiscal first half.
Second quarter revenue climbed 4.3 percent over the prior year period to $2.11 billion, while the bottom line rose 12.8 percent to $270 million adjusted EBITDA (earnings before interest, taxes, depreciation and amortization).
Helping that profit number was the renewed ability to fully bill intelligence agencies for Booz Allen's expenses plus its fees, which drives its profits. Booz Allen and other federal contractors have been able to use the CARES Act economic relief law to ask for reimbursement from agencies for labor costs if their employees could not access closed government sites during the pandemic, but the fee was not covered.
The company is holding to its fiscal 2022 outlook that sees revenue growth of between 7 and 10 percent and a middle-10 percent adjusted EBITDA margin.
NEXT STORY: George Wilson calling it a career at ECS Federal