Making the Cost of Affirmative Action Plans More Palatable

By William H. Truesdell, SPHR
President, The Management Advantage, Inc.
Merit Resource Group Strategic Business Partner

Don't let anyone fool you. Complying with federal affirmative action regulations is an expensive proposition. It takes internal resources to develop the program initially and to maintain it throughout the year. The federal government says the average time required per contractor to develop an initial Affirmative Action Plan (AAP) is 179.5 hours. Updating the AAP on a yearly basis as required will cost another 74.9 hours per contractor, according to the government.

That means the Affirmative Action Officer in your company will have to dedicate four and a half weeks to nothing but AAP development, once the company secures a federal contract worth $50,000 per year and the payroll sits at 50 or more workers. No answering the phone. No sitting in on staff meetings. No recruiting or open enrollment activities or counseling line managers -- just developing your AAP.

In real life, few if any HR professionals can dedicate such large blocks of time to any project.

In addition to development time there are the costs of AAP implementation. This includes training all managers who are active in employment and selection decision-making as well as others in your Human Resources Department that need to know the content of your new AAP. These training obligations are also requirements of federal regulations and can't be ignored.

You must also factor in the costs of applicant tracking, and maintenance of logs capturing data on new hires, promotions and terminations. And don't forget the cost of preparing data files each year that will be used to update your AAP and compute Impact Ratio Analyses and Job Area Acceptance Range analysis reports.

Add all of this up and if you are a new contractor with only a $50,000 contract you may by wondering why you sought out federal business in the first place when all your profits seem to be going to developing and implementing your AAP. It's a fairly common question asked among smaller employers. And the answer lies in how they choose to view the future.

We suggest you work with your company to pursue additional federal contracts. The incremental cost for AAP maintenance is small by comparison to the initial fixed costs. Very few variable costs attach to AAP maintenance. More contracts mean more revenue and little of that will be spent on AAP activities.

Helping your production, procurement and financial people win additional federal business can place you and your HR organization squarely in the business discussions you have been trying to access.

And, remember, if you don't have time to do your own AAP development or updating, contact us. We can help. We specialize in it. We can take that load off your shoulders and deliver a plan we guarantee will meet federal requirements.

If you are interested in Internet sites that might be able to help your organization secure more federal business, request "Web Contract Resources/AAP" from aap@merithr.com. Please also include your contact information.

Bill Truesdell is Founder and President of The Management Advantage, Inc., a Concord-based consulting company specializing in compliance, AAP design, implementation and training.

©2005 William Truesdell. All Rights Reserved.