When Gwen Simmons, CIO of Mecklenburg County, N.C., received orders last year to cut staff, she could have simply let the ax fall.

Instead, Simmons devised a plan that not only salvaged three full-time positions, but also strengthened the county’s relationship with other government agencies, boosted employee morale and recouped a whopping $100,000 in profit for the cash-strapped county.

“The inspiration for me was to develop a partnership with other key leaders in order to save full-time positions,” said Simmons. “Because my IT staff had an established project management office and a business process management group, we thought we could really leverage our expertise.”

To do so, Simmons and a handful of city and county officials hatched a plan to outsource some of Mecklenburg County’s senior, full-time staff members to neighboring agencies, including the city of Charlotte and the Charlotte-Mecklenburg Schools.

While one Mecklenburg County project manager was assigned to help Charlotte through an IT consolidation by examining the city’s business support services, another helped spearhead Charlotte’s enterprise resource planning (ERP) implementation. And when it came time for Charlotte-Mecklenburg Schools to map its technology strategic planning process, it was a Mecklenburg County business process employee who lent a helping hand.

The Dawn of a New Arrangement

Call it what you like — cross-sourcing, interagency collaboration, rent-a-tech — Mecklenburg County’s alternative to cutting staff is an innovative strategy that CIOs everywhere would be wise to consider. Requesting that a handful of senior-level employees work elsewhere to save the jobs of a few junior co-workers sounds altruistic.

But consider this: Employers took more than 1,500 mass layoff actions in April involving nearly 144,000 workers, according to the U.S. Bureau of Labor Statistics. Each mass layoff involved at least 50 workers from a single employer.

Such sweeping layoffs can have a disastrous impact on an agency’s employees and overall quality of service. According to Leadership IQ, a Washington, D.C.-based research and training company, a study of more than 4,000 employees in 319 companies found that 74 percent of employees who kept their jobs amid the recession said their productivity had declined since the layoffs, and 69 percent said the quality of their employer’s product or service had declined. Another key finding was that 87 percent said they were less likely to recommend their employer as a good place to work.

Finding new ways to avoid slashing staff can help preserve morale within an agency’s work force and protect high productivity levels. Also, there’s a strong economic incentive for cross-sourcing employees, provided that leadership does it correctly and is careful not to step on toes.

“Economic realities have caused employers to reduce the size of their staff or to look for cheaper alternatives, such as outsourcing or cloud shared services,” said Andy Woyzbun, a lead research analyst with Info-Tech Research Group. “This is the age of downsizing your IT department, so [Mecklenburg County’s] approach is interesting. Superficially it seems like a win-win.”

Something borrowed

Just ask Jeff Stovall, Charlotte’s CIO. Hiring county staff to work for the city was a more favorable arrangement than seeking the help of a recruitment agency, Stovall said. “We knew that working with our colleagues from the county would be an easier transition than contracting outside resources without government experience,” he said.

Jerry Schwinghammer, deputy director of business support services for Charlotte, agrees. “[Cross-sourcing] is somewhat like treating the county like a vendor and providing services that we otherwise would have received from an outsourced contractor,” he said.

That’s a huge benefit, according to Woyzbun. “[By recruiting county staff], you’re not buying a ‘pig in a poke,’” he said. “You’re buying a known commodity. The city of Charlotte is getting someone who’s used to the government mindset and the government pace.”

And that’s not all. In an era of high turnover, sharing employees among a core group of government agencies results in impressive knowledge retention, said Stovall. “If we’re going to be in partnership with the county and the school system long term, it behooves us to have a group of people who understand how business is conducted across these entities.” For example, Stovall pointed to one county employee who recently oversaw the city’s ERP implementation and applied those new skills to his county job — a perk that wouldn’t have been possible if Charlotte had brought in an IT professional from a recruitment agency.

Money Talks

And then there’s cost. “The price point is better for us than what we would have had to pay on the market,” said Susan Johnson, CIO of Charlotte-Mecklenburg Schools. “We’re able to get our work done more cheaply with very high-quality staff. It’s a huge benefit. We’re talking almost a $20 an hour [difference], maybe more, between contracting with the county for high-quality people versus contracting with the private sector.”

Although Charlotte-Mecklenburg Schools and the city of Charlotte are responsible for paying the salaries of the county employees they recruit, Stovall said they found that the rates were more than competitive. Simmons said the contract work Mecklenburg County landed as a result of cross-sourcing its employees amounted to $400,000 — one-quarter of which the agency was able to pocket as profit and funnel into professional development.

Another benefit of loaning was the new sets of eyes Mecklenburg County’s IT professionals brought to projects. “We found that the fresh perspective was really healthy,” said Schwinghammer. “By trying to learn from the county’s employees, it got us un-stalled out of some circular eddies that we had fallen into from an organizational perspective. We realized that there are some better ways to do things, so it helped move us along.”

That outsider status can also break down barriers and improve communication. For instance, Johnson said recruiting a county project manager to help conduct 33 face-to-face meetings with staff members of the Charlotte-Mecklenburg Schools opened doors she never thought possible. “The fact that the county employee we hired was not from Charlotte-Mecklenburg Schools helped us garner better feedback because our employees felt as if they were being heard and that we were sensitive enough to send someone who could listen to them and be unbiased,” said Johnson. “That was a deliberate choice on our part and it [bought] us a lot more goodwill than even I expected.”

What’s more, Simmons said that asking senior-level professionals to switch jobs in order to save the positions of a few junior staffers can aid retention efforts. After all, she said, “It’s very difficult to get qualified people. If you start laying off project managers and business process management folks, then your more senior people are going to get discouraged and leave. However, if employees see that the county is trying something different to save jobs instead of just cutting, cutting, cutting, they’ll have more of an appreciation for management.”

Recruiting employees from another agency can also highlight areas for potential collaboration. “The county employee we recruited to serve as a project manager for our ERP project had significant experience with ERP implementations and had implemented the financial and payroll systems for the county,” Stovall said. “That knowledge and practice really helped because it gave us a clear picture of what we needed to do internally and what additional collaboration opportunities there might be with the county regarding our ERP systems.”

Cindy Waxer  |  Contributing Writer

Cindy Waxer is a journalist whose articles have appeared in publications including The Economist, Fortune Small Business, CNNMoney.com, CIO and Computerworld.