STAFFING WITH TEMPORARY EMPLOYEES WHAT IS CONTINGENT WORK? Best - - PDF document

WORKPLACE PLANNING FOR FLEXIBILITY:

STAFFING WITH TEMPORARY EMPLOYEES

LIR 809

WHAT IS CONTINGENT WORK?

Best understood by what it is not:

Not permanent Not full time with single employer

One definition: Any job in which an individual does not have an explicit or implicit contract for long term employment and where minimum hours worked can vary in an unsystematic manner. Any job in which an individual does not have an explicit or implicit contract for long term employment and where minimum hours worked can vary in an unsystematic manner.

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WHAT ARE COMMON FORMS OF ALTERNATIVE EMPLOYMENT? Temporary help workers Leased or contract workers Independent contractors On-call workers Part-time workers

BLS categories

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Alternative Work Arrangements as Share

• f Total Employment (2001)

0.0% 5.0% 10.0% 15.0% 20.0% Independent Contractors On-Call Workers Temporary Help Agency Contract or Leased Workers Part-time Workers

Source: BLS, “Contingent and Alternative Employment Arrangements, February, 2001” News Release USDL 01-153, May 24, 2001. LIR 809

Trend in Temporary Help Employment

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Occupational Distribution of Temporary Workers (Temp. v. Traditional)

Source: BLS, “Contingent and Alternative Employment Arrangements, February, 2001” News Release USDL 01-153, May 24, 2001.

Clerical (29.5% v. 14.8%) Operators, laborers (23.2% v. 13.3%) Other(8.4% v. 25.4%) Exec., Admin,

• Mgr. (6.7% v.

15.1%) Professional (10.4% v. 16%) Technician (6.5%

• v. 3.5%)

Sales (7.7% v. 12%) Craft (7.5% v. 10.3%

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Occupational Distribution of Independent Contractors (Ind. v. Traditional)

Clerical (3.9% v. 14.8%) Operators, laborers (7.3% v. 13.3%) Other (16.1% v. 25.4%) Exec., Admin.,

• Mgr. (19.4% v.

15.1%) Professional (16.8% v. 16%) Technician (1.2%

• v. 3.5%)

Sales (15.6% v. 12%) Craft (19.5% v. 10.3%) Source: BLS, “Contingent and Alternative Employment Arrangements, February, 2001” News Release USDL 01-153, May 24, 2001. LIR 809

Race/Ethnic Composition by Work Arrangement

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Independent Contractors Temporary Agencies Traditional Arrangement Hispanic Black White

Source: BLS, “Contingent and Alternative Employment Arrangements, February, 2001” News Release USDL 01-153, May 24, 2001. LIR 809

Median Usual Weekly Earnings, February, 2001

$0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 Independent Contractors On-Call Workers Temporary Help Contract Workers Total Men Women

Source: BLS, “Contingent and Alternative Employment Arrangements, February, 2001” News Release USDL 01-153, May 24, 2001.

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Educational Distribution by Work Arrangement, Feb., 2001

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Traditional Independent Contractors Temporary Help College Grad. H.S. + H.S. Grad. H.S. Drop-Out

Source: BLS, “Contingent and Alternative Employment Arrangements, February, 2001” News Release USDL 01-153, May 24, 2001. LIR 809

Percent of Workforce with Health Insurance Coverage, By Work Arrangement, Feb. 2001

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% Traditional Independent Contractors Termporary Help With Health Insurance With Employer-Paid Health Insurance

Source: BLS, “Contingent and Alternative Employment Arrangements, February, 2001” News Release USDL 01-153, May 24, 2001. LIR 809

Work Arrangement Preferences

Prefer Traditional Arrangement Prefer Alternative Arrangment It Depends

Independent Contractors Temporary Help Workers

Source: BLS, “Contingent and Alternative Employment Arrangements, February, 2001” News Release USDL 01-153, May 24, 2001.

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Part-time as form of contingent

Part-time < 35 hr./wk

Short-term

• Temp. pt, rare

Secondary

perm pt, no advance

Retention

Retain valued employees Most is secondary

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Part-time versus full-time hourly compensation

$0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 $16.00 $18.00 $20.00 Total Compensation Wage & salary Legally Required Insurance Full-time Part-time

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WHO WANTS TO BE PART OF THE CONTINGENT WORKFORCE?

People who want flexibility:

Working mothers College students People on periphery of labor market,

such as newly retired

Short-term unemployed

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WHAT DO CONTINGENT WORKERS WORRY ABOUT?

Insecure economic future Lack of insurance & pension

benefits

Employer inaccuracy in describing

& defining job assignments

Being treated like 2nd class

citizens MOVING FROM STRATEGIC DECISION TO IMPLEMENTATION

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STRATEGIC QUESTIONS What are the Strategic Goals of our

• rganization?

What are our Core Competencies? What is our Organizational Culture?

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Strategic Staffing

Primary Business Supporting Functions Auxiliary Skills Core Skills Future Needs Temp Staffing Core Staffing

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2 STEPS

Define what is core and what is

contingent in your organization.

If a job is not core, determine if

it should be performed under a regular or alternative work arrangement.

Evaluate the costs and benefits of using contingent workers relative to core workers.

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EVALUATING USE OF CONTINGENT WORKERS Need to consider direct costs, indirect costs, and productivity of both core & contingent workers Decision rule:

The Ratio of Temporary Productivity to Core Productivity must be equal to or greater than The Ratio of Temporary Costs to Core Costs The Ratio of Temporary Productivity to Core Productivity must be equal to or greater than The Ratio of Temporary Costs to Core Costs

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MAKING THIS WORK

Communicate with core employees Orient temporaries Think about: space, who answers

questions, what training is needed

Be clear about likelihood of

permanent hiring

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ADVANTAGES & DISADVANTAGES TO CONTINGENT WORK FOR FIRMS

Disadvantages

Promotability Short-term plan Risk to workers=> recessions Loyalty Less HC invest Lower per capita Y

Advantages

Lower labor costs Security for core workers Less inflation Flexibility for family issues Recruiting pool

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JOB INSECURITY & CONTINGENT WORK

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WHY DOES CONTINGENT WORK EXIST: COMPETING VIEWS

Demand driven:

Meets employers’ needs; way to handle uncertainty Commonly used evidence

Secular Evidence: Temps used to be pro- cyclical, now lead business cycle Family char. lack predictive power Quality of Jobs Nearly 50% THS involuntary

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ALTERNATIVE VIEW OF USE OF TEMPORARY WORKERS

Self-selection model

Family/demographic characteristics suggest that many in contingent arrangement there because meets family needs

Explanation for lower wages after controlling for other human capital:

Wage differential may be CWD for preference for part-time

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CONTINGENT WORK AS RESPONSE TO INCREASING UNCERTAINTY

2-Tier workforce:

Core: Salaried employees on payroll for whom traditional values hold Periphery: weak ties to co. hired for finite periods; few benefits Core handles stable portion of product demand; periphery handles fluctuating portions

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ALTERNATIVE APPROACH: SHARE ECONOMY

Shock of downturn absorbed through

lower compensation not layoffs

Initially macro idea Stimulates productivity Spreads risk across workers Firms less afraid to hire Requires trust between management &

firms