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

WORKPLACE PLANNING FOR FLEXIBILITY: STAFFING WITH TEMPORARY EMPLOYEES 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 Any job in which an individual does not have an explicit or implicit contract for long term employment explicit or implicit contract for long term employment and where minimum hours worked can vary in an and where minimum hours worked can vary in an unsystematic manner. unsystematic manner. LIR 809 WHAT ARE COMMON FORMS OF ALTERNATIVE EMPLOYMENT? � Temporary help workers � Leased or contract workers � Independent contractors � On-call workers � Part-time workers BLS categories LIR 809

Alternative Work Arrangements as Share of Total Employment (2001) Part-time Workers Contract or Leased Workers Temporary Help Agency On-Call Workers Independent Contractors 0.0% 5.0% 10.0% 15.0% 20.0% Source: BLS, “Contingent and Alternative Employment Arrangements, February, 2001” News Release USDL 01-153, May 24, 2001. LIR 809 Trend in Temporary Help Employment LIR 809 Occupational Distribution of Temporary Workers (Temp. v. Traditional) Craft (7.5% v. 10.3% Sales (7.7% v. Clerical (29.5% v. 12%) 14.8%) Technician (6.5% v. 3.5%) Professional (10.4% v. 16%) Exec., Admin, Mgr. (6.7% v. Operators, 15.1%) laborers (23.2% v. Other(8.4% v. 13.3%) 25.4%) Source: BLS, “Contingent and Alternative Employment Arrangements, February, 2001” News Release USDL 01-153, LIR 809 May 24, 2001.

Occupational Distribution of Independent Contractors (Ind. v. Traditional) Clerical (3.9% v. 14.8%) Operators, Craft (19.5% v. laborers (7.3% v. 10.3%) 13.3%) Other (16.1% v. 25.4%) Sales (15.6% v. 12%) Technician (1.2% Exec., Admin., v. 3.5%) Mgr. (19.4% v. Professional 15.1%) (16.8% v. 16%) 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 100% 90% 80% 70% 60% Hispanic 50% Black White 40% 30% 20% 10% 0% Independent Temporary Agencies Traditional Contractors Arrangement 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 $1,000 $900 $800 $700 $600 Total $500 Men Women $400 $300 $200 $100 $0 Independent On-Call Temporary Contract Contractors Workers Help Workers Source: BLS, “Contingent and Alternative Employment Arrangements, February, 2001” News Release USDL 01-153, May 24, 2001. LIR 809

Educational Distribution by Work Arrangement, Feb., 2001 100% 90% 80% 70% 60% College Grad. H.S. + 50% H.S. Grad. 40% H.S. Drop-Out 30% 20% 10% 0% Traditional Independent Temporary Help Contractors 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 100.0% 90.0% 80.0% 70.0% 60.0% With Health Insurance 50.0% With Employer-Paid Health Insurance 40.0% 30.0% 20.0% 10.0% 0.0% Traditional Independent Termporary Contractors Help Source: BLS, “Contingent and Alternative Employment Arrangements, February, 2001” News Release USDL 01-153, May 24, 2001. LIR 809 Work Arrangement Preferences Independent Temporary Help Contractors Workers Prefer Traditional Arrangement Prefer Alternative Arrangment It Depends Source: BLS, “Contingent and Alternative Employment Arrangements, February, 2001” News Release USDL 01-153, May 24, 2001. LIR 809

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 LIR 809 Part-time versus full-time hourly compensation $20.00 $18.00 $16.00 $14.00 $12.00 Full-time $10.00 $8.00 Part-time $6.00 $4.00 $2.00 $0.00 Wage & salary Insurance Total Compensation Legally Required LIR 809 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 LIR 809

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 LIR 809 MOVING FROM STRATEGIC DECISION TO IMPLEMENTATION STRATEGIC QUESTIONS What are the Strategic Goals of our organization? � What are our Core Competencies? � What is our Organizational Culture? LIR 809

Strategic Staffing Supporting Functions Auxiliary Skills Core Skills Primary Business Temp Staffing Core Future Needs Staffing LIR 809 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. LIR 809 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 The Ratio of Temporary Productivity to Core Productivity Core Productivity must be equal to or greater than must be equal to or greater than The Ratio of Temporary Costs to The Ratio of Temporary Costs to Core Costs Core Costs LIR 809

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 LIR 809 ADVANTAGES & DISADVANTAGES TO CONTINGENT WORK FOR FIRMS � Disadvantages � Advantages � Promotability � Lower labor costs � Short-term plan � Security for core workers � Risk to workers=> recessions � Less inflation � Loyalty � Flexibility for family issues � Less HC invest � Recruiting pool � Lower per capita Y LIR 809 JOB INSECURITY & CONTINGENT WORK LIR 809

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 LIR 809 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 LIR 809 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 LIR 809

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 LIR 809