Strategic decisions must be made to determine the amount of recruiting needed to fill staffing needs with both regular full-time workers and temporary part-time workers. This is essential in making recruitment decisions. In today’s business environment, where organizations of all sizes are striving to be more productive, many have started looking for alternative staffing options. In fact, most companies now believe that retaining a regular workforce is costly, especially with the additional mandatory government expenses.
The rising expenses of hiring full-time staff and strict regulations are preventing employers from hiring new employees. Consequently, the desire to optimize skills and cut costs is revolutionizing the conventional business model, which previously relied solely on in-house employees, to a more adaptable model that benefits from contingent workers. This flexible approach includes temporary part-time employees, independent contractors, on-call workers, contract company personnel, agency temps, and temporary workers hired directly.
The organization can save on the cost of full-time benefit plans and recruit from a slightly different market by not hiring regular employees. Evidence will be provided to support this argument and an analysis of why companies prefer contingent workers over full-time workers will be conducted. Policy recommendations will also be offered, concluding with a final thought. Research has provided insight into the business implications of using traditional methods versus a flexible approach. While not covering every type of flexible approach, a general overview of how it differs from traditional methods will be given. In today’s rapidly changing business environment, adaptability, agility, and flexibility are crucial for companies. Contingency staffing, also known as temporary staffing, enables companies to restructure, modernize processes, and reduce fixed costs in order to stay competitive.
Contingency staffing has revolutionized the utilization of labor in a more lasting way. Collaborating with firms to secure workers possessing the necessary skills, knowledge, and abilities to conduct non-core business tasks on a regular basis has become an essential element for businesses seeking enhanced flexibility, productivity, and competitiveness. The concept of flexible staffing is a strategic approach in which companies assess their dynamic workload and subsequently hire contingency staff to supplement their permanent workforce, with the aim of optimizing profits and productivity.
The message proposes that contingency staffing is most efficient when used as a remedy for absenteeism or as an alternative to full-time workers. The effectiveness of contingency staffing is often linked to the adoption of flexible staffing arrangements, which aim to establish a just-in-time labor system. This concept originates from the idea of the just-in-time inventory system, where only the necessary amount of raw material is ordered for production purposes. Similarly, businesses should consider applying this principle to their human resources. Effective labor management plays a vital role in meeting product and service demands efficiently, ultimately giving companies a sustainable competitive advantage.
Understanding your current workforce composition, staffing levels, workload, and effectively managing the balance between regular full-time workers and contingent workers is essential for maximizing the use of resources. This proactive approach helps shift focus from cost to profit maximization and return on investment. Companies often hire temporary contingent workers to address seasonal or fluctuating work demands.
Hiring regular full time employees to meet peak employment needs would require employers to find tasks for them during less active periods, making it less stable compared to hiring temporary workers. Some employers hire additional workers only for specific tasks or jobs, which are less stable positions. This was supported by my research (see table 2 in appendix), where I asked employers about their main reasons for hiring temporary contingent workers:
- To provide needed assistance during peak business times.
- To fill a vacancy until a regular employee is hired.
- To cover for an absent employee who is sick or on vacation.
Flexibility in work arrangements is driven by five factors: cost savings, market flexibility, accessing specific expertise on a short-term basis, testing out new employees before hiring them, and ensuring a minimum level of performance.
Previously, companies have utilized temporary contingent workers to reduce the effects of hiring permanent employees. This approach allows employers to provide lower wages to specific workers. However, if workers possess significant company-specific knowledge and skills, employers may choose to pay higher wages than the market rate in order to decrease turnover and associated costs. We conducted a survey where participants were given two key questions (refer to table 1 in the appendix).
Initially, the researchers had to analyze the hourly wage expense of employees in flexible roles in comparison to those in full-time positions. Additionally, they were tasked with comparing the combined hourly wage and benefit costs of flexible workers with those of regular employees. The findings revealed that both the hourly wage and benefit expenses are lower for flexible workers compared to full-time employees.
Employers are motivated to adopt a flexible approach in the recruitment process primarily to avoid the hiring regulations associated with providing benefits. This helps minimize costs and prevent employers from discriminating among employees in terms of the different packages offered. During times of competitive pressure, such as during a boom, the firm can temporarily hire contingent workers in addition to the permanent workforce to handle the increased workload. This allows the firm to assess whether it will be able to sustain the additional employment before making it permanent.
During a recession, companies may choose to terminate contingent workers without impacting the self-esteem associated with permanent workforce layoffs. Additionally, hiring temporary workers can help retain employees with valuable skills, as well as accommodate those seeking flexible schedules. This approach allows businesses to leverage the expertise of skilled employees and is particularly beneficial in environments where specific knowledge is required intermittently.
Highly knowledgeable and skilled employees can introduce new working methods or technologies that the company was previously unaware of, leading to cross-fertilization. This is extremely advantageous for the employer. In fact, many employers hire temporary workers to accommodate their desire for part-time work, either because they are unable to work full-time or simply prefer not to. The value of these employees is recognized and they are adjusted accordingly.
However, certain workers employ a “try and buy” strategy in which they employ temporary workers as a means to advance to full-time, permanent employment. Temporary workers who demonstrate productivity can fill regular positions as they become vacant. Employers implement screening procedures to evaluate temporary workers for regular positions in order to secure the most suitable candidate for the job. This approach would minimize the costs associated with terminating employees who do not exhibit high productivity, as employers can easily replace them with other contingent workers until they are satisfied with the worker’s performance.
This would result in a lack of job stability. However, according to the research conducted (see table 3 in the appendix), employers were asked about their use of screening methods to transition workers into permanent positions. They were also asked to evaluate how frequently they actually transition workers into these positions. The findings revealed that only a small number reported frequently transitioning workers into permanent positions, while a majority indicated that they do so occasionally or sometimes. However, this flexible approach must be given greater consideration and scrutiny.
Concerns have been raised regarding the future job stability and training of workers in the face of flexible staffing, a trend towards a just in time workforce. Additionally, temporary workers currently lack health insurance and pension coverage. To address this, steps should be taken to prevent the misclassification of employees as independent contractors and other issues related to contingent workers, ensuring compliance with anti-discrimination clauses in the IRS tax code to ensure pension benefits. Managers should also prioritize making informed staffing decisions and providing comprehensive training to new temporary employees, irrespective of their existing skill level.
It is important for managers to prioritize the morale of temporary workers who work alongside full-time employees. While these temporary workers put in equal effort and time, they do not receive the same benefits as their permanent counterparts. This disparity in treatment can negatively impact their motivation and commitment to their duties. Moreover, given that temporary workers have higher on-the-job injury rates, it is crucial for managers to closely supervise them. Managers should take on a supervisory role and provide comprehensive assistance to all workers, regardless of their experience level, until they have proven capable of safely performing tasks. It is essential to inform temporary workers about their rights and privileges while treating them with the same respect and care afforded to permanent staff members.
Employing flexible staffing, such as temporary contingent workers, has demonstrated advantages over hiring regular full-time workers. This approach enables businesses to optimize expertise and reduce costs, both of which are crucial objectives in the current fast-paced business landscape. To effectively compete in today’s demanding business world, companies must adapt to operational fluctuations by utilizing flexible staffing.
Several surveys indicate that there is expected to be a rise in job openings for flexible working roles. The significance of these adaptable methods depends on the reasons employers have for adopting them. If the purpose behind implementing flexibility is to exploit workers by offering low pay, minimal benefits, or limited job security, then it becomes less relevant whether the workers themselves prefer flexible schedules or are willing to compromise their compensation and job security for flexibility.