Strategic decisions need to be undertaken to see how much recruiting needs to be done to fill staffing needs with regular full time workers and other contingent temporary part time workers. This lies at the foundation of recruitment decisions. In a business climate where most organizations of various sizes are being forced to become productive, many have turned to distinctive sources of staffing. Majority of the companies now have thought that retaining a regular workforce carries an excessive cost especially with the added compulsory government costs.
Besides the increasing cost associated with full time employees, the increasing rules and regulations have prohibited employers from further recruitment of new employees. Therefore, the need to maximize expertise and reduce costs is changing the traditional business model where everything was required to be done by your own employees to a flexible model utilizing the need of contingent workers. Flexible approaches could consist of temporary regular part time workers, independent contractors, on call, contract company workers, and agency temporaries and direct hire temporary workers.
They don’t hire traditional employees which save the organization the cost of full time benefit plans along with an added advantage of recruiting in a slightly different market. Below, I present evidence to further support my argument and enhance my analysis on why companies prefer to use contingent workers as compared to regular full time workers. Then, I would conclude giving some policy recommendations followed by a final thought. By the accumulated research I have conducted, I have gained an insight into the business phenomenon of the implications they face using traditional methods vs. lexible approach. I would not go into detail on each type of flexible approach but provide a general detailed overview on flexible approach with respect to traditional methods. Being aware about the rapidly changing environment in today’s business world, businesses are acknowledged if they are adaptive, nimble and flexible. Temporary staffing became labeled as contingency staffing since it was a unique way of doing business for companies who had to restructure and modernize their processes and minimize their fixed costs in order to compete.
Contingency staffing has developed the use of labor in a less temporary manner. Contracting with firms to provide workers with skills and knowledge and abilities to perform non-core business activities on a regular day to day basis has become the factor in every business to achieve flexibility, greater productivity and competitiveness. Flexible staffing is a strategic business idea where companies first evaluate their vigorous business workload and then recruit contingency staff to complement their permanent workforce in order to achieve maximized profits and productivity.
This conveys that contingency staffing is most valuable only then rather than using it as a solution to absenteeism or as replacement of regular full time workers. Its efficiency is often closely associated with the use of flexible staffing arrangements to provide just in time labor system which is derived from the just in time inventory system where if not more or less raw material is ordered for production, then why do that with the human resource. Labor should be effectively managed as well in order to meet the product and service demands and this is what gives them a sustainable competitive edge.
Its use can be maximized by first understanding, who is your current focal workforce, if your company is understaffed or overstaffed, what is the vigorous workload of your company and finally by balancing your workers with your workload. Using this proactive approach to balance the use of regular full time workers and contingent workers to staff adaptably will move the company’s focus from one of cost to profit maximization and return on investment. Usually firms hire temporary contingent workers to fulfill the need of work that is seasonal or subject to other fluctuations.
Hiring regular full time employees to meet peak employment needs would make it necessary for employers to find some tasks to keep the employees occupied during less active periods. These are more stable compared to other reasons for hiring temporary workers. Some employers who hire employees just to fulfill the need for additional workers needed to complete a task or a job are less stable positions. This was even supported by some research that I carried out (refer to table 2 in appendix), where I asked few employers and their man reasons for hiring temporary contingent workers are: . To provide needed assistance at times of an increase in peak business times 2. To fill a vacancy until a regular employee is recruited 3. To fill in for an absent employee who is sick or has gone on a vacation The adoption of flexible work arrangements are driven by five focal factors which are cost savings, market flexibility, the mixture of specific expertise on a short term basis, a way of trying out new employees before hiring them and lastly because of guaranteed minimum level of performance.
Looking back at the usage of flexible staffing arrangements, firms have used temporary contingent workers in order to reduce the implications of hiring employees. Employers use flexible working arrangements to provide certain groups of workers with low wages. They may though wish to pay above the market wage rate to reduce turnover for workers who constitute a high amount of firm specific human capital. This helps to minimize their costs. Survey was carried out in which the respondents were asked two basic questions (refer to table 1 in appendix).
First, they had to compare the hourly wage cost of workers in flexible arrangements with the hourly wage cost of workers in regular positions. Second, they were asked to compare the total hourly wage plus the hourly benefit costs of workers in a flexible working arrangement with the total hourly wage and the benefit costs of the regular workers. The results showed that the hourly wage cost as well as the hourly benefit cost of workers for flexible positions is lower than that of the regular full time workers.
The main strong incentive for employers to adopt flexible approach in the recruitment process is to avoid the hiring regulations required for providing benefits. This minimizes the cost and avoids the employer from discriminating among employees in the diverse packages offered. At times of competitive pressure, e. g. in a boom, contingent workers can be added to the permanent workforce to handle the extra workload until the firm is sure that it will retain the additional employment.
In the same way, during a recession, contingent workers can be easily terminated without any effect on the self-esteem related to the loss of permanent workforce layoffs. Companies also hire temporary workers to retain employees with efficient skills or to adjust some employees’ wishes for a flexible working schedule. This would maximize the potential knowledge from skilled employees and is best suited to business environments where the need for specific expertise is irregular.
Such highly knowledgeable and highly skilled employees often bring out cross fertilization by bringing out new working methods or new technologies to which the firm is not aware of ever before. Therefore, this proves to be very beneficial for the employer. A majority of the employers even stated that they hire temporary workers to accommodate employees’ wishes for part time work due to them being unable to perform a full time job or not preferring it. They adjust such employees due to the value being able to be retained in them.
However, some workers use a try and buy approach where they hire temporary workers to give them an opportunity to move up the ladder into full time, permanent employment. Workers who perform productively can fill in the regular positions when they become available. Employers use screening procedures to monitor temporary workers for regular positions so that the best person fit for the job can be achieved. This would reduce the cost of terminating employees if they don’t exhibit high productivity and employers have the opportunity to replace that worker with someone else until they are satisfied with the performance of the contingent worker.
This would lead to low job stability. However, supported with the research carried out (refer to table 3 in appendix), when employers were asked besides the question whether they use screening methods to move workers into regular positions, they were asked to evaluate the extent to which they actually move workers into regular positions. The results were such that only a minority responded saying that they often move workers into regular positions while a majority stated that they move them occasionally or sometimes. However, this flexible approach needs to be considered with much more attention and detail.
Looking into the loopholes of flexible staffing, * a trend towards a just in time workforce brings out concerns for workers for their future job stability and training which should be focused upon * Another issue is that the temporary workers are currently facing is lack of health insurance and pension coverage. Steps should be taken to restrain the abuse by the misclassification of employees as independent contractors and other facets of contingent workers in order to avoid pension benefits by complying them with the anti-discrimination clauses in the IRS tax code. Managers should make good decisions about staffing needs and make sure that every new temporary new employee is given the full adequate training to perform the new task as per the company needs no matter how much he/she is skilled.
* The managers should take into consideration issues regarding the morale of the temporary workers when they work alongside the full time workers since they put in the same amount of effort and the time but are not entitled to the same amount of benefits. This would reduce their motivation and commitment to the task. The manager should always supervise the temporary workers since it is believed that on the job injury rate is higher with temporary workers. Therefore managers should act as supervisors rather than facilitators and provide full assistance to them no matter what their experience is until they have seen it for themselves if they could perform tasks safely. * The temporary workers should be clearly informed about their rights and privileges and be treated with respect and care just as the permanent staff would be treated.
Having discussed the main drivers behind flexible staffing and how to utilize it effectively, it is quite reasonable to conclude that temporary contingent workers compared to regular full time workers is beneficial since it maximizes the expertise and minimizes the cost, the main two factors which every business in today’s dynamic environment is working towards. In order to compete effectively in today’s rigorous business world, flexible staffing is needed to adapt to the peaks and troughs of your business operations.
Many survey results indicate that the employment in flexible working positions is likely to grow. The effect of such flexible approaches solely depends on why employers adopt such practices. If it is to reap the benefit of paying such workers low wages, few benefits or low job security, it is of little concern if the workers prefer such flexible working schedules or are keen to give up compensation and job security for such flexibility.