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Strategic issues & choices in using contingent workforce
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Strategic Issues and Choices in Using Contingent and Flexible Workers
Dr. G C Mohanta, BE(Mech), MSc(Engg), MBA, PhD(Mgt)Professor
Role Played by Contingent Workers and Flexible Work Schedules
Contribute to meeting the goals of cost control and
Product or service innovationCost control objective requires firms to reduce
output costs per employeeContingent employment saves companies
considerable amounts of money because: - They do not give these workers most discretionary
benefits, or - Provide less general amounts of such benefits- Discretionary benefits represent a significant fiscal
cost to companies
Cost Control ObjectivesEmployers’ use of well trained contingent workers
also contributes through reduced training costsNot all contingent workers know company specific
work practices and procedures Company specific training represents a significant
cost to companies Companies that do not employ contingent workers
long enough to realize productivity benefits from training, undermine cost control objectives
Company sponsored training may seem to contradict lowest cost imperative in short term
Factors Increase Short Term Costs
Cost of training materials and instructors’ professional fees
Downtime while employees are participating in training
Inefficiencies that may result until employees master new skills
Longer Term Perspectives on Cost Control
Contingent work arrangements support lowest cost imperatives in longer term perspectives
Productivity enhancements and increased flexibility should far outweigh short run costs
- if companies establish track records of:• high productivity, • quality and • exemplary customer service
Flexible SchedulesFlexible schedules contribute to
lowest cost imperativesFlexible employees demonstrate
lower absenteeism than employee with fixed work schedules
Product and Service Innovation Objective
This requires creative, open minded risk taking employees
Companies that pursue differentiation strategies must take a longer term focus to attain their objectives
Both arrangements should contribute to innovations
Companies will benefit from influx of new employees from time to time who bring fresh ideas with them
Contingent employment should minimize problems of groupthink, as all group members view issues through lens of conformity
Flexible work schedulesFlexible work schedules promote differentiation
strategies for two reasons: First, flexible work schedules enable employees to
work when they are at their physical or mental bestSome individuals most alert during morning hours,
others most alert during afternoon/evening hours because of differences in biorhythms
Second, flexible work schedules allow employees to work with fewer distractions & worries about personal matters
Inherent flexibility of these schedules allows employees to attend to personal matters as needed
Contingent EmploymentEmployers justify increased contingent employment
with business necessity - cost containment & flexibility
Companies are trading employee loyalty for reduced costs and greater flexibility
Employees previously were maintaining employment within their choice companies as long as they wished
Many employees remained with a single company for decades at a time culminating in a retirement bash and receipt of a ‘gold’ watch for long time service
Such companies as Ford Motor Company, General Motors, IBM and Lincoln Electric exemplified extended employment
Contingent EmploymentWorkers do not forget past practices that once led to
job security and sound retirement benefitsWorkers may not take personal interest in
companies’ performance as employment relationship becomes more tentative
Workers will look for better and more secured employment else where & less loyal to employers
Companies may become victim to reduced employee loyalty, resulting in:
- heightened job insecurity among core employees - lower control over product or service quality- higher turnover - compliance burdens and costs and - greater training costs
Contingent EmploymentFirst, both contingent and core workers may
develop less loyalty for their employersHiring contingent workers may lead core
employees to feel less secure about their status Because staffing companies with contingent
workers generally represents a lower cost alternative to core employees
Consequently, core employees’ loyalties may become diminished, which can translate into lower worker dependability and work quality
Contingent EmploymentSecond, employers can lose control over
product or service quality when they employ contingent workers
This occurs when companies engage contingent workers on short term basis
It takes contingent workers time to learn company specific procedures and work processes
Companies that do not employ contingent workers long enough will not maintain sufficient control over quality
Contingent EmploymentThird, turnover rates among core workers will
probably increase when companies employ contingent workers
Core employees may feel uncertain about their job status and this uncertainty will lead to lower loyalty
Absence of job security and diminished loyalty will increase core employees’ job search activities
most qualified core employees may receive competitive job offers that lead to dysfunctional turnover
Contingent EmploymentFinally companies must bear the costs of training
contingent workersIn many cases, employing contingent workers
can be as costly as employing core workersSavings from not offering contingent workers
discretionary benefits is offset by training costsThese costs become less significant for
companies that employ contingent workers long enough to realize returns on the training investment through higher productivity and work quality
Case
Everyone telecommutes at your firm. All work is done in virtual teams of four. Divide up into groups of four and respond to the following questions:
How will you organize your team?Do you need a virtual leader?How will you select your virtual team?How will you hold team members
accountable?