Laurea in economia aziendale – Economics and Management
A. A. 2013 - 2014
Course
Human Resource Management
Prof.ssa Anna Comacchio
Temporary Work: how to win in an
unstable job market
Team 17
Francesco Ongaro
843810
Riccardo Paier
843057
Marco Poli
844666
Giovanni Scalco
841339
Giovanni Sgaravatti 843834
Contents
1. Introduction: The temporary framework
pag.2
2. Topic description: Temporary workers
pag.4
3.
The psychological contract: More than a transactional relationship
pag.6
4.
A friendly environment: Managing temporary workers
pag.8
5.
The rise of “supertemps”: A new perspective
pag.9
6.
Drawbacks: The challenges of supertemps
pag.10
7.
Summing up: Conclusions
pag.12
8.
References
pag.14
The temporary framework
In the human resources world, staffing is one of the key activities to be implemented in order
to deliver value to customers. Human Resources staffing refers to managing the people aspect
of running a business by having adequate employees on hand to perform tasks, in accordance
with the company ones. In order to better understand staffing, we first need to explain that it
is composed of three parts: recruitment, selection and socialization.
•
•
•
Recruitment: the process of generating a pool of qualified candidates for a particular
job.
Selection: the process of making a “hire” or “no-hire” decision regarding each
applicant for a job.
Socialization: the process of orienting new employees to the organization and the unit
in which they will be working.
We decided to analyze more in depth one source of the recruitment process, since this
argument emerged during our interview with Mr Vignaga of Marzotto: the phenomenon of
temporary workers, a highly debated topic in today’s job world.
Temporary work is an employment situation where an employee is expected to remain in a
position only for a certain period of time. Temporary employees may have the opportunity to
achieve permanent employment status after the established period of time, and they may also
be referred as seasonal employees or “Temps”.
2 Before moving to the core of our project, we would like to spend a few words about the
historical frame in which temporary work evolved.
The idea that long-term corporate jobs are the norm is very common, but in reality these jobs
arose in the past 60 or 70 years. Even in the manufacturing era that began in the late 19th
century, employment was initially casual, with an annual turnover around 300%. As assembly
lines became more complex, employers saw the need for a stable and trained workforce to
control quality and maximize production, while the concentration of workers in cities and
industrial centers led to the start of unions and a struggle for better pay, benefits, and rights.
During World War II, wage controls in the United States limited employers’ ability to attract
workers by means of higher pay, so companies developed generous benefits and pension
packages. This tracks the origin of the modern model of full-time, lifetime employment , and
it offered great advantages to both workers and employers. Workers got benefits, security, and
steady wage gains; companies got labor peace and the certainty of a return on large
investments in firm-specific training.
But a few decades after the corporate America had built up on lifetime employees, things
started to change the other way. Recessions in the 1970s and 1980s led to the downsizing of
heavy corporate bureaucracies and helped to label temporary work as a sign of executive
desperation. And then came globalization. Technology and cheaper transportation made it
easy to offshore production and even knowledge work to China or India, and the status of
temp jobs as the last hope for jobless managers was established.
Moreover, “Theory of the Firm” by Ronald Coase states that high transaction costs are the
reason for the existence of large corporations: it is cheaper to keep resources and talent inside
than to transact for them in the open market. New technologies lowered transaction costs and
challenged assumptions about which professional talents and management skills belong inside
or outside the organization.
3 What we are seeing today, then, is not the emergence, but the resurgence of the independent
professionals, thanks to the mix of market dynamism, technological advance, and human
aspiration that drives every innovation.
Who are temporary workers?
Nowadays, in the labour market, third parties are
used by companies to manage temporary
workers.Temporary agency work is characterized
by what is known as the “triangular relationship”
that connects the temporary work agency, the
agency workers and the user company.Workers
(employees) are hired by the work agency
(employers) and are assigned to user companies
(clients of the temporary work agencies).
Adecco, which is one of the world's most famous
private employers from Switzerland, places
700,000 temporary and full-time clerical, industrial, and technical associates with companies
all over the world; 70% of all temps work full time. This phenomenon has contributed to the
first decline in long-term unemployment rates since 1970.
The professional employee organization (PEO) is another entity that occurred in a related but
distinct development, and it has been the fastest growing business service in the United States
during the 1990s. These businesses manage their clients' employees and their relations, the
kinds of tasks associated with managing those employees. At the beginning, PEOs offered to
do bookkeeping and especially payroll for their clients, now they take care of almost every
task: employee management and relations: record keeping and legal compliance; hiring,
training, placements, promotions, firings, and layoffs; retirement plans and pension payments.
This huge growth in PEOs and in the number of temp workers in the labour market, is caused
by four main reason: flexibility, career opportunities, drastic reduction of paper work as well
as bureaucratic costs and management costs.
•
Temps provide the flexibility to quickly meet fluctuating demands. Due to the difficult
and uncertain global situation, firms may be reluctant to hire permanent staff,
preferring instead to bring in temps who can be dismissed more easily than permanent
employees.
•
In a knowledge-based economy, skilled workers are grouped in knowledge teams in a
way that each of these has its own rules and regulations, educational requirements, and
accreditation processes. Teams are made of only a handful of people within each
organization. Each group, however, expects and requires special treatment. Each team
4 expects and needs someone higher up who understands what the group is doing, what
equipments it needs, and what its relationship with the company should be.
Unfortunately, there are no or few career-advancement opportunities within the
organization for any of the specific skilled workers (machinery engineers, accountants,
R&D specialist, etc); none of them wants to be the company's CEO or has any chance
of getting the job. The raise of entire PEOs or branches of it, completely dedicated to a
specific class, will enable temps to scale up and get career opportunities.
•
The strength of the solid growth of temps and the rise of the PEOs, is the growing
burden of rules and regulations for employers. Just the cost of these rules and
regulations scares to suffocate small businesses. According to the U.S. Small Business
Administration, the annual cost of government regulations, government required
paperwork, and tax compliance for U.S. businesses employing fewer than 500
employees was somewhere around $5,000 per employee in 1995 (the last year for
which reliable figures are available). That amounts to about a 25% surcharge on top of
the cost of employee wages, health care, insurance, and pensions - which in 1995 was
around $22,500 for the average small-business employee. Since then, the cost of
employment paperwork rose by more than 10%. Many of these costs can be avoided
altogether by using temps in place of traditional employees.
More expensive than the costs of fulfilling with employment laws are the enormous requests
that the regulations impose on management's time and attention. During the period between
1980 and 2000, the amount of U.S. laws and regulations dealing with employment policies
and practices raised by about 60%. All the pieces of law demand managers to file multiple
reports, and in the case of noncompliance they all menace fines and penalties. Employers
(particularly smaller companies, which compose the vast majority) complain a lot that they
have no time to spend on day to day activities: products and services, customers and markets,
quality and distribution, hence there is no time left to work on results. Instead, they work on
problems such as employee regulations. The key to success of the employment agencies and
the emergence of the PEOs is that they both enable management to focus on the business.
Temporary workers together with PEOs allow managers to concentrate more on the business
than on employment-related rules, regulations, and paperwork. The time spent by managers
on this issues is a lot and because it is evidently not related to production and frontline
activities is clearly a waste of precious time and useful efforts. Only negative aspects emerge
from these management activities, like cheating. For this reason, firms are stimulated to try to
reduce or avoid the routine chores of employee relations, whether by improving the in-house
employee management or by outsourcing it to temps or to a PEO. But they have to take care
of not damaging or disrupting their relationships with employees in the process. Certainly, the
main benefit of decreasing paperwork may be to gain more time for people relations.
5 More than a transactional relationship
When describing temporary work, the term “atypical” if often used because when providing
the staff for these jobs it is sometimes difficult to evaluate the tasks and duties the workers
will need to perform. The attitude of temporary employees can have negative effects however,
and typical problems with flexible staff are often caused by this. These problems are
characterised by a relatively high turnover of staff, many employees dropping out during the
first few days of employment, high sick leave percentages, the unreliability of temporary
workers because of a high number of employees not turning up for shifts, low work morale
and the limited responsibility of temporary workers, as well as the difficulty of getting
workers who have a high enough skill level for the job. The HR manager, to find a solution to
these problems, has to analyse the relationship between the firm and the temporary worker
from a psychological outlook This issue is examined in a famous study by McLean Parks.
This study illustrated the possible effects of influencing factors such as: job insecurity, lack
of control, interpersonal support and job satisfaction levels and commitment among
temporary workers. This analysis suggests that temporary employees not only found a
motivation in a transactional contract with the organisation but also they establish a sort of
‘psychological’ contract that influences their performance. When evaluating the psychological
contract for temporary workers, this study describes nine areas of the relationship between
employer and employee that influence this psychological contract and therefore affect the way
in which employees think and act.
Four of these areas are very important for the creation of a sort of mental contract with
temporary workers:
•
the length of the employment relationship;
•
how specific the duration is;
6 •
the way the temporary employee contributes to the organisation. Whether it was
general work that is easily substituted by another person (universalistic), specific work
requiring particular skills (particularistic) or whether the employee had to
simultaneously fulfil obligations to two employers (multiple agency);
•
whether the workers felt that they had other choices when they decided on their
contract (volition).
7 This ‘contract’ can create a sense of subconscious commitment that can help the temporary
worker feel a stronger obligation to the company, but the company’s identity also needs to
match the way in which the worker behaves, and his or her personal career aspirations. In
order to provide a good match, the organisation needs to have an identification process of its
own.
Whether the organisation’s identity is attractive is an important part of this identification
process. There are six factors that affect this attractiveness. As an initial step, the company
needs to have a strong identity. The organisation’s identity can influence the way in which the
employee perceives it and connects to it.
There are three main factors involved in the individual’s assessment of the attractiveness and
indicate to what degree the perceived organisational identity is capable of encouraging an
employee to develop a sense of individual identity. If the organisation’s identity matches the
motivation and self-identity of the individual, they wish to maintain a continuous self-image
(self-continuity). A good match can lead to the individual employee identifying more strongly
with the organisation. If the organisation is distinctive, if it helps the individual to stand out in
a positive way or if the organisation’s identity increases the self-esteem of the employee, the
worker will find the organisation’s identity more attractive. Finally there are two factors that
make this identity more appealing: the intensity and the length of an employee’s contact with
the employing organisation. Both of these factors increase the individual’s sense of
connection to the company and therefore make the organisation more appealing. Also you
could argue that the more publicly visible the employee’s involvement with the organisation
is, the stronger its appeal. This visibility reminds people of their loyalty to the organisation,
and in return it creates expectations about the way employees should behave.
Managing Temporary Workers
The company has three potential ways of managing temporary workers: collective, personal
and relational.
Collective identity within a company produces and strengthens its structure with strong group
divisions. It underlines a clear distinction between high-value organisation members and
others who are ‘dispensable’, such as temporary employees. Sometimes such workers are
treated in a hostile way and temporary workers can see themselves as unimportant to the
organisation and therefore under threat. They typically experience low self-esteem, they are
unsatisfied with work and do not feel committed to the organisation. The temporary
employees can confirm stereotypes, delivering low-quality performances at work and not
interacting much with co-workers, making them likely to leave.
The ‘personal identity’ approach to management of temporary workers is important because it
accepts, but does not discriminate against, different others. Work is centred around individual
employees so there is not much co-operation and every employee is responsible for his or her
own contribution towards the company’s performance.
8 This creates a generally ambivalent attitude towards temporary workers. Their behaviour
depends on the situation and it is motivated by self-interest. Therefore, temporary members
see themselves as not fully involved in the organisation, because they lack the understanding
and support of other employees. They feel ambivalent towards the organisation and their coworkers, and so their behaviour is variable according to different situations.
The ‘relational identity’ approach to management produces a structure with strong
relationship networks. It encourages co-operation between employees, a motivational state
that is positive for temporary workers, and it encourages the careful management of
relationships. Minority group members are seen as unique rather than different individuals,
and other group members want to co-operate with them. Temporary individuals see
themselves as being involved and valued members of the company. In this context, temporary
workers will deliver high-quality performances, moving away from the stereotype to have
good relationships with co-workers, and usually they will stay with the organisation for a long
period.
Paying attention to the individual needs of each person employed by the company pays off for
the employer, as the employment relationship becomes more evident for the employee, with
consequential benefits. The potential for a long-term employment relationship can effectively
change the time frame of that relationship. A supportive atmosphere in the workplace and
well-structured training can increase the employees’ sense of security and improve the
relationships between them. If such changes in an employee’s attitude came about, it could
lead them to feel a stronger level of loyalty to the company they work for. As evidence to
support this, we can take the low levels of sick leave and good attendance for shifts (observed
in various empirical studies) as examples of this reinforced loyalty.
Supertemps
A small yet interesting segment of the temporary worker world is the so-called supertemps.
Supertemps are a new phenomenon which is strongly affecting and influencing how business
functions. This category is composed of top managers and professionals, ranging from
lawyers to CFOs to consultants, who graduated from the best universities and worked in wellknown companies and now choose to dedicate themselves to project-based careers
autonomously from any major organization. Corporations, month by month, are increasingly
believing in and asking them to perform mission-critical work that previously would have
been carried out by permanent employees or outsourced. This new phenomenon obviously
brought to the emergence of intermediaries, which aims to create a market for such
outstanding talents. This new working position is beneficial and favourable to all parties: it
offers more flexibility and autonomy to highly skilled workers, and open new horizons for
growth and innovation to corporations.
Why organisations decide to exploit this new type of workers? Companies crave for the
talent. So as more and more professionals changed their mind and prefer a temporary basis
model of work, organizations are trying to make up new ways to work with them.
9 The predominance of lean management teams, the post recession need to reduce costs, and the
fast pace of innovation combine to make temporary alternatives compelling. The large use of
outsourcing and consulting in the last years, prompted managers to reflect about work ( highend work too) in modular terms, and this helped them to be ready to accept and be engaged by
the new phenomenon of the supertemps. In a world business climate that is particularly
ambiguous and that rewards companies which are able to test ideas and change course with
short notice, this new talent model could become a source of competitive advantage.
How do supertemps deliver value added to the company? How have they been exploited by
corporations so far?
In some cases the supertemps stand in for the work that was previously given to big
consulting or law firm; in others they assume the roles earlier held by permanent employees.
In yet other cases it is assigned to them a number of various tasks which would have never
been accomplished if highly skilled project workers weren’t available.
For example they are regarded as an useful additional source of experience on an ad hoc basis,
such as involving them in most project-planning conversations. Moreover an experienced
senior professional is sometimes easier to bring in than the traditional consulting team of a
partner sup- ported by junior associates who actually do much of the work..
Another advantage employing supertemps is to probe interesting projects without to much
investments, as the project moves on, and the management depicts a clear plan and course of
actions about permanent investments, the company may decide to hire permanent employees.
Instead of the hiring costs and the exhausting paper work, only the project-work practises
have to be managed. In the end this advantage helps to preserve flexibility in ambiguous
situations, when the direction the company would take, is unclear at the outset.
The Challenges of a Supertemp
This model clearly presents some challenges in operation. Managers for example worry that
screening and interviewing independent professionals may take more effort at least until
companies have gained experience in identifying them and
that not enough supertemps will be available to make this a
reliable strategy. Trust and confidentiality present another
challenge. Companies must feel comfortable to have an
outsider work on high-level projects involving sensitive
information.There is also the concept of “internal readiness.”
Because the market for supertemps is still emerging, most
companies are not ready to take advantage of it. They do not
have the budget for temporary talent, they don’t think
systematically about how to divide work into projects, and
they don’t know how to successfully integrate temp talent
into the organization.
10 Society. The rise of supertemps has the potential to help the economy at large and society, as
well as companies and individuals. The Supertemp model helps to implement a higher level
of flexibility which gives the firms an aid in testing growth opportunities more easily,
enhancing innovation. Other social benefits include an alternative career path for engineers,
lawyers, MBAs, doctors who do not have to work seven days a week if they want to exercise
their skills at a high level anymore. With the growth of the supertemp market, a simple
platform for all talented people will be offered, including retirees and new parents, who
demand flexibility but want to stay inside the job market. Surely if some of the most talented
people in the labor market demand recognition of this new vision of work, the benefits will
spread throughout the workforce. But even though independent work has gotten a large
enforcement to date, distrust against it is still present in laws, institutions, and public opinion.
Conclusions
Summing up the numerous issues and opportunities that temporary workers represent, we
should stress the role of temps as a resource and not as a liability; human capital, and
subsequently how it is managed, is the key for the future survival into the global marketplace. . The point managers should have clear is how they consider temporary workers, they
must be viewed not as extra labour, but as extra capital. Moreover for a full implementation of
temps, the aspect to be more underlined it is not the costs of them. It is not how much capital
is being invested; otherwise Soviet Union would have easily been the more advanced
economy in the world. What is crucial is temporary workers’ productivity.
Temp agencies’ business consist exactly in selling productivity, through the right kind of
employees for specific jobs, saving time and effort to the firms that rely on them; however it
is quite difficult to verify how effectively agencies do so. Moreover the productivity of people
supplied by agencies does not depend only on pre-owned skills and abilities, but a key role is
played by how these people are managed and motivated. Obviously these two tasks have to be
firm concern.
Corporations, as well as small firms, have to be aware of that, and they should act
consequently, everyone’s work is critical for the overall mechanism to work well. Oversight
and incentives must regard CEOs as well as temps, and care has to be given to internal
employees as well as to external ones (suppliers, distributors, outsourcers, etc...)
The usage of freelance talents (like supertemps) and the utilization of temporary workers,
should not be confused with distrust of the company towards its employees, and it is
important for companies, we should say vital, to keep investing and developing talent into the
business. The relationship between people and organization they work for is a key activity for
success, and company’s identity should always be put at first place in human resources
managers.
11 A well thought management of temporary workers by HR department can turn out as a
precious resource for the company as a whole. The increasing tendency to put at first
transactional contract and to underestimate the psychological one is an issue that every
organization should tackle, productivity and efficiency are more related to matters such as
organizational identity and managers-employees relationships than is usually thought,. When
employment is traded as a commodity, the traditional social aspect of the employment
relationship fades away, possibly eroding valuable aspects of operational HRM. It appears
highly relevant how the psychological contract and the organization identity are changing the
face of HR practices and how much these topics count for a correct management of fixed
employees as well as for temps. Finally, it is important to understand how the operational
management of temporary employees may be improved within the confines of the HR
strategy chosen by the hiring organisation.
Is the Boss right?
12 References
“Jobless rate: A false friend to the BoE?”
January 22, 2014
Chris Giles, The Financial Times
“Somministrazione a tempo con motivazione più snella”
March 3, 2014
Giampiero Falasca, Il Sole 24 Ore
“If I was...considering temporary or contract work”
October 16, 2013
Phillip Ullmann, The Financial Times
“Il contratto collettivo fa spazio al lavoro a tempo”
Februray 3, 2014
Alberto Bosco & Josef Tschöll, Il Sole 24 Ore
“The Rise of the Supertemp”
May, 2012
Jody Greenstone Miller & Matt Miller, Harvard Business Review
“They’re not employees, they’re people”
February, 2002
Peter F. Drucker, Harvard Business Review
“Managing temporary workers: work identity, diversity and operational HR choices”
2005
Bas Koene & Maarten van Riemsdijk, Human Resource Management Journal, Vol 15, no 1
"Il modello imperfetto"
September 19, 2013
Ronald Kirbach, Die Zeit / L'Internazionale
“A new kind of job market” (video)
November, 2012
Wingham Rowan, Ted Salon, London
13 14