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Strategic issues & choices in using contingent workforce

Strategic issues & choices in using contingent workforce



Strategic issues & choices in using contingent workforce

Strategic issues & choices in using contingent workforce



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  • Students will have various responses to each questions. Some type of “virtual leadership” will probably be necessary – maybe a rotating leader position. The virtual team will probably be selected much as any other team would be selected – based on skills, expertise, ability to collaborate, etc. The accountability is crucial when not face to face. They may email drafts of their work – one person circulates their draft and all edit or provide feedback, etc.

Strategic issues & choices in using contingent workforce Strategic issues & choices in using contingent workforce Presentation Transcript

  • Strategic Issues and Choices in Using Contingent and Flexible WorkersDr. 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 innovationCost control objective requires firms to reduce output costs per employeeContingent 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 ObjectivesEmployers’ use of well trained contingent workers also contributes through reduced training costsNot 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 SchedulesFlexible schedules contribute to lowest cost imperativesFlexible 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
  • Flexible work schedulesFlexible work schedules promote differentiation strategies for two reasons:First, flexible work schedules enable employees to work when they are at their physical or mental bestSome 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 EmploymentEmployers 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 EmploymentWorkers do not forget past practices that once led to job security and sound retirement benefitsWorkers 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 EmploymentFirst, both contingent and core workers may develop less loyalty for their employersHiring 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 EmploymentSecond, 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 EmploymentThird, 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 EmploymentFinally companies must bear the costs of training contingent workersIn many cases, employing contingent workers can be as costly as employing core workersSavings from not offering contingent workers discretionary benefits is offset by training costsThese 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
  • CaseEveryone telecommutes at your firm. All work is done invirtual teams of four. Divide up into groups of four andrespond 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?