Strategic issues & choices in using contingent workforce

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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

    1. 1. Strategic Issues and Choices in Using Contingent and Flexible WorkersDr. G C Mohanta, BE(Mech), MSc(Engg), MBA, PhD(Mgt) Professor
    2. 2. 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
    3. 3. 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
    4. 4. 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
    5. 5. 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
    6. 6. Flexible SchedulesFlexible schedules contribute to lowest cost imperativesFlexible employees demonstrate lower absenteeism than employee with fixed work schedules
    7. 7. 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
    8. 8. 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
    9. 9. 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
    10. 10. 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
    11. 11. 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
    12. 12. 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
    13. 13. 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
    14. 14. 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
    15. 15. 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?
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