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Strategic issues & choices in using contingent workforce
1. Strategic Issues and Choices in Using
Contingent and Flexible Workers
Dr. G C Mohanta, BE(Mech), MSc(Engg), MBA, PhD(Mgt)
Professor
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. 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. 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. 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. Flexible Schedules
Flexible schedules contribute to lowest
cost imperatives
Flexible employees demonstrate lower
absenteeism than employee with fixed work
schedules
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. 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. 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. 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. 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. 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. 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. 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. 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?
Hinweis der Redaktion
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.