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Flexible forms of
employment are on the increase in the UK. This
trend is supported by the government, the CBI,
all the major political parties, the European
Commission and most academics and journalists in
the field.
The main benefits are
reported to be
- greater efficiency in
use of resources - including human
resources
- greater productivity
- improved
competitiveness
- greater ability to
respond to fluctuations in demand
- employees are better
able to dovetail work with other life
commitments (e.g. through term-time
working)
- workers gain wider
experience, improve their skills, develop
their "employability" and
commercial "edge" by working on
a variety of limited term contracts in a
variety of employment situations.
That's the theory. For
those eager to build a portfolio career in a
clover-leaf organisation, achieving a high
income, job satisfaction, personal autonomy and a
good work-life balance, a la Charles Handy,
things couldn't be better.
But does the theory match
the reality? Some think not.
Flexible work and
"contract chaos"
The trend to more flexible
forms of employment has inevitably led to the
rise of a variety of innovative forms of
contract. ESRC funded research at Birkbeck
College, University of London, is examining the
effects on companies and employees of the use of
new forms of contract.
Preliminary conclusions
from the research state the following:
- there is a growing
scepticism in organisations
about flexible employment practices
- there is developing a
form of contract chaos,
with organisations unable to keep track
of the the variety of contract being used
- the range of
employment contracts among people working
together leads to low perceptions
of fairness and low trust - in other
words to a poor
"psychological contract"
- the attempt to achieve
performance gains through a
cost-reduction strategy is backfiring
at high cost to both employer
and employee, as this is linked to lower
commitment and possibly to lower
effort
- Human Resource
specialists are responding not to the
evidence of organisational psychologists
and other researchers but to imperatives
of cost and fashion which are
often imposed on them by
the boardroom.
This is pretty damning
stuff, although the authors acknowledge the
tentative nature of these findings. But is it a
fair picture of the current state of play?
Focus
on temporary contracts
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The study so
far focuses on the variety of
short-term/temporary contracts. These are
certainly on the increase:
- between 1992 and 1996
total UK numbers in temporary work
rose by 30% (total employment rose by
2.4% in that period)
- fixed term contracts
rose by 25%
- agency temping rose by
37%
- 9.2% of all employees
are temporary
- 57% of firms use
temporary workers.
Various models have been
suggested to unify the employment trends at work
here, looking at the roles of core and
complementary workers in organisations. But there
are complex processes at work, with reasons for
employing temporary workers varying from sector
to sector and firms within industrial sectors -
even departments within the same company may face
different considerations and imperatives.
Broadly, however, these
imperatives include
- the need to cut costs
- the need to
concentrate on a company's core
function(s), while outsourcing non-core
activities to whoever can deliver them
most cost-effectively
- pressures or
requirements to develop internal markets
- legislation for
compulsory competitive tendering and
"best value" in public bodies
- preparations for
privatisation, sell-offs, demerger etc.
Often changes to the
structure of employment in a company are the
result of a major restructuring/business process
re-engineering exercise. And often these are
conducted by highly paid consultants, who in this study are accused of following management fashion
rather than responding to the particular needs of
the organisation.
One of the outcomes of this
kind of business transformation are new forms of
employment supported by innovative contracts:
- fixed term contracts
- use of casual labour
- outsourcing
- use of agency labour
(whose contract may be with agency,
rather than with the organisation worked
for)
- freelance consultancy
(often using previously employed people
on job-by-job contracts but now also
allowed to work elsewhere)
- "company
first" contracts (where workers have
a contract to work a set number of hours
for a company that has first call on
their services but otherwise are free
agents)
- annualised hours
contracts
- term time working
(with "holidays" unpaid, or
covered by small retainer)
- "zero hours"
contracts
- other forms of
variable hours contracts
The second half of this
list might well be forms of non-standard
permanent employment, but no doubt there
existence in an organisation which also employs
non-permanent workers might all be considered to
add to the "contract chaos".
Temporary
workers in the real world
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The reasons
cited in the study for the use of flexible
contracts are essentially cost, flexibility and
fashion. Not mentioned are
- organisational
uncertainty
- fixed term tasks,
and
- staff pull (as opposed
to organisational push).
For example, many firms are
unwilling to raise unrealistic expectations and
knowingly set up a permanent contract - with the
consequent redundancy implications - when a job
has a limited life. There are a number of good
reasons why it may have a limited life:
- because the
organisation has not yet decided how to
move forward
- the job may have a
fixed outcome after which the post is no
longer needed., or
- it may be expedient to
appoint a temporary job holder whilst the
requirements for the permanent candidate
are decided - it may even be the job of
the temporary employee to determine what
the job involves.
The Birkbeck study however
does attempt to tackle the issue from the
employee's point of view, saying
"In the UK much of
the research and policy on new forms of
employment has been dominated by labour
economists who tend to under-emphasise the
subjective expectations and the experiences
of employees".
So the study is a
deliberate attempt to redress the balance.
The
desire for security
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The study
cites examples where employees are outsourced to
organisations which are more demanding, but where
they may become more successful and more secure,
and others where people working for temporary
agencies have a reasonable expectation of both
security and interesting work. However,
insecurity is seen as one of the most pronounced
features of this new world of work.
Insecurity, however, is by
no means limited to those in temporary work. The
long hours culture which has developed and the
increase in work-related stress are signs that
the other 91% of employees (the
"permanent" ones) are also under
increasing pressure, often feeling that their job
is on the line.
How security affects work
performance is double-edged. On the one hand it
can, as the authors of the study assert, erode
commitment. But equally, there is plenty of
evidence that when employees enter the
"comfort zone" of a "job for
life" there can be a tendency to coast, and
just do enough to get through the day. This can
often be very frustrating for workers on
attachment to particular projects, people on
temporary contracts and consultants, whose
reputation and chance of future work is on the
line, but is jeopardised by sluggish and
complacent responses from permanent staff who may
have no incentive to invest in the ownership of a
project.
The
"psychological contract"
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One of the
more tentative areas of the study relates to the
concept of the "psychological
contract", or the "set of unwritten
reciprocal expectations between the individual
employee and the organisation". The use of
fixed term contracts is claimed to have a
negative impact on the psychological contract,
albeit an indirect one.
This is because of a a
connection between permanent contracts,
"progressive" HR practices (such as
filling vacancies from within the organisation!)
and a "positive" psychological contract
and greater organisational commitment. It is
claimed that
"The study
provides some very tentative support for the
negative role of fixed term contracts,
although the findings are more clear-cut in
demonstrating the perceived advantages of a
set of human resource policies which include
job security and use of an internal labour
market".
But in many ways this does
no more than to state the obvious: give someone a
job for life, and isolate them from external
competition for promotion, and they are less
likely to leave the organisation. But whether
this improves the organisations competitiveness,
or enables individuals to maximise their
potential is quite another matter. It seems like
a return to the Seventies is being argued for
here. But having job security, or a
"positive psychological contract", on
the Titanic would be of arguable worth - in the
end the illusion catches up with you.
HR
and non-core workers
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There are
some important issues to be explored here, but it
is equally important not to underpin
research with a nostalgia for a world of work
which has gone for good.
The key issues are
- how to develop a
strong sense of commitment in all
workers, core and non-core, permanent and
non-permanent
- how to develop
effective working relations between
payroll staff and external contractors
- how to tackle issues
such as training and career development
for non-permanent staff
- how to tap in most
effectively to the knowledge base of
non-permanent workers, whose experience
outside the organisation can be of
immense worth.
Having sensible and
equitable contract arrangements is essential for
the smooth running of all organisations.
Permanent staff as much as non-permanent can
become demotivated when colleagues are enjoying
better pay and conditions for comparable work.
Fairness all round, rather than uniformity in
types of employment, must be the goal.
Further
details
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Further
details of the study, Innovative Employment
Contracts: A Flexible Friend?, by David
Guest, Kate MacKenzie Davey and Christopher
Smewing, are available from the Department of
Organizational Psychology, Birkbeck College,
University of London, Malet Street, London WC1E
7HX, UK.
Tel: +44 171 631 6751
Fax: +44 171 631 6750
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