Employees: Contract vs Permanent

Contract Employees: Filling the Gap or Fudging the Issue?

May 25, 2008

All too often a manger is able to determine team structure strategy and yet is unable to act as budget restraint or other factors block progress.

Employees, both temporary and permanent, invariably fail to give their best when the leadership is uncertain of the situation. Delayed commitment from the organisation places an extra overhead on the process of change and development.

Better Planning

If a key role develops within an organisation, efficiency maximisation requires identification of function and role, and action to fill the position with an adequately skilled and trained employee.

Sadly this frequently fails to occur, especially in the corporate world. In the never ending struggle to keep the headcount/profit ratio where Wall Street or The City believes it should be, efficiency of structure is sacrificed.

This leads to long term use of contractor, consultant and freelance services as a direct result of line management either failing or being disallowed to fill roles in the most effective manner.

The bottom line is inefficiency. From an employer point of view, contractors, consultants, and freelancers should only ever be used where there is a temporary skill or manpower shortfall.

Perceived Attractions in the Use of Temporary Staff

Employers all too often perceive the lower on-boarding costs of temporary staff as overwhelmingly attractive. Less training and less benefit overhead do look good on paper, but there is a down-side.

Non-permanent employees are usually hired on the strength of portable skills. Effectively, they bring with them all that is necessary to perform the allocated task. However, if the organization gives nothing but remuneration to the individual, what motivation is there to encourage the individual to give back to the organisation more than the simple completion of allotted work?

Employee Engagement

Permanent employees can be actively engaged in the philosophy of the organisation, given training and advancement incentives and made to feel as though they are a part of something worthwhile. They can be encouraged to give a little more than work-for-money in the prospect that the organisation will reward effort and commitment with security and progress.

Temporary staff, either by their own desire to be independent or because the implications of inclusion would lend them permanent employee status in a legal sense, are often excluded from the sense of belonging.

Methods used to motivate contract staff are therefore radically different from those used for permanent employees.

Identifying the Permanence of a Role

A temporary skill or manpower shortfall may be caused by unplanned absence, or by a temporary increase in workload. However, manpower shortage is too frequently quantified by management in a subjective fashion. Stress within a team is perceived or foreseen and its cause is presumed without any attempt to measure work load balance. This approach makes it difficult to assess the full effect of a shortfall whether long or short term. It is rare for key roles, key personnel and individual input to team effort to be clearly identified making it difficult to foresee the effects that change may have of performance.

In order to accurately assess staffing needs, process and performance must be quantified. This is not such a daunting task as it may appear.

Performance of everyday tasks such as answering the telephone, stocking the stationary cupboard and answering customer enquiries are often left to individual definition. The discovery of the process steps required to achieve a satisfactory result are often within the scope of the individual, but methods are passed on by one-to-one training in a verbal fashion, documentation rarely being used.

Formal documentation of processes simplifies training and allows the organization to present standard methods to the outside world. It also enables management to build redundancy into many of the team tasks performed in the working day. Role substitution then becomes a reality.

The main gain is that by substitution, a manager can achieve insight into how well different individuals perform different tasks and thereby quantify both tasks and employee performance.

As a spin-off benefit, documentation also empowers staff by the establishment of operational standards. People work better if they are sure of what they need to do to accomplish a given task.

Use of process documentation, the flexibility it delivers and the reduced training burden it provides, allows the manager to see much more clearly the impact of skill and manpower shortages. It also affords the development of clear business case in the event of a headcount increase requirement and lays a foundation for alternative strategy planning.

The copyright of the article Employees: Contract vs Permanent in Human Resources Management is owned by Chris A Watkins. Permission to republish Employees: Contract vs Permanent in print or online must be granted by the author in writing.