592-HRM RESEARCH PROJECT
Deonpalmgrove
Temporaryvs.Permanent-Against.docx
Disadvantages of Temporary Workers
Permanent and Temporary Workers Defined
A permanent employee typically works full time under a supervisor and employment continues indefinitely (Kalleberg, 2000 as cited in Wilkin, 2013). In contrast a temporary employee can encompass a multitude of descriptions. A temporary employee can be placed from an agency, directly hired from a company, or be based on contract or seasonal work (Wilkin, 2013). Temporary workers are employed for a limited and specific amount of time (Kirk & Belovics, 2008, p.131). Temporary work is not for everyone – "those who value stability, knowing co-workers well, or knowing exactly what they are expected to do each day will not enjoy work as a career temp" (Silvasi-Patchin, & Newlon, 1992).
Overview of Disadvantages for Temporary Employee
Temporary employees generally have decreased wages, benefits, and protection (Kirk & Belovics, 2008, p.131). Perks like “health insurance, paid vacations, and retirement plans” are not typically offered to temporary employees (Kirk & Belovics, 2008, p.136). Low wages are offered for monotonous work. Temporary employees’ positions are also insecure. This instability makes it difficult to plan expenses. What starts in the work environment filters into temporary employee’s personal lives and impacts their financial stability and happiness. Siauliai (2013) surveyed temporary employees and found their highest grievances were: "instability; no career opportunities; waiting for a call; difficult to plan expenses; easy loss of incomes; no financial guarantees; a contract may be terminated without any explanation; no job description; long work hours; poor social guarantees; fear of losing a job; wages lower than under a permanent contract; the fact that it is a temporary employment; low labor supply; unskilled work is offered" (Siauliai, 2013, p.68). These disadvantages focus on lack of security and stability that lead to reduced career options. Temporary employees become isolated and have reduced self-esteem when permanent employees treat them as outsiders who will not be around long enough to become part of the group (Kirk & Belovics, 2008, p.136).
Overview of Disadvantages for Employer
An employer must be wary of consequences of hiring a temporary worker. Due to a lack of loyalty to a company a temporary worker may lack commitment to the organization and quit without notice or disregard a confidentiality agreement and leak sensitive company information (Kirk & Belovics, 2008, p.135). This volatile environment reduces stability for the company and surrounding employees. Temporary employees operate as individuals and do not “embrace the company’s mission and values” (Kirk & Belovics, 2008, p.135). Training must be provided to temporary employees. This training is usually job role specific and not the same training provided to the rest of the company. Without this training the chance of mistakes is increased (Kirk & Belovics, 2008, p.135). Legally an organization is responsible for their employees’ actions, whether they are a permanent or temporary employee (Kirk & Belovics, 2008, p.135). If hiring a permanent employee these disadvantages are not as present. Permanent employees are more loyal, create a stabile work environment, and a seamless workflow.
Career Path
Employment uncertainty is a barrier for temporary employees to plan and manage their career (Redpath, Hurst, & Devine, 2007). Temporary employees are typically hired for the skills they already possess which reduces their chances to expand their skillset (Redpath, Hurst, & Devine, 2007). Long term, contingent employment does not fit with career prospects. Unless a temporary worker is able to find permanent employment they will become “permanent ‘helpers’ in the labor market” without stability (Siauliai, 2013, p.67). Temporary employees may reduce permanent employees wages because their wage rates could be lower, which leads to a competition for a positon (Motiejunaite (2007) as cited in Siauliai, 2013, p.66). Temporary employees may have a lower level of personal satisfaction and identity. Many “still crave a permanent niche because they continue to regard a job as something defined and something that defines them" (Ettorre, 1994, p.16).
Training
Training presents issues for temporary and permanent employees as well as management. If going through an agency, managers rely on the agencies screening for the specific required skills. Due to an increase in hard-to-find skills, temp agencies "have to do more training and orientation than ever before" (Ettorre, 1994, p.14). The use of temporary employees triggers a reduction of in-house experts as knowledge and expertise leave with the temporary employee. As more companies utilize temporary workers "they might come to depend on these workers for strategic work, eroding the quality of their permanent workforce and creating a network of external providers. Prices for expertise go up, and companies find themselves without core expertise in house" (Ettorre, 1994, p.15). Temporary workers are overall “less likely to receive training from employers than permanent workers" because employers are concerned with receiving a return on their investment (Martin & Stancanelli, 2002). Bringing temporary employees in causes a disruption in workflow. Permanent employees must take time to train temporary employees on basic tasks specific to the company. This may lead to an internal conflict because permanent employees have to take on additional duties outside of their job role (Freeman, Gonos, 2006) as cited in Siauliai, 2013, p.66).
Legal and Safety Issues
Legal issues present an additional burden on HR to know the rules and risks of hiring a temporary employee. Without a consistent definition of types of employees, labor laws often conflict which makes it “difficult to conform to all legal standards" (Ettorre, 1994, p.14). Companies may face additional scrutiny if they select to hire temporary workers solely to “avoid paying benefits or payroll taxes" (Ettorre, 1994, p.15). Benefits may be voluntarily provided by employers, with some countries requiring a minimum contribution period (Martin & Stancanelli, 2002). At a minimum, companies should investigate: “the type of work done by the nontraditional employee, the method of payment, the duration of the job or project, how the employee performs the work, and whether he or she is working for any other company" (Ettorre, 1994, p.15).
Financial Costs
Hiring a temporary employee does not come without cost. Agencies require a fee for their services. If a contract needs to be terminated early, to end employment or transition to permanent employment, a contract buyout fee may apply. Wage rates are typically lower than permanent employees, unless unique skills are sought after (Addison, Surfield, 2005; Cox & Gtobar, 2001 as cited in Siauliai, 2013, p.66). If temporary employees are paid less than permanent employees, they have lower levels of commitment and loyalty, which increases turnover and increases overall employment costs (Martinkus, Bertinskiene, 2005 as cited in Siauliai, 2013, p.66).
Morale, Teamwork, and Management
Temporary employees are hired to perform a specific task or project, making their employment relationship transactional. This limits employee engagement leading temporary employees to “not become attached to the organization" which results in less discretionary effort (Redpath, Hurst, & Devine, 2007). Friction between permanent and temporary employees creates an "us and them mentality" and reduces productivity (Ettorre, 1994, p.15). Failure of temporary employees to participate in company processes creates a “negative impact on work performance and psychological atmosphere" (Siauliai, 2013, p.65). This negative impact results in a misbalance of teams and inability to build teams (Carre, 2003 as cited in Siauliai, 2013, p.66). As the structure of the workforce changes, management must be taught how to guide and direct the changing workforce in order to create stability (Redpath, Hurst, & Devine, 2007; Ettorre, 1994, p.15)
Impacts on Job Satisfaction
“Contingent workers experience lower job satisfaction” compared to permanent employees (Wilkin, 2013). Job satisfaction is "associated with task performance, contextual performance, and turnover" (Judge, Thoresen, Bono & Patton, 2001; Organ & Ryan, 1995; Tett & Meyer, 1993 as cited in Wilkin, 2013). Increased job satisfaction increases “job performance, citizenship behaviors, and [reduces] turnover" (Wilkin, 2013). If temporary employees have low job satisfaction their job performance and citizenship behavior decrease and turnover increases. People who have “high satisfaction with their jobs are also likely to report high satisfaction with other life domains such as nonwork activities and family" (Heller, Judge, & Watson, 2002; Tait, Padgett, & Balwin, 1989 as cited in Wilkin, 2013). Reduction in job satisfaction for temporary employees negatively impacts satisfaction with their life.
Permanent and temporary workers compare themselves and the outcomes they receive (Festinger, 1954; Goethals, 1986; Kruglanski & Mayseless, 1990 as cited in Wilkin, 2013). If temporary workers are compared to permanent works, they are not happy; however if temporary workers are compared to unemployed people, they are happy (Wilkin, 2013). If similar outcomes are not received then temporary employees may "experience a sense of deprivation, and consequently lower job satisfaction" (Wilkin, 2013). Job satisfaction for temporary employees is impacted by "lower pay and fewer benefits”, little participation in career planning and training, and holding lower ranks in their workplace (Wilkin, 2013).
Reduction in job satisfaction has a "negative impact on personal lives. The most severe effects were felt in the areas of personal career goals and objectives, personal finances, opportunities for training and development, changes for promotion, and control" (Redpath, Hurst, & Devine, 2007). Because temporary employees were only trained for their current job, there is a barrier to the next level of proficiency. This impacts their long term career path and potential job satisfaction. Work life balance is impacted as temporary workers may need to move to find opportunities, receive no benefits or time off (Redpath, Hurst, & Devine, 2007). In order to continue finding work, temporary employees must ensure continued high performance. Anxiety and fear is compounded by insecurity and “frustrations from not knowing if contracts would be extended…or if they would secure another contract" (Redpath, Hurst, & Devine, 2007). Labor instability affects family formation, results in lower marriage rates (Ahituv, Lerman 2005 as cited in Siauliai, 2013, p.66).
Impacts on Job Security
Although temporary employees have limited career opportunities permanent employees may feel insecure (Goebl, 2003 as cited in Siauliai, 2013, p.66). Psychological contracts signify what contributions an employee owes their employer and what contributions their employer owes them (Kraimer, Wayne, & Liden, 2005). Employees with perceived low job security are more likely to believe their organization is using temporary workers due to a poor reflection they have made. They see temporary workers as a threat and feel vulnerable because of this threat (Kraimer, Wayne, & Liden, 2005). "Temporary workers become potential rivals" for full time employees as they view temporary employees as possible outsourcing and candidates for future full time positions (Kraimer, Wayne, & Liden, 2005). Although employees may perceive that temporary employees pose a threat to their job security, they still believe temporary employees are beneficial to the company (Kraimer, Wayne, & Liden, 2005). Permanent employees think hiring a temp is an "indication that there is less obligation for them to perform well. Low job security is also considered to be psychologically stressful, and one way to alleviate that stress is to decrease job performance" (Kraimer, Wayne, & Liden, 2005). Permanent employees with high job security see a benefit to temporary employees and maintain high levels of performance. Overall, temporary workers report less satisfaction with pay and job security than permanent workers (Martin & Stancanelli, 2002).
Exit, Voice, and Loyalty
Utilizing temporary and permanent employees within the same environment “worsened relations between managers and employees, decreased standard employees' loyalty, and increased their interest both in leaving their organizations and in exercising voice through unionization” (David-Blake, Broschak, & George, 2003). When permanent employees work alongside temporary employees they "exhibit lower levels of loyalty and intentions to remain with their organizations and higher intentions to unionize" as well as "report less trust in their organizations" (Kraimer, Wayne, & Liden, 2005). Different types of temporary workers cause different reactions in permanent employees. Contractors typically complement knowledge, whereas temporary employees supplement knowledge permanent employees are already providing. Contractors prefer contract work, whereas temporary workers would typically prefer permanent work. These differences in preferences lead permanent employees to accept contractors but dislike other temporary workers because they believe they could be replaced (David-Blake, Broschak, & George, 2003). Internal mobility decreased for lower level employees and increased for higher level employees in organizations that used temporary workers (David-Blake, Broschak, & George, 2003).
Temporary workers "limit coordination, learning, and shared values among coworkers" (David-Blake, Broschak, & George, 20003). Employee loyalty and peer relationships decrease when temporary employees are involved (David-Blake, Broschak, & George, 2003). With increased mobility of temporary workers, the work environment becomes destabilized (David-Blake, Broschak, & George, 2003). Using temporary employees "increases responsibility, decreases developmental and internal mobility opportunities, and decreases actual or perceived job security" for permanent employees (David-Blake, Broschak, & George, 2003). This increase in responsibility comes without an increase in compensation. Coworkers become responsible for training and supervising their coworkers. Management delegates complex tasks to permanent employees and they are responsible for errors temporary employees may produce. If this responsibility would formally be delegated permanent employees may adjust better to working with temporary employees (David-Blake, Broschak, & George, 2003, p.483).
Temps in Nursing
In the nursing field, researchers found reduced levels of care when temporary employees were used. Staff lacked continuity which compromised patients’ health due to more mistakes being made. Temporary employees would not be employed for long which reduced their incentive to provide quality care. Nurses felt instead of increasing staff levels to the quantity needed, the hospitals relied on temporary workers that were not prepared for the job. Temporary nurses did not enjoy the cycle of repeating orientations - "when you're always being oriented, there's no chance to organize or develop leadership qualities, or learn or know and work with a permanent staff" (Donovan, 1980). Due to the time it takes for a new temporary work to become versed in proper policy and procedure many permanent employees felt they could complete the job quicker and more accurately. Temporary employees are the perpetual newcomer who may suffer from loss of identity as they become lost in the shuffle (Donovan, 1980). Temporary employees feel they are left on the outside and lack authority, therefore they do not report unethical practices (Donovan, 1980).
Conclusion
Overall, temporary employees reduce employee satisfaction, job security, and increase orientation training and legal issues. An ill-defined career path and skills that become out of date reduce temporary employees’ commitment to continue as a temporary worker. Temporary employees provide lower quality work. Isolation and instability at work impacts their personal lives.
References
Davis-Blake, A., Broschak, J. P., & George, E. (2003). HAPPY TOGETHER? HOW USING NONSTANDARD WORKERS AFFECTS EXIT, VOICE, AND LOYALTY AMONG STANDARD EMPLOYEES. Academy Of Management Journal, 46(4), 475-485. doi:10.2307/30040639
Donovan, L. (1980). Is temporary staffing worth it?. Rn, 43(9), 37-101.
Ettorre, B. (1994). The contingency workforce moves mainstream. Management Review, 8310-16.
Kirk, J. J., & Belovics, R. (2008). a look into the temporary employment industry and its workers. Journal Of Employment Counseling, 45(3), 131-142.
Kraimer, M., Wayne, S., Liden, R., & Sparrowe, R. (n.d). The role of job security in understanding the relationship between employees' perceptions of temporary workers and employees' performance. Journal Of Applied Psychology, 90(2), 389-398.
Martin, J. P., & Stancanelli, E. (2002). Tackling some myths about temporary jobs. OECD Observer, (231/232), 41-43.
Redpath, L., Hurst, D., & Devine, K. (2007). Contingent Knowledge Worker Challenges. Human Resource Planning, 30(3), 33-38.
Silvasi-Patchin, J. A., & Newlon, B. J. (1992). Temporary Help Services: An Alternative Form of Employment. Journal Of Employment Counseling, 29(2), 84-87.
Svedaite, E., & Tamosiunas, T. (2013). Investigation of the Advantages and Disadvantages of Temporary Employment. Socialiniai Tyrimai, 2013(1), 64-70.
