Human resource Management
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8 The Flexible Workforce
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Learning Objectives
After reading this chapter, you will be able to:
1. Explain why flexibility is needed in the workplace.
2. Describe the factors that are changing the nature of work.
3. Explain the types of workers that constitute a flexible workforce and how their compensation and benefits compare with those of traditional employees.
4. Describe the different flexible work arrangements.
5. Explain how a small company can incorporate flexibility into its workforce.
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Section 8.1 The Need for Workplace Flexibility
Introduction Workin’ 9 to 5, what a way to make a livin’
This lyric from the 1980 Dolly Parton song “9-5” no longer captures everyone’s typical work- day. Today, people work in a variety of ways, whether 12-hour shifts, from 7 a.m. to 3 p.m., from home, for a set project, on a rotating schedule, or just a few days a week. Clearly, there are a lot more ways to structure work nowadays than the typical standard approach used in the past. These changes have come about due to economic pressures, demographic changes, and technological advancements. The structure of work and the people doing the work have evolved in response to these changes, with more changes expected in the future as additional changes occur in the world of work.
The previous chapters in the textbook covered compensation and benefits issues as they relate to a company’s traditional workforce, or those employees who work standard sched- ules (typically fixed eight-hour shifts, five days a week). With the large and increasing number of nontraditional employees, companies need to adjust their compensation and benefits poli- cies to incorporate the needs of these employees. In this chapter, we will discuss what those needs are and how companies can meet the needs of their ever-changing workforce. Do keep in mind, however, that a vast majority of the workforce works in traditional work settings due to business needs that dictate working during specific times and at specific places. Flexibility in these instances is often very difficult to implement.
Specifically, we will cover the changing nature of work and how that affects compensation and benefits policies. We will cover the different types of employees, such as contractors and temporary workers, and the different work arrangements, such as part time, flextime, and telecommuting, that create a flexible work environment. We will also cover the unique per- spective of small companies as they adapt to the flexible workforce.
8.1 The Need for Workplace Flexibility Workplace flexibility can be defined as “enabling employees to exercise some measure of control over when, where, and how much they work” as well as “providing opportunities for entry, exit, and re-entry to work over the course of employees’ careers” (Bond & Galinsky, 2011, p. 1).
Workplace flexibility has become more common in the modern workforce because of the increasing need by employees for some control over work arrangements due to factors such as a lack of time for personal issues, increasing numbers of dual-career families, and a blur- ring of the boundaries between work and nonwork. Parents don’t feel they have enough time to spend with their children, husbands and wives (or partners) don’t feel they have enough time to spend with each other, and employees don’t feel they have enough time to spend on themselves. As indicated in Figure 8.1, this sense of not having enough time is increasing.
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66%
55%
75%
61%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Children Spouse (or Partner) Themselves
Note: Data for "Themselves" as of 2002, the first year the data was collected
1992
2010
50%
64%
Section 8.1 The Need for Workplace Flexibility
In a survey by the Families and Work Institute, over 85% of employees indicated that they value the flexibility to manage work and personal/family life and consider it an important factor when looking for a new job (Tang & Wadsworth, 2010). In a recent survey of HR profes- sionals, 89% responded that flexible work arrangements will be more commonplace in the future (Society for Human Resource Management, 2014).
Employers, not just employees, can benefit from workplace flexibility. Given the value employ- ees place on flexibility, employers can use it as an incentive to attract employees and keep them engaged with the company, thus improving retention of talent (Thompson, Payne, & Taylor, 2014). Workplace flexibility, however, does have its downsides, such as increased administrative burdens on employers and difficulties managing across different flexible arrangements. Employees can also be negatively impacted by a sense of isolation or feeling out of the loop. Therefore, the pros and cons of flexible work arrangements as well as the needs of both the employer and the employee need to weighed before engaging in such an arrangement.
Knowing why such flexible arrangements are needed will help provide a better context for understanding the different workplace arrangements available. Many factors are in play that affect the workforce and create a need for some flexibility in its configura- tion. Some of these factors are voluntary and some are nonvoluntary, but together they are changing the way we work.
Critical Thinking
Why are employees wanting workplace flexibility? Do you expect this to change in the future?
Figure 8.1: Growing need for workplace flexibility
Flexible work arrangements allow employees to choose a work schedule that is more compatible with their lives.
Based on information from Workplace Flexibility in Manufacturing Companies by James T. Bond & Ellen Galinsky. Copyright © 2011, Families and Work Institute. http://www.familiesandwork.org
66%
55%
75%
61%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Children Spouse (or Partner) Themselves
Note: Data for "Themselves" as of 2002, the first year the data was collected
1992
2010
50%
64%
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100
90
80
70
60
50
40
30
20
10
0 Total, 16
years and over
16 to 19 years
20 to 24 years
25 to 54 years
55 to 64 years
65 to 74 years
75 years and over
Percent
2002 2012 Projected 20221992
Section 8.2 The Changing Nature of Work
8.2 The Changing Nature of Work As we discussed in Chapter 6, the workforce is changing as different generations join the pre- vious ones already working. Each generation has its own unique talents, perspectives, needs, and wants. These characteristics influence what people want from work, which affects what companies need to offer in terms of compensation and benefits. However, not only are work- ers changing, but so is the work environment. Technology and globalization have had huge impacts on the way business is done today. The world is getting bigger and smaller at the same time. Globalization has opened up the sharing and integration of markets and cultures, while technology has brought people and places closer together. As work and demographics change, the compensation and benefit strategies needed to motivate desired behavior also need to be adapted to take into account employee needs and wants.
Changing Demographics
The composition of workers has transformed due to the changing demographics of the work- force. The characteristics making up the work population are different than they were in the past. The workforce has gotten more diverse in terms of age, gender, and race. We’ll discuss each of these in turn.
Age The workforce is composed of workers with a wide variety of ages, and this wide dispersion of ages in the workforce is expected to continue in the future (see Figure 8.2).
Figure 8.2: Labor force participation rates by age
As projections show, there will continue to be many different generations working simultaneously, which impacts the structure of the workforce.
Bureau of Labor Statistics, U.S. Department of Labor, The Economics Daily, Labor force participation projected to fall for people under age 55 and rise for older age groups on the Internet at http://www.bls.gov/opub/ted/2014/ted_20140106.htm
100
90
80
70
60
50
40
30
20
10
0 Total, 16
years and over
16 to 19 years
20 to 24 years
25 to 54 years
55 to 64 years
65 to 74 years
75 years and over
Percent
2002 2012 Projected 20221992
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Section 8.2 The Changing Nature of Work
This means that there will continue to be many different generations in the workforce at the same time. We discussed the different generations and their impact on pay systems in Chap- ter 6. Now let’s look at the different generations in terms of how they approach work and what that means for the structure of the workforce.
The Silent Generation (those born during the Depression Era through the end of WWII) came of age in a time when work followed the traditional structure that was described at the begin- ning of the chapter—working 9 to 5. As they have gotten older, however, they are not as will- ing or able, due to other priorities or health reasons, to adhere to such stringent schedules. This has led them to pursue less demanding jobs (such as being a Walmart greeter) or vol- unteer duties in place of a job (as finances allow) in order to give themselves more flexibility with their time.
Baby Boomers (those born between 1946 and 1964) are similar to the Silent Generation in that they are used to the more typical 9-to-5 schedule, although their schedule evolved into an 8-to-5 day, with an hour off for lunch. The early members of this generation are of an age where they are likely retired or pursuing part-time or volunteer work, similar to the Silent Generation. The later members of this generation, however, are still needing to work, but they’ve figured out they want to spend their time doing something they like and that they find challenging. They are willing to change companies or start a second career in order to make that happen, and they are willing to try different ways other than the typical five-days-a-week job to do it.
Generation X (those born between 1965 and 1981) are midcareer and have many years of work left. This generation grew up with both parents working, so they were often home alone for many hours, hence earning the moniker “Latchkey Kids.” As such, they have tended to want more of a balance between work and family than what their parents were able to have. They want meaningful careers—and still need the money that comes along with that—and want to be involved in their children’s lives. Since they are still in the middle of child rearing, a flexible work schedule that allows time for dropping off children at school, seeing school plays, and participating in after-school activities such as dance and sports is important to them.
Millennials (those born between 1982 and 2000) don’t look for work-life balance in the same way that earlier generations, most notably Generation X and late Baby Boomers, do. Instead, they view work time and nonwork time as flowing from one to the other throughout the days and weeks. They want opportunities to pursue other activities at times that might be during core work hours while undertaking work during after-hour times. They want work schedules that allow them to do this without having a negative impact on how they are perceived at work.
As we mentioned in Chapter 6, members of Generation Z (those born after 2000) are still too young yet to have a big impact on the workforce. As this generation grows up and enters the workforce, these workers will have their own perceptions about work and how that fits into their overall life, which will lead to additional changes in work demographics.
Age impacts a worker’s pay due to the corresponding experience that typically comes with age. With all things equal, a younger worker doesn’t have as much experience and therefore earns less than an older, more experienced worker. Pay generally peaks between the ages of mid-40s and mid-50s. After this age, it gets harder to switch jobs and workers begin retiring, lowering the mean level of pay for this age group.
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Section 8.2 The Changing Nature of Work
The desirability of benefits can vary based on age. For example, retirement benefits are more of an immediate need for older workers (although younger ones benefit tremendously from sav- ing early!). Health insurance also has varying levels of importance to workers of all ages. Younger workers (Millennials) may not need health insurance due to the ability to stay on their parents’ plan well into their mid-20s. Workers who still have children at home will focus on insurance that provides good health care coverage for their children. Older workers whose children are grown and on their own will not be concerned with dependent coverage. They, however, will be concerned with having adequate coverage for themselves, especially since health issues typi- cally increase with age. In fact, in a phenomenon known as job lock, many workers are not able to retire because of the financial costs related to medical care. Therefore, they have to continue to work in order to receive health insurance (Burke & Weathington, 2008).
The different generations, each in their own way, have created a need for a more flex- ible workforce that provides opportunities for meaningful work that doesn’t consume the worker’s time. This is reflected in the diverse demographics of employees who are now commonplace in the workplace as well as various work arrangements, which will be discussed later in this chapter.
Gender In the past, it was a common notion that a man’s place was at work while a woman’s place was at home. The man was expected to go to work, get a paycheck, and provide financially for the family. The woman was expected to focus on raising the chil- dren and maintaining the home.
As part of the Industrial Revolution, women began entering the workforce as they left the family farms and moved to the cities. World War II created an influx of women in the workforce as they filled in for the men fighting overseas in the war.
When the war ended, many women went back to the home, but a number of them chose to stay in the workforce. Even though more women became part of the workforce like the men, gen- der roles essentially stayed the same. Women were expected to continue to raise the children and maintain the home in addition to whatever outside work they did. Their work was viewed more as an extra rather than as an essential part of their or their family’s lives. As such, they were not treated equally in terms of pay, promotions, and job responsibilities.
Critical Thinking
Are your needs similar or dissimilar to the typical working needs for your demographics?
GraphicArtis/Getty Images
With many of the nation’s men over- seas, women were called upon to enter the workforce.
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50%
40%
30%
20%
10%
0% 1995 2003 20111999 2007 2014
Note: Based on the percentage of women CEOs at the time of the annual published Fortune 500 list. For 2014, share is as of November.
5.2%
Section 8.2 The Changing Nature of Work
This viewpoint about the roles of the different genders is still around but is slowly changing. From 1977 to 2008, the percentage of employees who believed it was better “if the man earns the money and the women takes care of the home and children” dropped from 64% to 39% (Galinsky, Aumann, & Bond, 2011, p. 10). It is still a difficult environment for women given that two in five employees continue to believe in the traditional gender roles. This is causing women to still not be treated equally in the workforce. For 2014, the median weekly earnings for women was 82.5% that of men’s wages; this means they earn 82.5 cents for every dollar a man earns (U.S. Bureau of Labor Statistics, 2014b). Reasons for this continued disparity range from outright discrimination to the choice of occupation. Change is slowly happening, however, with some estimates indicating that women earn more than men in one-third of households.
The number of women in chief executive roles is still slim. There are only 25 women chief executive officers out of the Fortune 500 list of top U.S. closely held and public companies based on gross revenue (Leahey & Fairchild, 2015). This represents just a small portion of women in executive roles, although it is an improvement from 1995, when there were no women CEOs in the Fortune 500 (see Figure 8.3).
Some of this is due to women choosing not to pursue an executive position due to not wanting to put the hours into work that such a position requires because they want more of a work-life balance; this is true for many men as well. Some of it, though, is due to the lack of opportuni- ties or difficulty women have in gaining the experience and recognition needed to be selected for an executive position.
Figure 8.3: Number of women CEOs in the Fortune 500
While change is gradually happening, the number of women in executive roles is still small. In 2014, only 5.2% of the CEOs of Fortune 500 companies were women.
Source: “Women and Leadership,” Pew Research Center, Washington, DC (January, 2015) http://www.pewsocialtrends.org/2015/01/14 /women-and-leadership/.
50%
40%
30%
20%
10%
0% 1995 2003 20111999 2007 2014
Note: Based on the percentage of women CEOs at the time of the annual published Fortune 500 list. For 2014, share is as of November.
5.2%
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80%
70%
60%
50%
40%
30%
20%
10%
0%
47.4%
46.3%
1975 1985 19951980 1990 2005 2010 20132000
All women Mothers with children under 18
Note: Participation rates for all women are 1975–2013 annual averages; participation rates for mothers with children under 18 are for March 1975–2013.
70.3%
52.7%
Section 8.2 The Changing Nature of Work
This creates extra issues for mothers in the workforce because they are tied to their children’s activities, schedules, and illnesses that they must balance along with typical work duties. Because women are usually perceived as the family’s caregiver, they are also usually the ones tasked with taking care of aging parents. Often, they are faced with both—raising children and caring for elderly parents—during the same period, further stretching their time and efforts.
There are indications that this situation is changing. The gap between women and men caring for children is narrowing (see Figure 8.5).
The upward trend of fathers spending more time with their children is even more pronounced with Millennial fathers. They are spending 71% more time with their children than fathers of that same age did 30 years ago (Galinsky et al., 2011). This suggests that the gap will con- tinue to narrow as fathers continue taking a more active role in child rearing, with a growing number opting to stay home to raise children. This would represent in a shift in the attitudes toward gender roles and open up opportunities for both genders, opportunities that compa- nies need to take into account when they are dealing with their employees. Employee benefits will need to adapt to meet this change. Maternity and paternity leave, flexible work schedules, and insurance for dependents all become especially important in today’s workforce.
As can be seen in Figure 8.4, the number of women in the workforce who are raising children has increased substantially from 1975, far outpacing the increase of working women in general.
Figure 8.4: Mothers in the workforce
The number of mothers in the workforce has had a more substantial rise than the number of women working in general.
Source: U.S. Department of Labor
80%
70%
60%
50%
40%
30%
20%
10%
0%
47.4%
46.3%
1975 1985 19951980 1990 2005 2010 20132000
All women Mothers with children under 18
Note: Participation rates for all women are 1975–2013 annual averages; participation rates for mothers with children under 18 are for March 1975–2013.
70.3%
52.7%
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4.5
3.5
2.5
1.5
0.5
4
3
2
1
0
H o
u rs
3.8
2
4
3.1
20081977
Note: Children are all under the age of 13.
All fathers All mothers
Section 8.2 The Changing Nature of Work
Race Not only is the split between gender changing in the workforce, but so is the racial makeup of employees (see Figure 8.6).
White continues to be the majority race in the workforce; however, it is expected to represent just over 60% in 2022, down from over 71% in 2002. The number of Hispanics is rapidly growing, from just over 12% in 2002 to an estimated almost 20% in 2022. Blacks and Asians are expected to have modest growth in that time frame.
Race has an impact on pay, with Asian workers earning $965 in median weekly earnings, com- pared to $829 for White workers. Black and Hispanic/Latino workers lag behind, with $647 and $601 in median weekly earnings, respectively (U.S. Bureau of Labor Statistics, 2015b). The workforce is becoming more diverse in terms of racial identity, so companies will need to be cognizant of this and make sure they are taking into account all of the needs of their workforce. This includes efforts to equalize pay as well as to address specific individual needs related to benefits. Care must be taken not to rely on stereotypes but to get a true assessment of what employees need.
Watch the following video about race and identity: https://www.youtube.com/watch?list=P LsRNoUx8w3rP3LdCenGW3Fb-IbhQ38Sd_&v=u5GCetbP7Fg
This link from the United States Census Bureau has other statistics about the labor force split by gender.
http://www.census.gov/library/infographics/labor_force.html
Figure 8.5: Average time spent with children on workdays
The increasingly active role that fathers have played in child rearing causes a shift in attitudes toward gender roles and opportunities.
Source: Times Are Changing: Gender and Generation at Work and at Home. Copyright © 2009, Families and Work Institute. Revised August 2011, by Ellen Galinsky, Kerstin Aumann, James T. Bond.
4.5
3.5
2.5
1.5
0.5
4
3
2
1
0
H o
u rs
3.8
2
4
3.1
20081977
Note: Children are all under the age of 13.
All fathers All mothers
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2002
4.6% 11.4%
12.4%
71.3%
2022 6.2%
12.4%
19.1% 60.8%
2012
5.3%
11.9%
15.7% 65.7%
White
Hispanic
Black
Asian
Section 8.2 The Changing Nature of Work
Economy
The Great Recession from 2008 has left a lasting impact on the workforce. Many workers were laid off during the recession and have had a difficult time finding a job at their previous level or in their chosen field. This has created a large part of the workforce that is working at a job rather than a career. Many workers are also not able to find a full-time job and have had to settle for working part time at one job or more. At the same time, the Great Recession also highlighted to a number of people that they were not happy with their chosen work life and helped prompt many to make career changes that better fit what they were looking for out of life. This has resulted in a mix of workers from different backgrounds and fields working together, changing the dynamics of the office.
Additionally, the passage of the Affordable Care Act (discussed in Chapter 2) has created ram- ifications for companies that have full-time employees. A response by some companies has been to reduce job hours below the threshold level that requires compliance with the act, which has negatively affected some workers. Other workers have changed jobs in order to gain employment with companies that provide health care insurance. As implementation of the Affordable Care Act continues, additional impacts on the workforce may be seen.
Education
The level of education in the workplace has increased dramatically over the last 70 years, as illustrated in Figure 8.7.
Figure 8.6: Change in racial composition of workforce
In addition to shifts regarding gender and age, the racial composition of the workforce is gradually changing.
Source: Employment Projections program, U.S. Department of Labor, U.S. Bureau of Labor Statistics, http://www.bls.gov/emp/ep_table _304.htm
2002
4.6% 11.4%
12.4%
71.3%
2022 6.2%
12.4%
19.1% 60.8%
2012
5.3%
11.9%
15.7% 65.7%
White
Hispanic
Black
Asian
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250,000
200,000
150,000
100,000
50,000
14,627
56,742
Silent Generation
Baby Boomers Generation X Millennials
66,879
117,949
Bachelor’s Degree or Higher
High School, or some College
Less than High School 24,458
19 4 0
19 5 2
19 6 0
19 6 5
19 6 8
19 7 1
19 74
19 7 7
19 8 0
19 8 3
19 8 6
19 8 9
19 9 2
19 9 5
19 9 8
2 0 01
2 0 0 4
2 0 0 7
2 010
2 013
P
o p u la
tio n in
T h o u sa
n d s
3,407
Section 8.2 The Changing Nature of Work
From 1940 to 2014, the percentage of the adult population who had a bachelor’s degree or higher jumped from 4.6% to 32.0%, while those with high school diplomas increased from 19.6% to 56.4%. Correspondingly, the number with less than a high school education dropped from over three-quarters (75.9%) of the population to just over a tenth (11.7%) of the popu- lation (U.S. Census Bureau, 2014). The disparity between the levels of education from the oldest generation in the workforce (the Silent Generation) to the youngest (the Millennials) is large. The majority of the Silent Generation have less than a high school education, with many having only an eighth-grade education (Synder, 1993), while the majority of the Millennials have a high school education or higher.
The rapid introduction of technology, inventions, and machinery over the past decades has prompted the growing need for increased levels of worker education, which has led to the dramatic switch in education levels discussed above. The ever-changing nature of technology and the widespread globalization of business are continuing to fuel the need for an educated workforce. The Great Recession also prompted many workers to go back to college or pursue advanced degrees due to a shortage of available jobs. As such, workers need flexibility with work hours to accommodate their school schedules and studies.
Figure 8.7: Education levels for adults over age 25, from 1940 to 2014
Technology and globalization have prompted a need for an increasingly educated workforce that can handle these changes.
Source: U.S. Census Bureau, 1947, 1952–2002 March Current Population Survey, 2003–20 14 Annual social and Economic Supplement to U.S. Census Bureau, http://www.census.gov/hhes/socdemo/education/data/cps/historical/fig2.jpg
250,000
200,000
150,000
100,000
50,000
14,627
56,742
Silent Generation
Baby Boomers Generation X Millennials
66,879
117,949
Bachelor’s Degree or Higher
High School, or some College
Less than High School 24,458
19 4 0
19 5 2
19 6 0
19 6 5
19 6 8
19 7 1
19 74
19 7 7
19 8 0
19 8 3
19 8 6
19 8 9
19 9 2
19 9 5
19 9 8
2 0 01
2 0 0 4
2 0 0 7
2 010
2 013
P
o p u la
tio n in
T h o u sa
n d s
3,407
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Unemployment rate 2014 (%) Median weekly earnings in 2014 ($)
2.1
1.9
2.8
3.5
6.0
6.0
9.0
1,591
1,639
1,326
1,101
792
741
668
488
Doctoral degree
Professional degree
Master’s Degree
Bachelor’s degree
Associate’s degree
Some college, no degree
High school diploma
Less than a high school
diplomaAll workers: 5% All workers: $839
Note: Data are for persons age 25 and over. Earnings are for full-time wage and salary workers.
4.5
Section 8.2 The Changing Nature of Work
Not only does the level of education have an impact on the need for a flexible workforce, it also has an impact on compensation and unemployment levels. There is an inverse relation- ship between education and unemployment rates and a positive relationship between educa- tion and earnings: The greater the education, the lower the unemployment rates and the higher the earnings. This holds true up to a professional degree and then there is a slight decline with the attainment of a doctoral degree (see Figure 8.8).
Figure 8.8: Impact of education on earnings and unemployment rates
With the exception of a doctoral degree, higher levels of education result in higher earnings and lower unemployment ratings.
Source: U.S. Bureau of Labor Statistics
Unemployment rate 2014 (%) Median weekly earnings in 2014 ($)
2.1
1.9
2.8
3.5
6.0
6.0
9.0
1,591
1,639
1,326
1,101
792
741
668
488
Doctoral degree
Professional degree
Master’s Degree
Bachelor’s degree
Associate’s degree
Some college, no degree
High school diploma
Less than a high school
diplomaAll workers: 5% All workers: $839
Note: Data are for persons age 25 and over. Earnings are for full-time wage and salary workers.
4.5
This has implications as companies set their compensation systems. As education increases, the amount that employees expect to be paid increases. At the same time, there will be a larger number of skilled workers available, which could hold down wage increases under the laws of supply and demand. Conversely, a higher-educated workforce does cause issues for companies that typically have lower-skilled jobs that require little educational background because they will face a shortage of available workers—the higher-educated workers simply will not want to take jobs that require little to no education.
Waves of Work
As we mentioned in Chapter 1, human history has gone through three waves (or ages) of revolutionary change: the Agricultural Revolution (beginning about 9000 BCE), the Indus- trial Revolution (from the late 18th century through the beginning of the 20th century), and the Information Revolution (from the mid-20th century onwards) (see Toffler, 1970). Each of these ages has necessitated a different type of workforce in order to be successful.
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Section 8.2 The Changing Nature of Work
The Agricultural Revolution required individual workers or family units who grew and har- vested their own crops for use by their families and surrounding community. This group of workers were their own bosses and answered to themselves when there were issues or dif- ficulties. Their work schedules were dictated by the seasons and the weather, and their tools were specific to the task and often created by themselves.
The Agricultural Revolution gave way to the Industrial Revolution. Work was composed of manufacturing and machinery. Jobs were based on Frederick Taylor’s scientific management theories, in which workers completed set tasks that were a part of the whole, and for their work they were paid a fair wage. There was little flexibility in the workplace. Workers were very specialized in the tasks that they did, and work schedules were very strict and set.
A new age—the Information Age—emerged as computers, communication, and related tech- nology became more advanced and prevalent. This age is still ongoing and continues to evolve with the introduction of new technology and innovations. As we will discuss in the next sec- tion, technology is opening up new ways to work and creating the need for workers to adapt as work changes.
Technology
Computing power has increased at the same time as costs have come down. This has expanded the reach of technology to all levels of society; it is no longer something that is available to only the rich or privileged. Technology is applied to all types of industries—from manufactur- ing to education to health care to entertainment. This has a variety of implications for the way work is done and the role of the worker.
Just as workers were displaced during the Industrial Revolution due to the advent of machines, workers today are being displaced due to technology that performs the work faster, more accurately, and continuously. While technology has taken jobs away, it has also created jobs as well. Jobs that didn’t exist 10 years ago, like app developer and social media manager, are now viable careers. At the same time, there are other jobs, such as switchboard operator and pho- tographic processor, that no longer exist because of technological changes that automated the work. Other roles, such as mechanic or architect, have changed due to the use of technology.
The role of the worker is becoming the user of technology, with technology doing the rou- tine part of the job and the worker doing the more complex tasks and critical thinking. This applies even in industries such as manufacturing that have typically relied on unskilled labor. The operation of the machines now requires interfacing with the computer console. The days of just attaching a part or assembling one piece of the whole are ending. The worker now needs to understand the process and recognize when something is not correct so that inter- vention can occur. Figure 8.9 shows the dramatic increase in the number of nonroutine cogni- tive jobs over the past 25 years, highlighting the need for employees to be prepared to adjust to the changing level of skill needed in jobs.
Below are special cases of technology that have had, and will continue to have, an impact on work.
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Section 8.2 The Changing Nature of Work
Specialized Computer Software Various computer software has been created to handle specialized tasks, such as booking reservations for airlines, completing tax returns, and recording employee hours. The spe- cialized computer software has made some tasks obsolete due to a computer handling the calculations and compilation of data rather than a worker needing to do those tasks. The worker is now able to focus his or her time on the question of what the data means rather than how to put the data together. For example, an accountant enters financial information into an accounting program, clicks on a few buttons, and financial statements are created. The worker isn’t spending his or her time with the mechanics of creating the financial statements. Rather, he or she can spend that time determining where there are opportunities for the com- pany or where there are problems.
The use of specialized computer software by companies requires workers to have knowledge of how to use that software. Workers who don’t have the software knowledge—or can’t easily and quickly learn it—will not be able to perform the jobs that require the use of that software. Additionally, companies will often use different software programs even though the underly- ing use of the software—such as payroll or accounting—is the same. This requires workers to learn new software when they change companies or even change jobs within a company. The use of specialized computer software also requires workers who can troubleshoot and fix problems associated with the software.
Data Analytics The advancement of the computing power of computers has led to data analytics, also known as data mining, which is the searching and analysis of vast amounts of data in order to discern patterns and relationships that can be used for decision making. Data mining has
Figure 8.9: Number of jobs based on skills needed
These changes of the past 25 years show the impact of technology taking over routine work and freeing workers to do more complex tasks.
Source: “Is Your Job ‘Routine’? If So, It’s Probably Disappearing” by Josh Zumbrun. Wall Street Journal, April 8, 2015. Dow Jones, Inc.
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Section 8.2 The Changing Nature of Work
opened up new job opportunities for people with the skills to analyze the data and turn it into meaningful and useful information. It has also opened up new avenues for doing business by being able to specifically target select groups of consumers. Related to this is a trending topic in computing and data analysis known as Big Data. Big Data deals with the analysis of extremely large data sets to reveal patterns, trends, and associations, especially relating to human behavior and interactions.
The following video gives more details about Big Data: https://www.youtube.com/watch ?v=7D1CQ_LOizA
The Internet The Internet has drastically changed the world by opening up information without regard to language, culture, or location. Jobs are no longer bounded by geographical constraints—a person can conduct work on his or her laptop on the beach while using the Internet to stay connected. Telecommuting is made possible through the Internet and computers by giving access to the same resources available in the office. Cultural experiences are shared with oth- ers across the globe, while languages can be translated with a click of a button.
Information is now available by doing a search on the Internet versus going to a library or university to track down the information. This enables people to gain knowledge that was previ- ously held by only a few. At the same time, the accuracy of information on the Internet must always be assessed. YouTube videos have provided numer- ous tutorials on how to do any type of task you can think of. This has created demand for people to provide how-to videos, opening up career opportuni- ties for many while also creating many do-it-yourselfers who would have turned to experts for help in the past. Email and smart phones are making it easy to check work from anywhere and at any time—while on business trips,
at home, or on vacation. This blurs the lines between work hours and nonwork hours. This is beneficial in some ways, as it allows employees the flexibility to work during the evening to allow time to take care of a personal or family matter during the day. On the other hand, this constant access to work—and the expectation to always be available for work—causes additional stress for employees (Chesley & Johnson, 2012). The Internet provides a way for companies to offer flexible schedules for employees while getting the work done, but com- panies need to be sure to manage the process. See the podcast “Flipping the Switch: Who Is Responsible for Getting Employees to Take a Break?” for more information.
http://knowledge.wharton.upenn.edu/article/f lipping-the-switch-who-is-responsible-for -getting-employees-to-take-a-break/
iStock/Thinkstock
The Internet enables work to take place outside the four walls of the office.
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Section 8.2 The Changing Nature of Work
While the Internet makes it possible to interact with anyone regardless of where he or she is located, the Internet has also depersonalized communication as email and texts take the place of phone calls and face-to-face conversations. This depersonalization makes it more difficult to create trust and build relationships with coworkers, managers, and customers. This is an important aspect as many employees in the younger generation are seeking socialization as part of their work environment. Additionally, the speed of the Internet and other technology has created an atmosphere of instant results, 24/7. This can create tension and dissatisfaction if responses aren’t given immediately. The Internet can also create information overload due to the vast amount of data available and lead to paralysis in making decisions. The Internet offers benefits to the work environment, but it also has pitfalls, so companies and employees must work together to utilize the Internet in a way that benefits all participants.
Globalization As we’ve mentioned, due to the Internet and other technology, the world is shrinking. Glo- balization, the process of opening communication, business, and culture between nations, is changing the way we work. No longer do companies deal with just local customers who share the same language, values, and traditions. Now companies do business with customers worldwide, creating products and services that appeal to a variety of people. Globalization has opened up a need for employees who speak other languages and understand different cultures as well as have the ability to bridge the gaps between different nations politically, socially, and culturally. Details about globalization will be covered in Chapter 10.
Compensation and Benefits in a Changing World of Work
As the workforce changes, so must compensation and benefits. Pay will need to be meaningful— in other words, worthwhile—for employees who don’t work the standard 40-hour Monday through Friday workweek, while taking into account an altered workload due to different numbers of hours put into work.
Women in particular will need schedules that provide the flexibility to take care of chil- dren. As men continue to take on more child-rearing responsibilities, they will also need more flexibility in their schedules. Companies will have to look at employees needing family- friendly policies, not necessarily just women-friendly or men-friendly policies. This will not only help companies attract and retain workers, but it will also enable workers to be more productive due to lower levels of stress since stress at home negatively impacts work done at the office.
As women become more financially independent, they will benefit from finance seminars that educate them on prudent fiscal spending and planning, both for their own personal budgets and for the company’s. With many employees facing the care of their elderly parents, compa- nies can address this need by offering employee assistance programs that provide access to legal, counseling, nursing home, and other such resources. EAPs are also available to help employees cope with child-rearing issues, substance abuse, and other such difficult situa- tions. Assisting employees during difficult times not only helps the employee during a crisis
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Section 8.3 Contingent and Contract Employees
but also helps build loyalty between the employee and the company, which creates a more productive and engaging environment, benefiting all parties involved.
Companies need to continue to examine their workforce and its needs in order to adapt to the ongoing changes in demographics, tech- nology, and globalization. By doing this, com- panies will be able to successfully recruit and retain employees while maintaining their competitive advantage and business success.
8.3 Contingent and Contract Employees A flexible workforce, supported by a flexible compensation and benefits system, is needed in order to respond and adapt to the changing nature of work. We will now go into details about the types of workers that constitute a flexible workforce and how their compensation and benefits compare with those of core employees.
Temporary Workers
Temporary workers are individuals who are not employed by the company and do not work for the company on a permanent basis. They work for the company for a specified amount of time, as indicated in the contract. Temporary workers, or “temps,” as they are often called, historically were clerical help, such as secretaries and file clerks. Today, temporary workers can be in any industry and in any position, such as accountants, nurses, scientists, lawyers, and IT professionals in addition to office staff.
Companies turn to temporary workers for a number of reasons. By using temporary work- ers, companies can adjust their staffing to meet production or demand needs. They can also use temporary workers to fill in during employee absences such as medical leave or vacation. Using temporary workers can allow companies to try out employees before hiring them on a permanent basis to determine if the employee performs at the expected level and is a fit with the company. Temporary workers are cheaper than permanent workers because the company does not have to provide any, or as many, benefits as are provided to the permanent workers.
From an individual’s standpoint, temporary work has appeal because it does not tie the worker to a particular company or position. The individual can perform the temporary work and then take a break before undertaking another work assignment. Temporary work also enables an individual to gain experience in a new field or after a long absence from the work- force. After the Recession of 2008, however, many individuals found themselves forced to take temporary work even though they wanted a permanent position instead.
The majority of temporary workers are employed through staffing agencies. Staffing agen- cies, also often called temporary employment firms, work with companies to find qualified
Critical Thinking
What impact have the economy and globalization had on work? Do you expect this to continue in the future?
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Section 8.3 Contingent and Contract Employees
individuals to fill job openings within the company under a contract basis. The staffing agency handles the recruitment and screening of job applicants and then, with the approval of the company, hires the temporary workers who are placed at the client company. Staffing agen- cies can specialize in finding temporary workers, permanent workers, or both. The tempo- rary worker is the employee of the staffing agency and not the company for which he or she is working. Therefore, the staffing agency takes care of all payroll-related issues for the individ- ual. The individual receives an hourly rate and is paid on a weekly basis. The staffing agency receives its fee from its client, the company needing the temporary worker.
From a compensation and benefits standpoint, temporary workers are treated differently than permanent core employees. Under a temporary assignment, the pay rate is typically lower than that of a permanent worker. The individual also typically does not receive any benefits, although it varies by the staffing agency. Some of the staffing agencies offer limited paid holidays, and less often, paid vacation and sick days. A few agencies also provide access to a retirement savings account, such as a 401(k), but there is usually not a company match, so workers lose out on that extra money to help fund their retirement. As can be seen, tempo- rary work does not provide the full level of compensation and benefits that permanent work provides, but it does offer flexibility in terms of the hours worked.
Temporary workers can provide an invaluable service for companies by filling a niche due to the need for a specialized skill set or by stepping in when companies are short-handed. Research indicates that temporary workers performed better than their permanent peers in the attainment of company goals, making temporary workers a viable addition to a com- pany’s workforce (Broschak & Davis-Blake, 1999). Companies, however, need to make sure they treat the temporary workers like any other workers with regard to safety, training, and health protections.
See the OSHA website for more details on this: https://www.osha.gov/temp_workers/
Leased Workers
A leased worker is one who is employed by a leasing company, also known as a professional employer organization (PEO), but performs work for another company, known as the con- tracting or client company. Employee leasing is a contractual relationship between the PEO and the client company. The contracting company is responsible for the supervision of the leased workers, while the PEO handles the payroll and reporting functions of employment. The PEO receives a fee for providing those administrative services. The client company pays the fee for the PEO’s services as well as the actual costs of payroll for the leased workers.
A leasing arrangement turns over or outsources the administrative and regulatory require- ments for personnel to a third party, enabling the client company to reduce its human resources department staff. A company can add more workers without having to deal with the additional complexity associated with a large workforce since the PEO will handle all the administrative and regulatory duties. A common situation is that the PEO just takes over the client company’s existing staff of permanent employees and the client company “leases” the employees back from the PEO. The use of leased workers is often done to provide food, secu- rity, and cleaning services.
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Section 8.3 Contingent and Contract Employees
Leased workers are generally treated as employees for the purposes of the client company’s benefit plans. While the client company can specifically exclude leased workers from benefits in the plan documents, the client company needs to be careful the exclusion is not determined to be discriminatory and therefore invalid (Bailey, 2004). Given the complexity of the situa- tion, it is advisable to consult with an attorney to obtain clear guidance on what can and can- not be done with regard to leased workers.
Leased workers are similar to temporary workers in that an outside firm employs them both. Leased workers are different from temporary workers in that they per- form their job for a particular company for an open-ended amount of time and do not change assignments or companies. Costs for a leased worker are typically less than those of a temporary worker because the leased worker is a longer-term solution while the tem- porary worker is a shorter-term solution, which commands a premium fee. Leased workers, however, can fall under a client company’s benefits, whereas temporary workers do not, as they are typically an exception due to the temporary nature of their assignments.
Independent Contractors
An independent contractor works for a company on an individual contract basis. Rather than going through a staffing agency or a PEO, the independent contractor negotiates directly with the company. The independent contractor, also known as a freelancer or individual con- sultant, typically has specialized skills that are needed for a specific project.
The company will pay the independent contractor a set amount for the project, and then it is the independent contractor’s responsibility to pay all related payroll taxes. An independent contractor arrangement alleviates the need for the company to provide benefits to the inde- pendent contractor. Often, the hourly pay rate is higher for independent contractors than for employees to help with recruitment and to help offset the lack of benefits.
The company, however, has to be careful to make sure the individual is really an indepen- dent contractor and not an employee. Both the IRS and the Department of Labor have cre- ated guidelines to help determine how to classify workers (http://www.irs.gov/Businesses/ Small-Businesses-&-Self-Employed/Independent-Contractor-Defined and http://www.dol .gov/whd/regs/compliance/whdfs13.pdf ), and it is the company’s responsibility to prove that a worker is an independent contractor and not an employee. If it is deemed that the worker is an employee of the company and not an independent contractor, then the company is responsible for meeting all legal and financial employment requirements. It can get com- plex, so find an attorney who specializes in employment law!
Critical Thinking
What is the difference between temporary and leased workers?
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Section 8.4 Types of Flexible Working Arrangements
8.4 Types of Flexible Working Arrangements Flexible working arrangements can be valuable to both workers and companies and help cre- ate a mutually beneficial work environment. It is important for the flexible working arrange- ments to be favorable to both sides—these arrangements must be a win-win for both parties in order to be effective. Companies still need the work to be done, so employees can’t look at flexible working arrangements as a means to get out of work. At the same time, employees need flexibility to take care of life demands such as children, aging parents, education, and volunteering, so companies can’t look at flexible working arrangements as a means to get more work out of employees. The key to success with a flexible working arrangement is to give employees the control they need while giving the companies the production they need. Under such circumstances, both parties benefit.
The benefits to the company of a flexible working arrangement are numerous. Absenteeism and employee burnout are reduced. Employee morale and job satisfaction are increased, which improves productivity. According to a study by the Society for Human Resource Man- agement (2009), 91% of HR professionals believe flexible working arrangements had a posi- tive impact on employee job satisfaction and engagement. Flexible working arrangements are a strong selling point in the recruitment of new employees and help in the retention of current employees, as indicated by 89% of HR professionals in response to a flexible working arrangements study. Flexible working arrangements can provide companies with a noncash way to offer employees additional benefits.
Employees also benefit greatly from a flexible working arrangement. Some of the same benefits to companies of such arrangements apply to employees. Higher job satisfaction and reduced burnout are beneficial to the employees as well as the employers. Employees also benefit
Compensation and Benefits in the Real World: FedEx
Classifying, or misclassifying, employees has major financial implications for employers— as FedEx found out the hard way through a $228 million settlement with 2,300 drivers in California and Oregon.
This settlement occurred after the U.S. Court of Appeals for the Ninth Circuit ruled in appeals from federal district courts in California and Oregon that the drivers whom FedEx Ground treated as independent contractors were really employees. Therefore, FedEx had misclassified them and as a result, denied them rights and benefits under the law.
FedEx utilized contract labor as part of its business strategy due in part to the financial benefit derived from not being held to the same levels of compensation and benefits as that required for employees. This court ruling has implications on the effectiveness of this type of strategy going forward for all companies utilizing this type of strategy. Thus, from a compensation and benefits perspective, it becomes increasingly critical for a company to determine if a worker is a contractor or employee. Companies will need to budget accordingly and adjust their strategy as warranted. Source: Alexander v. FedEx Ground Package System, No. 3:05-cv-00038-EMC (N.D. Calif.)
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Section 8.4 Types of Flexible Working Arrangements
from the reduced stress and improved work-life balance that flexible working arrangements afford them. In the same study mentioned previously (Society for Human Resource Manage- ment, 2009), over two-thirds of HR professionals indicated that flexible work arrangements positively affect the quality of employees’ personal/family life. Additionally, depending on the type of flexible working arrangements, they can be a cost-savings option for employees due to less gas used for commuting, less money spent on work clothes, less wear and tear on the car, and so on.
Flexible working arrangements can range from small, such as the employee getting to choose when to take lunch breaks, to big, such as the employee choosing when and where to work. There is not a one-size-fits-all arrangement for either the employees or the employers. Not all employees are suited to a flexible arrangement, because they need structure and direct supervision in order to get work done. For example, some employees could not telecommute because they would find it too distracting to work at home due to the temptations of the tele- vision, taking a nap, doing household chores, and so on. In addition, not all jobs are conducive to flexible working arrangements, and not all companies can provide such arrangements. Fig- ure 8.10 shows the offering of common flexible arrangements by industry.
Both teaching and the hospitality, restaurant, and tourism industries offer the option to tele- commute to only a small percentage of employees: 9% and 6%, respectively, due to the nature of those jobs. These types of jobs require face-to-face contact with customers (or students, in the case of teachers), so they are not conducive to working from home. Teaching and the hos- pitality, restaurant, and tourism industries, however, lend themselves to offering employees the option to work part time, while the manufacturing and health services industries do not as much. In addition, teaching doesn’t offer much chance of working compressed workweeks or flextime because of the set hours of school, whereas the other industries do provide these options for at least 30% of employees.
Figure 8.10: Flexible arrangements by industry
While not all industries can provide these arrangements, the benefits of these options are higher job satisfaction and reduced burnout if the company and employee can find an option that works for both parties.
Source: Families and Work Institute, http://www.familiesandwork.org
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Section 8.4 Types of Flexible Working Arrangements
Part-Time Work
Part-time work is simply working fewer than the standard 40 hours a week. The U.S. Bureau of Labor Statistics defines part-time workers as “persons who usually work less than 35 hours per week” (2008). As of April 2015, there were 21,777,000 part-time workers com- pared to 120,402,000 full-time workers, which means part-time workers represent just over 15% of the workforce (U.S. Bureau of Labor Statistics, 2014c). Note: When we discuss part- time work in this section, we’re talking about those employees who choose to work part time, not those employees who are forced to work reduced hours due to cutbacks in companies or the inability to find full-time work, known as part-time work for economic reasons (also known as involuntary part-time work). The reason is that this chapter focuses on flexible working arrangements as a means of creating a win-win situation for both the company and the employee. Part-time work due to economic reasons does not fall into this category.
There are many reasons an employee may want to work part time, such as to have time for children or family, to have time to pursue other interests such as charity work, and to have time to pursue advanced education. A key element of the reasons is time—part-time work enables more time to do other things while providing an opportunity to earn some income and to have an impact at work.
Flexible working arrangements will vary by industry and down to the company and job level. To be effective, flexible working arrangements need corporate support. Clear policies are needed in order to make such arrangements work in a fair way. Keep in mind that fair doesn’t always mean equal since some positions will not be conducive to flexible arrangements, as illustrated in Figure 8.10, nor will flexible arrangements be a fit for all employees. Companies must to be creative and flexible in their own way to help meet the needs of their employees as well as those of the business.
Apply It: The Value of a Friday
A small accounting company provides tax preparation services. Its busy time is during tax season, which runs from January through April 15, the deadline for filing tax returns. The company offers a creative way to meet the demand for work during peak times without having to offer its employees more money. It gives employees every Friday off after tax time!
The employees know that after tax time, they will get every Friday off for the rest of the year. The employees get the motivation they need to work during the peak time because they know they will get that time back later in the year. The company doesn’t lose out on production because work is slower later in the year. Plus, it doesn’t cost the company any extra cash outlay, nor does the company have to increase the employees’ pay to cover their extra work during the first part of the year. It’s a win-win combination for all involved.
The most commonly used flexible working arrangements are part-time work, job sharing, flextime, compressed workweeks, and telecommuting. Each of these will be discussed in turn.
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Section 8.4 Types of Flexible Working Arrangements
Compensation for part-time work varies by company. Some companies pay a part-time employee a percentage of the full-time worker’s wages based on the hours worked. For example, if the part-time employee works 20 hours a week (versus the 40 hours for a full- time employee), then the part-time worker would receive half the amount that the full-time employee does. If the employee works 24 hours a week, he or she would receive 60% of the full-time wage. Other companies pay a premium rather than a straight percentage based on hours worked. This is to account for the part-time worker typically working more efficiently since he or she can focus on work while there instead of being distracted by outside needs since he or she has the time to take care of those issues outside of work. Other companies take the opposite approach and offer a discount to the wage based on hours worked since the option for part-time work is an added benefit and provides value to the employee. Therefore, the company doesn’t have to pay as much to the part-time employee since some of the reward for work comes from the option to work on a part-time basis.
Companies also take a varying view of benefits for part-time employees. Some companies just give a prorated share of benefits based on hours worked. Other companies exclude part-time employees from any discretionary benefits (legally required benefits, such as Social Security and Medicare, have to be provided). Still other companies choose to offer full benefits to their employees regardless of hours worked.
Companies need to take into account their business strategy, competitors, and financial posi- tion as well as their ability to recruit, motivate, and retain employees when determining what philosophy to follow regarding compensation and benefits for part-time workers.
Job Sharing
With job sharing, two employees work part time to cover a full-time position. In other words, two different employees share the duties and responsibilities of one job. This arrangement was portrayed in the movie 9 to 5 that was referenced at the beginning of the chapter. Job sharing requires coordination and a good working relationship between the two employees who share the job, making it difficult to implement. In general, about half of the 2015 Best Companies offer job-sharing arrangements, although this percentage varies by industry, as shown in Figure 8.11.
Typically, the compensation provided for job-sharing employees is equal to that of an equiva- lent full-time person. The two employees who are job sharing could split the pay equally, or adjustments could be made for experience, education, and knowledge of the job. Benefits for job sharing fall into the same category as those offered to part-time employees—they vary widely, from no benefits to prorated benefits to full benefits and anywhere in between. Again, companies will need to consider the factors mentioned previously when setting their com- pensation and benefits systems for job-sharing positions.
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Retail
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Financial Services and Insurance
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Section 8.4 Types of Flexible Working Arrangements
Flextime
With flextime, the employee works the full number of hours; however, he or she has a choice as to when those hours take place. Typically, flextime is used to give employees the option of when to start and end work. Some employees may choose to start at 6 a.m., while others may choose to start at 10 a.m., adjusting their end times to make sure they work their full hours each week. With this type of flextime, there are usually core hours in the middle of the day where employees are required to be in the office, such as from 11 a.m. until 3 p.m. Employees set their specific schedule and follow it day after day.
Another option for flextime is to give employees more latitude for determining when they come in to work and stay at work. This offers employees more options since they are not bound by any set parameters. With this option, employees can come in to work early in the morning one day, take off for three hours around lunchtime to take care of other business (such as a doctor’s appointment or a child’s school event), and then return to work, staying however long is needed to finish their hours. The next day they may work the more tradi- tional 8-to-5 schedule, and the day after could be totally different.
The key for companies in offering flextime is to specify the exact policies of the program so that everyone knows what to expect. Employees need to know when their coworkers will be at work, so good communication among all parties involved is critical in making flextime work. Compensation and benefits for flextime are typically no different than those of regular employees since no adjustment is needed for the number of hours worked.
The majority of the 2015 Best Companies offer flextime arrangements, although only half of information technology companies do (see Figure 8.12).
Figure 8.11: Percentage of Top 100 companies in each industry that offer job
sharing
Job sharing can be difficult to implement in some industries because it requires coordination and a good working relationship between the two employees who share the job.
Based on Industry-Specific Strategies of Winning Companies: An Analysis by Great Place to Work®, http://www.greatplacetowork.com
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Section 8.4 Types of Flexible Working Arrangements
Compressed Workweeks
With compressed workweeks, the employee works the full 40 hours each week but in fewer than the typical five days. The most commonly used option is four 10-hour days each week, although other alternatives, such as working 9 days out of 10 in a two-week period, can be used. Compressed workweeks require longer work days but allow employees to have an extra day off. Under the common four 10-hour day schedule, this gives the worker a three-day weekend.
Once more, the information technology industry is low in offering this flexible working arrangement compared to the rest of the 2015 Best Companies, with over three-quarters of companies in the other industries offering compressed workweeks (see Figure 8.13).
Again, compensation and benefits for compressed workweeks are typically no different than those of regular employees since no adjustment is needed for the number of hours worked.
Telecommuting
Telecommuting is working from a remote location that is not the company’s main office. Employees can work from a satellite office that is closer to home or they can work from home. This is also known as flexplace, since the place of work is flexible, although this term isn’t as widely known or used. Employees who telecommute can work under the other options already discussed—on a part-time basis, with flextime, or with compressed workweeks. Job sharing and telecommuting, however, are not typically combined.
Figure 8.12: Percentage of Top 100 companies in each industry that offer
flextime
A majority of top companies offer flextime, allowing employees to choose the time they are in the office to complete their full hours.
Based on Industry-Specific Strategies of Winning Companies: An Analysis by Great Place to Work®, http://www.greatplacetowork.com
Retail
Professional Services
Manufacturing and Production
Financial Services and Insurance
Healthcare
Information Technology
0% 20% 40% 60% 80% 100% 120%
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Retail
Professional Services
Manufacturing and Production
Financial Services and Insurance
Healthcare
Information Technology
0% 20% 40% 60% 80% 100% 120%
Section 8.4 Types of Flexible Working Arrangements
The benefits of telecommuting are numerous, for both the company and the employee. The company has lower overhead costs because not as much office space is needed, although this could be offset somewhat if the company pays for the telecommuter’s phone and Internet connections. Production is higher for telecommuters because they can focus on the work that needs to be done in a quiet environment free of office distractions, allowing them to avoid time wasters such as coworkers stopping by for endless chats. Additionally, turnover is lower among telecommuters and job satisfaction is higher, which positively contributes to the motivation and retention of employees. A study found that employees who telecommuted reported higher job satisfaction, quit at half the rate of office-based work- ers, and had a 13.5% increase in productivity (Bloom, 2014). As men- tioned at the beginning of this section, however, not every employee is suited for telecommuting. For some, an office environment provides the best fit. In the Bloom study, some workers opted out of telecommuting after the trial period because they decided that it didn’t work for them (and this played out in their productivity rates, which were the lowest of the telecommuter group). The author summed it up well: “They had tried it and figured out that it wasn’t right for them” (Bloom, 2014).
Figure 8.13: Percentage of Top 100 companies in each industry that offer
compressed workweeks
By working longer days, an employee on a compressed workweek schedule can take an extra day off while still being considered a full-time worker.
Based on Industry-Specific Strategies of Winning Companies: An Analysis by Great Place to Work®, http://www.greatplacetowork.com
Retail
Professional Services
Manufacturing and Production
Financial Services and Insurance
Healthcare
Information Technology
0% 20% 40% 60% 80% 100% 120%
Hero Images Inc./Superstock
Telecommuting is a growing flexible work arrangement.
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Retail
Professional Services
Manufacturing and Production
Financial Services and Insurance
Healthcare
Information Technology
0% 20% 40% 60% 80% 100% 120%
Section 8.4 Types of Flexible Working Arrangements
Employees benefit from a telecommuting arrangement in a variety of ways. Because they aren’t pulled away by distractions, they can get their work done faster, leaving more time for other things. They save a tremendous amount of time and money by not having to commute into the office. Employees who telecommute are also closer to the activities that take place in their lives, making it easier and less stressful for them to take care of family obligations and to help achieve a work-life balance.
Telecommuting increased 61% from 2005 to 2009 (Lister & Harnish, 2011). Telecommuting has gotten a further boost as a legitimate option due to the Telework Enhancement Act of 2010, which required federal agencies to establish a telework policy for eligible employees (https:// www.telework.gov/guidance-legislation/telework-legislation/telework-enhancement-act/). Essentially, this act helped provide support and acceptance of telecommuting as a viable work option. Since the act became law, telecommuting by federal workers has increased 24% and the eligibility of employees for telecommuting has expanded by 49% (U.S. Office of Personnel Management, 2013). In a 2014 study of HR professionals, 83% agreed with the statement that “telecommuting will be more commonplace for organizations in general than it is today” (Society for Human Resource Management, 2014b).
One hundred percent of the companies in four out of the six industries of the 2015 Best Companies offer the option of telecommut- ing, with the majority of companies in the other two industries also offering the option (see Figure 8.14).
Critical Thinking
Pick three of the five flexible working arrangements and describe what they are and how compensation and benefits might differ from those of core employees.
Figure 8.14: Percentage of Top 100 companies in each industry that offer
telecommuting
Employees who telecommute report higher job satisfaction, have higher retention rates, and show higher productivity.
Based on Industry-Specific Strategies of Winning Companies: An Analysis by Great Place to Work®, http://www.greatplacetowork.com
Retail
Professional Services
Manufacturing and Production
Financial Services and Insurance
Healthcare
Information Technology
0% 20% 40% 60% 80% 100% 120%
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Section 8.5 Considerations Due to Company Size
There typically isn’t any impact on compensation and benefits under a telecommuting arrangement. Compensation and benefits would be more impacted if it were a part-time worker who telecommutes, in which case the part-time work would be the factor that deter- mines any necessary adjustments to compensation and benefits.
8.5 Considerations Due to Company Size The use of flexible working arrangements by small companies is an individualized decision. Some companies have fully embraced such arrangements, while others have an aversion to them, with yet others falling somewhere in between.
Flexible working arrangements can be a very valuable benefit to small companies because they provide a mechanism for them to stay competitive with larger companies that have the resources to offer more pay and benefits. Small companies and their employees experi- ence the same benefits from flexible working arrangements as do larger companies, namely, reduced absenteeism, employee burnout, and stress; increased employee morale and job sat- isfaction; and better work-life balance. Flexible working arrangements are also effective tools for the recruitment, motivation, and retention of employees.
Small companies are constrained by their limited resources and size, which can make it more difficult for them to offer the full spectrum of flexible working arrangements. At the same time, their small size gives them the ability to customize the working arrangements for their employees and to change those arrangements as needs dictate. For example, an employee going back to school might need flextime to accommodate class schedules while in school but not once he or she has graduated.
An interesting finding from the Families and Work Institute’s National Study of the Changing Workforce (Galinsky, Sakai, & Wigton, 2011) was that more employees from small companies (defined as 50 employees to fewer than 500 employees) felt that they did not have to choose between their work or personal lives, compared to employees from large companies (defined
as 500 or more employees). This shows that small companies do seem to work indi- vidually with their employees to develop working arrangements that work for both the employee and the company. There still needs to be a fair process and specific guidelines for offering these arrangements to make sure they are not perceived as arbi- trary or promoting favoritism.
Critical Thinking
Do you see other factors, besides those mentioned in the book, changing the nature of work?
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Summary & Resources
Big Data Deals with the analysis of extremely large data sets to reveal patterns, trends, and associations, especially relating to human behavior and interactions.
compressed workweeks A flexible work- ing arrangement in which the employee works the full 40 hours each week but in fewer than the typical five days.
data analytics The searching and analysis of vast amounts of data in order to discern patterns and relationships that can be used for decision making.
flextime A flexible working arrangement in which the employee works the full number of hours; however, he or she has a choice as to when those hours take place.
globalization The process of opening com- munication, business, and culture between nations.
independent contractor A person who works for a company on an individual con- tract basis.
job lock The inability of an employee to retire due to the financial need to retain health insurance or other benefits provided by the employer.
job sharing A flexible working arrange- ment in which two different employees share the duties and responsibilities of one job.
leased worker A worker who is employed by a leasing company, also known as a pro- fessional employer organization, but per- forms work for another company, known as the contracting or client company.
part-time work A flexible working arrange- ment in which the employee works fewer than the standard 40 hours a week.
part-time work for economic reasons Employees who are forced to work reduced hours due to cutbacks in companies or the inability to find full-time work; also known as involuntary part-time work.
staffing agencies Companies that work with other companies (their clients) to find qualified individuals to fill job openings within the company under a contract basis.
Summary & Resources
Summary In this chapter we discussed flexible working arrangements. We started by discussing the need for such arrangements due to the changing workforce. Changing demographics, eco- nomic and global factors, education levels, and technology have all altered and influenced how employees need and want to work.
Next, we covered contingent and contract employees, explaining about temporary, leased, and independent contractor workers. Then we explained the common flexible working arrange- ments—part-time work, job sharing, flextime, compressed workweeks, and telecommut- ing. We ended the chapter with how small companies approach the topic of flexible working arrangements.
Key Terms
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Summary & Resources
telecommuting A flexible working arrange- ment in which the employee works from a remote location that is not the company’s main office.
temporary workers Individuals who are not employed by the company and do not work for the company on a permanent basis.
traditional workforce Employees who work standard schedules (typically fixed eight-hour shifts, five days a week).
workplace flexibility Enabling employees to exercise some measure of control over when, where, and how much they work as well as providing opportunities for entry, exit, and reentry to work over the course of employees’ careers.
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