Benefits Costs for Contingent vs. Regular Employees

Introduction

A contingent worker is a person who works for an organization on temporary, freelance or contractual terms instead of a permanent or full-time employment basis. One of the presumed benefits of using contingent workers is flexibility.

An organization uses contingent workers for a specified period, by the end of which it ceases its services and hires others if necessary. However, it is important for organizations to understand and acknowledge both the advantages and disadvantages of contingent workers by recognizing what it can achieve or fail to achieve with their help. This paper will discuss the compensation of contingent workers in comparison to regular employees, including their effect on business and outsourcing of HR functions.

Haven’t Found The Relevant Content? Hire a Subject Expert to Help You With
Benefits Costs for Contingent vs. Regular Employees
Post Your Own Question And Get A Custom Answer
Hire Writer

Given the different levels of pay and benefits, how may an organization create a sense of internal equity?

When hiring contingent workers, it is important to ensure that a sense of internal equity is maintained in relation to the satisfaction of both sets of employees. In a bid to enhance internal equity, it is important for managers to carefully assess the real cost of using contingent workers and their effects on labor costs vis-à-vis regular workers. Organizations are embracing the use of contingent workers in workplaces to either add value to certain departments or curb capacity building.

Because contingent workers exceed labor costs within an organization, HR managers have the mandate to determine compensation strategies. In many cases, contingent workers have consistently been paid lower wages than regular workers (Hipple & Stewart, 1996). One example of a company that employs contingent workers is IBM, which uses a workforce management system that enhances the effective management of its contingent and regular employees (Global firms in 2020, 2010).

Another example involves Coca-cola Company, which has HRM programs and procedures that involve hiring contingent workers in its sales department to complement the permanent employees, especially when faced with the high demand of orders, for instance, during major sports events such as the upcoming World Cup tournament. In this sense, Coca-cola maintains internal equity since contingent workers are only hired upon necessity but do not interfere with the functions of regular employees.

Specifically, how has the employment of contingent employees affected an organization’s business, its HRM responsibilities, its overall costs, as well as its organizational culture?

The employment rate of contingent workers in the US has been growing and has consistently continued to be part of workmanship within the employment agencies. Contingent workers bring little bargaining power to the labor market because they have fewer resources than regular employees, thus enhancing business performance. For example, T-Mobile realized the only way to beat the competition when intruding on a new system was to hire contingent technicians (Zappe, 2005).

The work benefits and salaries of contingent workers have mainly per hour and per day compensation options. Talented and experienced contingent workers have continued to contribute to the growth of companies in different ways. However, in cases where contingent workers are hired as independent contractors or temporary workers, a company has no obligation to pay employment taxes or provide company benefits. Nevertheless, staffing companies may offer benefits to these workers in some rare cases (Vaiman, Lemmergaard, & Azevedo, 2011).

In terms of productivity, managers should not be surprised if contingent workers do not perform quite well as regular employees. Productivity, in this case, depends on the skills of the workers; here, contingent workers generally have less education and presumably less training and experience on the job compared to regular workers. Contingent workers may be less motivated to put forth the maximum effort. Moreover, corporate culture may be interrupted when many contingent workers are hired, especially when there is a high turnover of workers. In a workplace that depends on teamwork, the group process may be disrupted due to the frequent changing of contingent workers (Vaiman, Lemmergaard, & Azevedo, 2011).

In your educated opinion, should the compensation of contingent workers be the same as regular, full-time employees doing the same work? Discuss

The main reason for hiring contingent workers is to minimize costs and increase profitability. Therefore, it will be pointless to hire contingent workers if their compensation is similar to regular workers for the same job. Generally, legal, institutional and external pressures, as well as possible labor cost savings, have been cited as probable reasons for increased use of contingent work arrangements.

Increased litigation in areas of employment discrimination and wrongful discharge has caused some of the employers to avoid permanent employment; however, EEO Act also outlaws discrimination against contingent workers (Mitchell, 1999). Institutional factors, such as management, limit the number of permanent workers in the company. In addition, the existence of unions restricts permanent employment in a way that hiring temporaries becomes more cost-efficient and flexible, as they have no collective bargaining in terms of employment agreements.

How would you, as the CEO of the company, create a sense of engagement with the infusion of regular employees and contingent workers?

Contingent workers may feel inferior to regular workers as they do not receive the same benefits. As the CEO, it is important to ensure all workers find themselves working in the same background of work. This includes ensuring the contingent workers are involved in different activities within the organization. The involvement of contingent workers in the workplace may help in ensuring that all workers cooperate to increase the output of the organization.

Managers would need to train contingent workers to ensure systems continue operating normally. Staffing is one of the major functions of a human resource manager, which can be cumbersome due to its processes. Staffing in a company requires a well-structured budget to ensure workers selected through this process are, in fact, qualified and are aligned to goals and objectives. The employment of contingent workers has, in fact, become a popular outcome in many industries and service companies. Most companies use contingent workers to increase sales or the capacity of products manufactured in the industry (Hipple & Stewart, 1996).

Outsourcing HRM Functions

A company outsources its services due to a number of factors, one of them being cost-effectiveness. Some other reasons include bringing new talent and experiences that will in turn help to develop the company. Outsourcing of services to other companies helps the organization to focus on growth of the company. By outsourcing, the company saves on time and money when it comes to emphasis in the roles of the different pertinent issues in the company. I agree with this trend as many corporations outsource this service to ensure they are able to continually deliver quality products and services (Sheehan & Cooper, 2010).

Outsourcing of different functions to other organizations is a trend that will continue to grow in the corporate industry. Costs of certain services are reduced to a small percentage of company’s budget when outsourcing a contract to outside firms (Glaister, 2014). The importance of reducing the number of employees is another reason why this trend will continue growing in the corporate industry. For example, Coca-coal has a HRM program of outsourcing accounting services.

In my opinion, the regulations imposed on international vendor supporting local US companies should be slightly reduced. In the US, I have witnessed that many companies outsource labor from abroad, especially from developing countries such as China and India due to law wages they demand. In addition, existence of well-defined labor laws pertinent to outsourcing must be clear to help organizations seek and outsource their services to corporate industry.

Another example of a company that has embraced outsourcing is Unilever, which has many franchises around the world. This company uses the services of payroll administrators to make sure its employees are paid on time. Unilever also outsources auditing services for its accounts each year, thus maintaining only a small and manageable number of workers. This not only reduces costs of operations, but also increases productivity as the management can perform effective supervision of available employees.

Conclusion

Many employers in contemporary labor market are turning to contingent workers in order to maximize potential benefits of reduced costs and lean management. Compared to regular workers, contingent workers are less expensive because they demand few benefits and are only hired when a need arises.

Although Equal Employment Opportunity Act may deem the difference in compensation between regular and contingent workers doing the same work as discrimination against the latter, it is obvious that companies hire contingent workers in order to save costs, improve HR management effectiveness and enhance profitability. Indeed, as evidenced by Coca-cola’s HRM program and procedures, a company employs regular workers in core business segment and outsources HR services for non-core areas.

References

Glaister, A. (2014). HR outsourcing: the impact on HR role, competency development and relationships. Human Resource Management Journal, 24(2), 211–226.

Global firms in 2020: The next decade of change for organisations and workers. (2010). Economist Intelligence Unit. Web.

Hipple, S., & Stewart, J. (1996).Earnings and benefits of contingent and noncontingent workers. Monthly Labor Review, 119(10), 22-30.

Mitchell, A. T. (1999). Contingent workers hold potential liability. Business Press, 11(49), 33.

Sheehan, C., & Cooper, B. (2011) “HRM outsourcing: the impact of organisational size and HRM strategic involvement”, Personnel Review, 40(6), 742 – 760.

Vaiman, V., Lemmergaard, J., & Azevedo, A. (2011). Contingent workers: needs, personality characteristics, and work motivation. Team Performance Management, 17 (5/6), 311 – 324.

Zappe, J. (2005). Temp-to-Hire is Becoming a Full-Time Practice at Firms. Workforce. Web.

MyhomeworkGeeks
Calculate the price of your paper
Pages (550 words)
Approximate price: -

Why Hire a Professional Essay Writer from MyHomeworkGeeks

Quality Urgent Essays

Domyhomeworkk online platform provides the best essay writing service ever received elsewhere, thanks to our professional essay writers. Experience gained in the 10+ years of being in the assignment writing industry is also an added advantage.

Professional and Experienced Academic Writers

A lot is done to maintain us as the best essay writing service provider. Besides owning a degree from a recognized university, a writer must pass the rigorous tests we take them through before they are considered eligible to offer urgent essay help on our website.

Affordable Urgent Assignment Help

Who said a reliable website should not be cheap also? While it is human nature to associate prices with quality, that does not always work. At domyhomeworkk.com, we guarantee you cheap and urgent essay help without compromising the quality.

24/7 Available Urgent Essay Writing Service

Whether it is a ‘write my essay for me cheap’ or ‘edit my essay’ order you want to request, always feel free to reach us at any time of the day. Our experts work in shifts to ensure that you access urgent essay writing services at any time of the day.

Plagiarism Free Essays Online

The punitive measures that come with plagiarized content are so harsh, and we understand that. We consequently ensure to write each client’s papers from scratch no matter how urgent the essay is. To acknowledge borrowed content, our quick writer references and cites the work.

Wow Customer Support 24/7

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

We'll send you the first draft for approval by at
Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

So much stress and so little time? Take care of yourself: let us help you with your tasks. We offer all kinds of writing services.

Essays

Custom Essay Writing Services

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.

Admissions

Admission and Business Papers

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.

Editing

Editing and Proofreading

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.

Coursework

Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.

Have a homework question? Get help from verified tutors now!