Corrections or additions?
This article by Bart Jackson was prepared for the March 20, 2002
edition of
U.S. 1 Newspaper. All rights reserved.
When to Use Contingent Workers
Two reporters write for the same newspaper. Madly
typing,
they compose markedly similar stories; filling their 40-hour weeks
with markedly similar work. One man, however, is labeled a “core
staffer” — reimbursed with a set salary and full benefits.
The other is a “stringer” — paid either by the article
or the printed word. Long a newspaper tradition, this blending of
core and outsourced talent has been aggressively adopted by all fields
of business for the past decade. Question is: Just how well does this
trend work?
Those seeking the optimum method of bringing aboard temporary,
part-time
and contractual employees will want to attend the Employers
Association
of New Jersey’s panel discussion “Strategic Use of Contingent
Workers,” which is one of many panels taking place at EANJ’s
conference
on Tuesday, March 26th, at 10 a.m. at Seton Hall. Cost: $165. Call
973-313-6103.
Barrie Peterson, co-director of Seton Hall’s Institute on Work
moderates. Panelists include Francine Moccio of Cornell
University;
Don Watson, production manager of Stepan Company; Cathy
Brown
of AT&T; and Hylton Senior, director of patient services for
Memorial Sloan Kettering. A series of new survey studies and practical
panel experience will shed light on the actual cost saving benefits,
morale difficulties, and even the legal aspects of taking on
contingent
workers.
It seemed a marvelous plan to pull American business out of its tight
money problems. After the recession of 1992, every company of every
size sought desperately to cut costs. Massive layoffs provided
short-term
solutions, but alas someone had to be retained in the shop to do the
work. Analysts quickly brought compensation under the financial
microscope
and discovered the astounding differential between actual salary and
cost-to-company of putting that person on the job.
The solution, already growing since the early 1980s, became obvious:
bring on the temps, part timers, and independent contractors. Call
them consultants and let them take care of their own benefits and
bookkeeping, and pay their own Social Security taxes. From 1990 to
2000 the temp market tripled to 3 million active temporary workers.
Independent consulting firms in the U.S. jumped 15 percent, from
barely
65,000 in 1992 to well over 75,000 in 1997. Then the law jammed a
stick in the spokes.
Microsoft, ever the trend setter, carried this outsourcing to an
extreme.
Keeping a minuscule salaried core staff, it hired vast numbers of
independent contractors, paying them a flat fee, and providing them
with a 1099 tax form instead of the W-2 salaried workers receive.
This arrangement attracted the attention of the IRS.
The same unimpeachable agency that had so deftly gobbled up Al Capone
squared off against Bill Gates — with the same results. The IRS
indicted Microsoft for misclassifying its workers and in December,
2000, the Supreme Court demanded that the computer giant pay $97
million
in back benefits to its not-so-independent contractors. In addition,
Microsoft faced the mammoth underlying expense of re-classifying,
refiguring, and re-accounting its entire salary and wage system. This
precedent set employers, human resource workers, and attorneys
nationwide
to trembling.
But, Microsoft’s troubles aside, Peterson insists that “the mixing
of part-time and outsourced staff with a salaried core has a host
of benefits for both workers and employers alike.” Peterson, a
native of Teaneck and a graduate of Princeton Theological Seminary,
has spent the past decade at the Institute for Work helping employers
make exactly such staffing decisions.
He lists several excellent reasons for expanding with part time,
temporary
and contingent workers, but warns each comes with a caveat, demanding
a special strategy.
Schedule flexibility. Mom can work only when the kidsare away at school. The local hospital or library, open seven daysa week, has all sorts of odd hours that need filling. Frequently it’sa great match with both employer and worker accommodating to theother’sneeds. However, costs lurk hidden here. Usually some highly-paidsalariedstaff member must now devote a hefty portion of her time to workingout a schedule for these part-timers. Secondly, temporary andpart-timehelp typically may demand more money per hour than core staffersreceive.Temp to hire. Hiring a worker temporarily or on somecontingentbasis offers both employer and employee a chance to test the fit.If things do not work out, both can part, without harm, foul, orcostlyunemployment insurance.Here again, however, Peterson adds a warning: Be totally honest. Avery justifiable misrepresentation lawsuit awaits the company thatlures a worker in part time with the promise of a permanent staffposition, only to renege on the deal later. A recent AmericanManagementAssociation survey reveals that the vast majority of temporary workersare not temporary by choice. They see their time with you as a muchcoveted foot in the door. Unfortunately, only 13 percent will receivepermanent positions from any of their temporary employers. Another47 percent will find permanent jobs, but elsewhere in the labor force.Outsourcing bookkeeping for contingents. The inordinateamount of time spent on salary and wage bookkeeping is invariablyan expensive headache that any employer would gladly leave to asupplierof contingent labor. However, human resource executives would be wellwarned to examine into whose hands these contingent workers’ payrollaccounting processes fall. If a temporary agency or hiring hall comesunder indictment for illegal practices, your firm can be named inthe suit.Seasonal workers. For the seasonal or tenuously expandingfirm, contingent workers provide an adaptive labor force that canbe more easily let go if the economy or your plans begin to falter.Of course, setting up workers as canaries in your firm’s economiccoal mine may not prove the best way to inspire loyalty. Establishinga potential upward pathway for workers and concentrating on how muchcorporate success depends on them may be a counterbalance to thefatalisticgrumble of “last hired — first fired.”Savings on benefits. This is the spark that launches mostbottom-line-driven firms to cut core staff and swell the ranks withoutsourced folks who can jolly well look out for their own healthcare, retirement, and everything else. Undeniably, in an age whena firm must shell out $200,000 a year to woo and keep a $60,000salariedassistant manager, the $75,000 outsourced consultant can look prettygood. “The problem with staffing by math,” points outPeterson,”is that you tend to get what you pay for.”All those costly benefits the guys in accounting are now moaning aboutserve to keep morale up, loyalty and productivity high, and to holdthe intellectual capital of your business inside. The contract orcontingent worker owes you nothing but his work in trade for yourcash. He stands on the outer ring, looking in. A definite separatenessand even antagonism can evolve within work teams.Many managers and department heads have in the past years tried toovercome this problem by equalizing all of their team. While thefinancialreimbursement may differ, all members are invited to Christmasparties,given similar work spaces, praise, and other perks. “Ah, but nowhere comes Scrooge,” laughs Peterson. “The legal departmentsin many firms, fearing the IRS’ ruling against Microsoft, arethunderingin with a segregation maxim. They are demanding contingent employeesbe treated distinctly from core staffers.” This, of course,shattersall the morale-building efforts the managers have labored so hardto create.”There is an enormous amount to be gained by flexing ourtraditional work schedules and remuneration into ways more adaptiveto both the employer and the employee,” says Peterson. “Butthis part of business growth, like any other, must be carefullyplannedfrom every aspect.”— Bart JacksonTop Of PageCorporate AngelsThe Girls Scouts of Delaware-Raritan recognized eight New Jersey womenwho exemplify dedication, leadership, and commitment in theircommunitiesand in their fields of expertise. The awards were made on Thursday,March 7, at the Girl Scouts’ 11th annual Women of Distinction dinner.Recipients of the awards include Andrea Alstrup, corporate vicepresident, advertising, Johnson & Johnson; Deborah Ford,soprano,Trinity Episcopal Cathedral; Barbara Gitenstein, president,the College of New Jersey; Katherine Kish, president, MarketEntry; Dr. Elaine Leventhal, professor of medicine, UMDNJ-RWJMedical School; and Melanie Willoughby, president, New JerseyRetail Merchants Association.Fleet is sponsoring Liberty Science Center’s travelingexhibit, A Question of Truth. The exhibit examines how the searchfor truth in scientific inquiry has been influenced by bias andprejudicethroughout history. Fleet contributed $100,000 to the exhibit. Atthe presentation ceremony, Jack Collins, president of Fleet NewJersey,said: “Especially now, while we are reaching out to our neighborsin the aftermath of September 11, it is important for all of us tocontinue to support the great cultural, educational, and artsorganizationsthat enhance our communities. Through this exhibition, Liberty ScienceCenter is advancing efforts to bridge our understanding of differentcultures and beliefs.”Top Of PageDonate PleaseThe American Red Cross of Central New Jersey is hosting a blooddrive at its Princeton office at 707 Alexander Road on Saturday, March23, from 8 a.m. to 1:15 p.m. The organization reminds potential donorsthat the blood supply must be replenished almost daily because redblood cells last 42 days, unfrozen, and blood platelets, which areso important for cancer patients, last only five days, and cannotbe frozen.The Trenton Area Soup Kitchen (T.A.S.K.) has launcheda building expansion project in order to increase services to thecommunity. The project, which will take one year to complete, willadd approximately 3,000 square feet to the soup kitchen’s existing6,500 square feet of space. It will include a kitchen expansion,additionalstorage space, offices, and a community meeting room.Over the past few years, the number of patrons coming to T.A.S.K.has steadily increased, and the soup kitchen is now serving over 2,500meals a week. In describing the soup kitchen’s need for additionalspace, Peter Wise, its director, said “poverty is clearly on therise. The lines at the soup kitchen are getting longer. The levelof need is greater than ever. The gap between the `have’s’ and the`have not’s’ is continually growing. If we are to provide T.A.S.K.patrons with meals and other much-needed services, we must have morespace.”In addition to meal services, T.A.S.K. provides adult educationprograms,including one-on-one tutoring in literacy, basic math, GEDpreparation,and computer skills. The organization’s fundraising goal is $300,000.An anonymous area businessman has agreed to provide one dollar forevery two dollars T.A.S.K. raises before August 1.Previous StoryNext StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
