Compensating flexible workforce

1. Compensating Flexible Workforce:
Contingent Employees and Flexible
Work Schedules
Dr. G C Mohanta, BE(Mech), MSc(Engg), MBA, PhD(Mgt)
Professor

2. Flexible Workforce/Contingent Employees
 Part-time employees
 Temporary & on-call workers
 Leased employees
 Independent contractors
 Freelancers
 Consultants

3. Contingent Workers
 Engage in tentative employment
 50% male/female
 12.5 million employed in 2001
 29 million worked on flexible schedule
 26.1% of all civilian workers

4. Employed Contingent Workers in
2001
TYPE NUMBER
Independents 8,858,000
Part-Time 2,245,000
On-Call 2,089,000
Temporary 1,169,000
Leased 633,000

5. Benefits Costs
Benefit Full-time Part-time
Paid leave $1.89 $0.37
Supplement pay 0.81 0.17
Insurance 2.07 0.50
Retirement 1.09 0.19
Other 0.05 <0.01
Legally-required 2.27 1.44
Total $8.19 $2.68

6. Job Sharing
 2 or more part-timers perform 1 job
 Reduces costs
 Increases flexibility
 Maintains productivity levels
 May increase morale & loyalty

7. Temporary Workers
 Fill in for core employees
 Help ease high demand periods
 Help determine future employment needs
 May be assessed for a core position
 Don’t receive company benefits

8. Leased Employee Arrangements
 Lease company does all HRM functions
 Fees either % of payroll, or % per employee
 Employees work for contract duration
 Food service, security, building maintenance,
administration

9. Rise In Use Of Contingent Worker
 Economic recessions
 International competition
 From manufacturing to service
 More females in workforce

10. Service Divisions
 Transportation
 Communication
 Public utilities
 Wholesale trade
 Retail trade
 Government

11. Federal Compensation Guidelines
 ERISA (Employee Retirement Income Security Act)
 NLRA (National Labour Relations Act)
 ADA (Americans with Disabilities Act)
 ADEA (Age Discrimination in Employment Act)
 Title VII of 1964 Civil Rights Act - outlawed major forms of
discrimination against blacks & women including racial segregation
 FLSA (Fair Labour Standards Act ) - established minimum wage,
guaranteed ’time and a half’ for overtime, prohibited employment of
minors
 COBRA (Consolidated Omnibus Budget Reconciliation Act ) - workers
and their families can choose to continue group health benefits during
voluntary or involuntary job loss/reduction in hours worked/transition
between jobs/ death/divorce
 FMLA (Family and Medical Leave Act) – employees can take unpaid, job-
protected leave for specified family & medical reasons with continuation of
group health insurance coverage

12. Wage Comparisons in 2004
Group F-T P-T
Management & Professional $30.38 $23.79
Production 14.62 8.92
Service 10.26 7.57
Overall Average $19.05 $10.17

13. Benefits Offered In 2004
% of Companies
Type Offering Benefits
Paid time-off 25%
Medical insurance 11%
Retirement 20%

14. Leased Workers’ Benefits
 Leasing company is legal employer
 In 2001, average wage was $19.75
 Leasing & hiring companies responsible for
discretionary benefits
 Covered by safe harbor rules

15. Safe Harbor Rules
 Leased employees covered by leasing company’s
pension plan
 Nonintegrated employer contribution rate of 10%
 Full & immediate participation in vesting
 Leased employees less than 20% of non-highly paid
workforce

16. Independent Contractors
 Freelancers & consultants
 Companies not responsible for
 Federal Taxes
 FLSA Overtime or Minimum Wage
 Workers’ Compensation
 ERISA, FMLA, NLRA, ADA, Title VII of Civil
Rights Act
 Economic reality test
 Right to work test

17. Economic Reality Test
 Extent a worker controls methods & results
 The control a company has on worker’s earnings
 Importance of worker’s service to the company
 Initiative or skill level required
 Permanency, exclusivity, or length of assignment
 Worker’s investment in materials or equipment

18. Right To Control Test
 IRC test to determine workers’ independence
 20 Considerations, including:
 Hiring, training, supervising, firing
 Hours
 Services
 Compensation
 Equipment, materials, location

19. Flexible Work Schedules
 Flextime
 Compressed work weeks
 Telecommuting

20. Flextime
 Set weekly not daily hours
 May have to work core hours
 Possible employer benefits
 Lower tardiness & absenteeism
 Higher productivity
 Extended business hours
 Possible employer drawbacks
 Increased overhead costs
 Coordination problems

21. Compressed Workweeks
 Example:
 40 hours in 3 - 4 days
 Possible benefits
 Can promote recruitment and retention
 Can reduce commuting time
 Can allow more family time

22. Telecommuting
 Employees work on-site & off-site
 Constant direct contact with other
employees
 Possible benefits
 Same as with flextime
 Possible disadvantages
 Less direct employee interactions
 Makes performance appraisals difficult

23. Telecommuting Arrangements
 Satellite work centers
 Neighborhood work centers
 Nomadic executive office
 Work off-site and/or on-site
 Temporary or permanently

24. The flexible workforce
Definition:
A workforce that can respond quickly in
quantity and type to changes in demand a
business may face.
© PhotoDisc

25. The flexible workforce
The organization of a flexible workforce
Periphery Workers
Core workers
© PhotoDisc

26. The flexible workforce
Full-time employees
Core workers
Core workers
who have specific skills
and job security

27. The flexible workforce
Part-time or temporary
workers who available
Core workers
Core workers whenever needed
Periphery workers
Periphery workers

28. The flexible workforce
Examples of flexible workforce
practices:
Part-time
Temporary
Bank time
Job sharing
© PhotoDisc

29. The flexible workforce
Major advantages of a flexible workforce:
Employee benefiting from flexible working
hours
More employee opportunities of training and
being multi-skilled
Reducing business costs and increasing
productivity
Reacting quickly to changes in the workforce
© PhotoDisc

30. HR Issues in the New Workplace
Temporary Employees
In opening years of the 21st century, largest employer in
U.S. was a temporary employment agency, Manpower, Inc.
Temporary Employees do everything from data entry to
interim CEO
Contingent workers = people who work for an
organization, but not on a permanent or full-time basis,
including temporary placements, contracted professionals,
or leased employees
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31. HR Issues in the New Workplace
Technology
Telecommuting and virtual teams are related trends
Telecommuting = using computers and
telecommunications equipment to perform work from
home or another remote location
Work anywhere - wireless Internet devices, laptops, cell
phones, fax machines
Extreme telecommuting = people live nd work in countries
far away from the organization’s physical location
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32. HR Issues in the New
Workplace
Work-Life Balance
Telecommuting is one way organizations help
employees lead more balanced lives
Flexible scheduling important in today’s
workplace – 27% of workforce/flexible hours
Broad Work-Life Balance initiatives – critical
retention strategy – on-site gym & childcare, paid
leaves & sabbaticals
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33. HR Issues in the New Workplace
Downsizing
Downsizing = intentional, planned reduction in the size of a
company’s workforce
Managers can smooth the downsizing process
Regularly communicating with employees
Providing them with as much information as possible
Providing assistance to workers who will lose their jobs
Using training and development for remaining employees
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34. The Flexible Workforce
Core workers
Fulltime workers
Contingent workers
Part time employees
Contract / Outsourced workers
Temporary workers
Interns

35. Flexible Schedules
Flexible work hours
Core time
Flextime
Compressed work weeks
Telecommuting

36. Case
Everyone telecommutes at your firm. All work is done in
virtual teams of four. Divide up into groups of four and
respond to the following questions:
How will you organize your team?
Do you need a virtual leader?
How will you select your virtual team?
How will you hold team members
accountable?