Comparing the Impact and Compensation of Contingent and Full-Time Workers

Comparing the Impact and Compensation of Contingent and Full-Time Workers

Introduction

Contingent workers are independent contractors, consultants, freelancers, and non-permanent workers who are hired to carry out specific tasks, and once they are done, they leave. One common characteristic of contingent workers is that they are always highly skilled experts in their respective fields. Because contingent workers are not employees of a particular firm, the business owner does not have the duty of providing them with continuous work (Verlinden, 2021). The modern complex business world necessitates the need for contingent workers at one point in the operation. When there is too much work, and the permanent workers cannot handle the whole work, the management may hire contingent workers to boost productivity. Moreover, when organizations have special projects that need experts, they opt for talented contingent workers who have refined skills in executing certain tasks that would otherwise be challenging to the existing employees (Barker & Christensen, 1998). This discussion discusses how contingent workers impact an organization, how they are compensated, and how they are infused into the system to work in harmony with the existing permanent employees.

Contingent workers have positive and negative effects on the organization’s Human resources, costs, and culture. The positives of hiring contingent workers are: first, contingent workers are preferred by human resources because they demand less compensation and benefits than permanent workers. Most contingent workers are always young people who graduated from college recently and just looking for small cash to sustain them as they look for permanent jobs (Fournier, 2015).  Therefore, while negotiating for their pay, they always quote lower wages than what is paid to the permanent workers. Moreover, they do not demand employee benefits such as retirement benefits, health insurance, paid holidays, and paid vacations. Therefore, they help the organization to cut the costs of labor.

The second positive effect of contingent workers on an organization is that they often focus on producing quality work as per the contract they sign. They understand that giving poor results is a direct way of breaching the contract, and their contract may be terminated. Therefore, these workers give it all in their duties to give the best results (Fournier, 2015). Moreover, they ensure that they perform well to secure more opportunities with the organization. Therefore, Human resource management does not need extra effort to enhance good performance. This means that the HRM of the organization does not incur extra costs in trying to hire more people to enhance individual workers’ performance (Barker & Christensen, 1998). Hiring contingent workers helps min eliminate workers’ retention costs, which are often characterized by huge benefits. Many permanent workers put pressure on the HRM to offer them some benefits to remain in the organization. This extra cost is eliminated when an organization hires contingent workers.

One of the negatives of hiring contingent workers is that this practice erodes organizational cultures. Contingent workers are not always keen on organizational cultures because they know they are there for just some time and will go. When the permanent workers interact with the contingent workers who are not keen on the organizational culture, they start to forget about some elements of the organizational culture, thus weakening the entire culture (Verlinden, 2021). Another negative aspect of hiring a contingent is that when the work is risky, the management incurs extra costs of updating and training the new contingent workers on the safety regulations. In addition, when the HRM does not carry out proper safety training for the contingent workers when they join the organization, contingent workers could become a liability to the organization when they get injured at their workplace.

From my management knowledge, contingent workers should be paid slightly higher wages than permanent employees doing the same job. One of the reasons why I say so is that, as discussed earlier, contingent workers are always very focused on their work, and they will always perform the tasks perfectly (Horne, Williamson, & Herman, 2000). They do this to secure more future chances with the organization. Moreover, contingent workers are on contract. They know that they may not be paid when they do a shoddy job. Therefore, they are keen on delivering the best results. Therefore, in my opinion, they should be paid higher wages because they will always give the best results (Barker & Christensen, 1998). It is not reasonable to pay contingent workers and permanent workers the same amount because they have other employee benefits while contingent workers do not. Therefore, paying contingent workers more will motivate them to work even harder.

However, one challenge that can come with paying contingent workers a higher rate of wages than permanent employees is that it can lead to demotivation. When the existing employees realize that contingent workers doing the same job are paid better wages over theme they can get demoralized and feel betrayed (Fournier, 2015). This demotivation could lead to a go-slow of the workers hence reducing productivity.

One way the HRM could infuse and integrate both the contingent workers and the permanent workers to work cohesively is to inspire both types of employees to work collaboratively to learn specialized skills. Most contingent workers are highly skilled employees, while some permanent workers are well-experienced (Horne, Williamson, & Herman, 2000).  Therefore, enabling them to work collaboratively requires a transfer of skills on both sides. The contingent workers learn the details of the work from experienced permanent workers. The permanent workers learn specialized skills, especially the latest skills in the market, from the contingent workers. Therefore, enhancing integration requires inspiration for the HRM. Encouraging team building is the second way the HRM can boost the infusion of contingent workers into the system (Verlinden, 2021). The HRM should encourage the permanent workers to form teams, including the contingent workers; teams will boost skills transfer. Increasing communication among employees makes them work effectively.

Conclusion

Contingent workers are non-permanent workers who are hired to carry out specific tasks, and once they complete the work, they leave.  It reaches a time when HRM teams hire contingent workers to boost productivity, and it is becoming a trend in the modern business world. Contingent workers tend to have positive and negative effects on the organization, but the positives surpass the negatives. Contingent workers should be paid slightly higher wages because their quality of work is guaranteed, and they do not demand employee benefits apart from wages. As the CEO of an organization, I will ensure the integration of contingent workers and permanent workers through inspiration, encouraging communication, and embracing teamwork.

References

Barker, K., & Christensen, K. E. (1998). Contingent work: American employment relations in transition. Ithaca: ILR Press.

Fournier, J. (2015). What is a Contingent Worker? https://www.hcmworks.com/blog/what-is-a-contingent-worker

Horne, M. S., Williamson, T. S., & Herman, A. (2000). The contingent workforce: Business and legal strategies. New York (105 Madison Ave., New York 10016: Law Journal Press.

Paycor. (2021). The Impact of Hiring Contingent Workers. https://www.paycor.com/resource-center/articles/the-impact-of-hiring-contingent-workers

Verlinden, N. (2021). The Contingent Workforce: Everything You Need to Know. https://www.aihr.com/blog/contingent-workforce/

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The Background readings for this module explore the premise of how contingent workers, who have become a key foundation of the U.S. workforce, are compensated. In this assignment, the various aspects of how contingent workers are compensated compared with conventional workers are compared. As you undertake this comparative analysis, address the following:

How does the employment of contingent employees affect an organization’s business, its HRM responsibilities, its overall costs, and its organizational culture?
In your educated opinion, should the compensation of contingent workers be the same (on a pro-rated basis) as conventional, full-time employees doing the same work? Discuss, bringing in both the strengths and challenges this approach presents.
How would you, as the CEO of the company, create a sense of engagement with the infusion of contingent workers in a workplace that historically consisted of conventional, full-time employees?
Use at least 2 library sources and/or background readings to help strengthen and support your 3-page essay (using in-text citations). Write in full sentences and include a strong introduction, conclusion, and reference page.