Will employee meltdown mean a "contingent" work force?

Imagine that you're scanning through the want ads in your local newspaper, and your eyes spot the following advertisement: Position Available: Only those With God-Like Qualities need Apply Wanted: Individuals with a wide backgroung of experience in all areas, highly educated, able to work effectively in a high stress environment, able to work 70-plus hours per week and be grateful for receiving a 40-hour salary with no additional benefits, possess a sense of humor, pleasant attitude, and either show visible proof of ability to perform miracles daily or demonstrate the ability to waik on water, know all things, and appear in all places without showing signs of physical stress or fatigue. Because of the corporate downsizing that has been occurring in the 1990s, and the competitiveness that has arisen as a result of this trend, the job description in this ad is more of a reality than a fantasy. The forces of history are once again pushing Americans toward the type of workforce that their parents and grandparents fought to overcome - long hours for less pay, working more to buy less. They also may be pushing us into a work environment that includes only a small core of "permanent" employees with God-like qualities augmented by a large pool of "contingent" or temporary workers. Carolyn S. Hayes, who has seen many changes during her 32-year career as an office professional, described the work environment thus, "Today, demands on high-performance organizations to do more with fewer people require that the entry-level worker possess a solid educational foundation. To succeed, he or she must be a skilled team member, comfortable with technology and complex systems, and have a passion for continuous learning."(1) Two Philosophies There are two basic philosophies for maintaining a skilled workforce. One advocates the concept of "retreading the current workforce," and the other embraces the philosophy of "operating 'lean and mean' by hiring contingent or temporary workers." Will the 1990s be remembered as the era that fostered the throwaway, sheddable, disposable, just-in-time employee? Maybe. The Massachusetts Institute of Technology's Lester C. Thurow notes that, in the first half of the 1990s, corporate downsizing eliminated between 500,000 and 600,000 jobs a year. He claims that once downsizing is completed, many of the laid-off workers are replaced by a contingent work force composed of involuntary part-timers, temporary workers, limited-term contract workers, and previously laid-off "self-employed" consultants. "With contingent workers, companies get lower labor costs and greater deployment flexibility. Contingent workers get lower wages, fewer fringes and paid holidays, and much greater economic risks and uncertainty."(2) Supporters of the contingent workforce movement advocate two basic approaches for maintaining a healthy, productive company:

* Flatten the pyramid (organizational structure)

* Empower the workforce with up to 50 percent contingents(3) According to an article in the Personnel Journal, "just-in-time" employees save companies such as McDonnell Douglas a great deal of money. Benefit costs that consume 30 to 40 percent of payroll expenses are a major expense, as are training expenses. Temp agencies such as Manpower screen, test, and train applicants on various software applications. "No-frills" employees provide a trained workforce that can be easily downsized in harsh economic times.(4) Opponents of the contingent worker movement claim that a temporary workforce is a costly venture because training programs are expensive and contingent workers remain on the job for only short time spans - not long enough for firms to recover their training costs. They view contingent workers as McWorkers with McJobs. Because labor is a firm's most valuable resource, they believe that losing valuable expertise to McWorkers ultimately has a negative impact on a company. Authors Stanley Nollen and Helen Axel caused quite a stir earlier this year with the publication of their book, Managing Contingent Workers: How to Reap the Benefits and Reduce the Risks. They not only looked at the training cost issue, but questioned whether contingent workers really save money, give firms flexibility, and improve productivity.(5) Herb Ostrach, vice president of Five Star Temporaries in Orlando, Florida, claims that many of the book's conclusions "are debatable and others misleading." He refutes the nonrecovered training cost claim and comments, "Yet the whole rationale behind temporaries is that they are trained before they are hired. There would be no industry otherwise."(6) The Trend So, where might America be headed as downsizing and the contingent workforce continue to grow? Stephen Covey, popular speaker and author of the Seven Habits of Highly Effective People, predicts that "in two decades much of America's economy will be driven by contingent workers."(7) Could this be true? Many agree with him. Peter Bickford, director of human resources at Barber Foods, which sent many employees to hear Covey's presentation, said, "He's cutting edge; he's ahead of the game. In 20 years, we'll all be contingent workers."(8) One bellwether of business trends is California's Silicon Valley. Columnist Mark Simon of the San Francisco Chronicle, who cites figures from a study by the South Bay Labor Council, writes, "Temporary workers-contract employees, part-timers and consultants-make up the fastest-growing segment of the Silicon Valley economy and have accounted for most of the net job growth in the area in the past decade."(9) And, Amy Dean, head of the labor council, said, "As goes Silicon Valley, so goes America."(10) Another telling opinion comes from James Meadows, an AT&T vice president, who told the New York Times, and was quoted worldwide, that the company was trying to promote "the whole concept of the workforce being contingent." He called it part of a larger move to a society that is "jobless, but not workless." A writer for THE WALL STREET JOURNAL calls contingent workers "the vanguard, perhaps, of a new kind of career: the project junkie." He says the nomads are proliferating partly because they fill a void created by the waves of corporate downsizing. Noting that the ranks of temporary workers are accelerating particularly in high-tech industries, he says, "As technology projects sweep into companies, many executives are struggling to meld a home-grown work force with a contingent of out-of-town hot shots. . ." "The gradual trend away from traditional jobs carries enormous implications for pay, personnel issues, and whatever constitutes a career."(11) But Carrie Leana, a professor at the University of Pittsburgh's Katz Graduate School of Business, and coauthor of Coping With Job Loss: How Individuals, Organizations, and Communities Respond to Layoffs, says if you look inside American firms, you find a disturbing paradox. "The very qualities that many executives say their firms need in order to compete-flexibility, teamwork, innovation-are, in fact, being destroyed by the organizational culture they're creating." She argues that advocates of a contingent work force ". . . see great savings but don't count the costs." She says she's not talking about human costs but "real damage . . . to the ability of our business firms to compete and succeed over the long run."(12) Others argue that the trend toward a contingent workforce "could be a bomb in the laps of corporate chieftains - one that could explode and bring a return to the union organizing and acrimonious labor-management relations of the 1920s and '30s."(13) Boston University professor of economics Peter Doeringer foresees "a resurgence of labor unions as a backlash to corporate America's preference for expendable workers."(14) More For Less Another dimension to today's tumultuous times is that managers who view contingent workers as a wary venture may not hesitate to hire "permanent" qualified workers because they can be snapped up at bargain basement wages. New workers who are becoming the "core" of firms are often working harder for less pay than previous employees made. "I love this recession! I have hired highly skilled employees I never dreamed I could attract for the money the company is willing to pay them," said the personnel officer of a large communications corporation. "Two years ago, I was making $100,000. Now, I feel fortunate to have a job that pays $40,000 a year," said a former executive. There have been five significant changes in the American workplace since the 1970s:

* Work duties have become more specialized because of automation

* More Americans are pursuing and completing postsecondary education, thereby filling jobs that once required only a secondary education

* The rapid growth of technology has outpaced the available number of workers with the essential skills to perform the job adequately

* America has not reacted quickly enough to the changes that have occurred in the business and economic environment