At present, international developments such as globalization, technological change, and shorter product life cycles have created a greater need for flexibility; organizations use their human and material resources to cope with growing environmental turbulence. Hence, an important part of current organization workforce is comprised in temporary jobs. Temporary workers are primarily used as cheap alternatives for absent permanent workers and for buffering production, and are, therefore, largely seen as secondary workers. According to economic theories such as transaction cost theory, human capital theory, and implicit contract theory, there is a trade-off between long-term commitment of the employee and long-term investment on the part of the organization. Several studies have shown that the current treatment of temporary workers has consequences for organization performance in the long run.

Nevertheless, today’s short-term employment provides a structural basis for the inequality of temporary workers compared to their permanent colleagues. In addition, the high level of individualism of today’s workers causes employers to be less disposed to invest in human capital. While employees are continually seeking better employment conditions, organizations are more reluctant to invest in their workers. Thus, this paper is trying to examine the extent at which the use of temporary employment relationships affects employee and employer behavior. But lets first look at the advantages and disadvantages of employing temporary workers.

Temporary workers enable organizations to adjust more easily and quickly to workload fluctuations. For example employee absences due to illness, vacation, maternity or disability leave, sudden departure; and/or unexpected demands such as special projects, etc. In addition, through temporary work organizations can offer flexibility and at the same time better meet their own needs and stay current with today’s work force. It encourages the “quantitative flexibility,” cited by Atkinson (1985), enables the outsourcing of the personnel management (recruitment, training, etc.) to manpower supply agencies, and reduces the cost of the management. Better yet, corporations can evaluate workers without commitment and thus hire those that suit their business. Some businesses employ temporary workers as an excellent and cost-efficient way to recruit and test the abilities of new workers before signing them on full-time.

Some companies will repeatedly use the services of temp workers who have proven to be a company asset.  In the short term, the hiring temporary workers are generally more cost-efficient than the cost of hiring permanent employees with benefits. Actually the agency that supplies these temp workers in most cases bear the financial burden of recruiting, hiring, and training workers. Likewise, today temporary workers increasingly include highly skilled individuals with a wide range of educational backgrounds and work experience such as accountants, financial officers, doctors, scientists, lawyers and IT professionals. These individuals can tackle critical one-time projects that are limited in time and scope. Hence, they provide specialized skills to all types of industries. In contrast, a lot of resources are invested in training temporary workers regardless of how skilled or unskilled they are; a certain amount of training is required in order for them to perform their assigned tasks to suit the specific needs of that company at company expense. Certain types of jobs are inherently dangerous and require careful safety training because studies show that frequency and severity rates of on-the-job injuries are significantly higher with temporary workers.  Unless a prior trained worker is brought back again.

Likewise, morale and employee relations’ problems can arise when you have temps working alongside permanent employees for months, doing the same work and putting in the same hours, but not receiving the same benefits afforded their permanent employee coworkers. For instance, Michael Lauffenberger, a 31-year old programmer for the General Dynamics Atlas Missile Program, reportedly felt unappreciated for his programming work on a parts-tracking system. He planted a "logic bomb" in the system designed to erase critical data after he resigned. He then anticipated returning to rescue the company as a highly paid and valued consultant. In other words, temporary workers are likely not to give in their 100% effort because they are temporary, get no benefits, etc and why should they sow seeds that will be reaped by the permanent workers? Incentives sometimes enhance performance and show employees that they are appreciated.

With that stated, studying employee behavior is not only relevant because of the growth in the number of temporary workers that is currently employed, it is also important because managers have to deal with the problem of obtaining cooperation among a collection of individuals or units who share only partially congruent objectives” (Ouchi, 1979). Creating cooperation between parts within an organization has always attracted the attention of managers, but has become even more salient as organizations move toward team-based organizational structures (Cohen & Bailey, 1997). Within team structures, employees are expected to coordinate their tasks and monitor the quality of each other’s work. This requires contributions from each individual to the common team goal (Smith, Carroll, & Ashford, 1995). Ensuring everyone’s contribution can be problematic in teams because every individual member will be interested in the benefits that the team can offer, but less in putting a lot of effort into it (Miller, 1992).

A general theoretical expectation is that temporary workers will have less positive exchange relationships with organizations than regular employees (Tsui etal., 1995), because they receive few if any benefits, are not routinely considered for promotions, and cannot expect a steady work schedule or long-term employment. Therefore, it is expected that temporary employment relationships lead to the situation in which the employer offers a short-term financial inducement in exchange for narrow and well-specified contributions by the employee. Although there is a strong theoretical rationale to expect less positive outcomes with temporary work status, past research does not support this view (Van Dyne & Ang, 1998).

Moreover, the literature concerning the effects of labor flexibility on cooperation shows that relatively little is known about how temporary contracts affect attitudes and behavior at work. There are very few systematic studies on the effects of temporary contracts and findings from the available studies are inconsistent. For example, empirical studies comparing permanent and temporary workers reveal negative effects of temporary work status on work behavior (Moorman & Harland, 2002), while other studies do not find differences between the behavior of permanent and temporary workers (Van Dyne & Ang, 1998). Therefore, it can be stated that the assumed negative effects of temporary status seem to be the result of speculation rather than empirical research.

Research indicates that temporary workers generally perceive their employment relationship as equitable compared to that of permanent workers. Although empirical evidence on employment conditions suggests that temporary workers have a secondary position compared to permanent workers, temporary workers do not perceive this as inequitable. To ask whether organizations that employ many temporary workers are able to bring about cooperation between different actors points to a somewhat ironic situation that may occur in modern organizations. The only solution is to encourage employers to invest in their personnel because these are unique human resources consisting of capabilities, which are regarded as a primary source of competitive advantage. At the same time, there may be fewer opportunities and incentives to invest in these employees because of the increasing use of temporary workers. Related to this, organizations put more emphasis on cooperative types of behavior of their employees, while the use of temporary employment relationships may undermine positive types of behavior shown by employees (Pfeffer, 1994; Tsui et al., 1995; Moorman & Harland, 2002).


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