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As a function of layoffs and volatility in the business environment, companies are rethinking their permanent full-time workforce. Contract staff and outsourcing of all but core competencies will be “business as usual” in the year 2000 and beyond. The implications are widespread.

Volatility in the marketplace, mergers and acquisitions, and accelerating rapid change in technology are forcing companies to rethink their workforce. No longer can companies afford the overhead for a large full time staff. Companies need a flexible workforce to protect against volatility. This need for flexibility is driving long-term growth in the contract staffing industry.

Overall Trends in Contract Staffing:

• Overall contract staffing is expected to increase in the foreseeable future for solid business and economic reasons. While in 1998 with the volatility and “Asian Flu” only 39% of the over 100 companies canvassed increased contract staff headcount, this year 54% expect an increase, and looking five years out, 66% expect contract staff to grow.
• Importantly, more than half those who experienced headcount growth in 1998 and those who expect growth in 1999 experienced or expect dramatic growth over 15%. Roughly 10% – 15% of those canvassed experienced or expect growth in 1998 and 1999 of 25% or more and several expect to more than double their contract staff.
• Of the over 100 companies canvassed, on average 16% of the staff was contract. This varied widely, however, with some companies with less than 1% contract and others 50% or higher. In over half the companies contract staff represented 10% or less of the staff.
• Reasons for contract staff being up are solid:
  • The employee market is tight—finding good people tough, especially in technical areas.
  • Scarce availability of skills, particularly IT and highly specialized technical areas.
  • Volatility in the marketplace requires a flexible staff that can be moved out when projects are finished.
  • Need for project work in specialized technologies more suitable/conducive to short term contract and a flexible workforce to increase productivity.
  • Full-time employee overheads are expensive. One company quotes a $25/hour employee costing as much as $53/hour with employee benefits and overheads (401K, medical, vacation time, company picnic, etc.). Another company says a $50/hour employee costs $72.50/hour reflecting fringe benefits from 45% – 60%.
  • The “temp to perm” employee model is attractive. Companies bring in temps for a 90-day probation period and then have the option to hire them full time. This is a great “try before you buy” concept and avoids “finder” fees.
  • Revenue per employee is higher with more contract and less full time staff. This is attractive to Wall Street.
  • More and more employees prefer being independent contractors, because they earn higher salaries, like the independence and mobility, and because their spouse is often earning benefits for the household.

• As an extension of the trend to contract staffing, there is a trend being looked at where companies will totally outsource functions which are not core competencies. Specifically, companies will focus on core competencies and partner with other companies to manage non-core functions. For a high tech manufacturing company, for example, non-core functions might include accounting, benefits administration, facilities management, cafeteria and food service, mailroom, and even purchasing.

Outside Factors Affecting Contract Staffing Trends:

• Most respondents agree that outside economic factors such as the Asian crisis, downsizing, and the stock market affect contract staffing trends.
• Downsizing has fueled and paved the way for the whole culture of contract staffing. In the 1990s, supplemental contingent workers are more and more common—contracting is now business as usual. While the contract staff is usually the “first to go” in a downsizing situation, ultimately downsizing makes contract staffing go up as companies realize they need a flexible workforce to weather the hard times. It’s an interesting phenomenon—companies cut heads to keep costs down, but expenses go up.
• As we continue to see more and more volatility in the business climate, companies recognize a need to change strategy for their workforce—more and more it is openly “OK” to employ a largely outside or contract employee base.

Specific Contract Staffing Needs:

• There has been a drastic shift in the past few years from Administrative/Clerical to the IT sector and highly technical areas for contract staffing. Of the over 100 companies canvassed, 63% indicated an increasing need for IT skills and 52% for technical engineering versus just 23% for clerical/administrative, 19% for manufacturing, and 4% for warehouse.
• The supply of technical engineers is lower than the demand so that this area is “hot.” The low supply and high demand forces wages up, particularly for mechanical, electrical, and software engineers.
• While technical skills are in high demand, what companies thirst for most is project management skills. Companies need people who can manage projects from start to finish. It is rare to find people with the technical savvy who can also manage people well to take a project through to completion.
• Specific technical programming skills needed include specific languages—most in demand being C++, NT, Java, SAP, UNIX, and Oracle. Also mentioned are People Soft, Visual/Basic, Novel Cobalt, and Tandem. Computer Networking skills, Web, Internet, MCSE certified tech people, and CAD/CAM engineering Design are also mentioned.
• There is a big and growing need for PC Technicians and people who can “man” the HelpDesk and Customer Service areas.
• Manufacturing is down, in part due to automation and greater efficiencies.
• Consultants tend to be used for more specialized specific defined assignments and projects.

SOURCE: TAC Worldwide Companies, Inc. For more information, call Dan Leinweber of Leinweber Assoc. at 978/440-7878 or e-mail dan@leinweber.com.

Do you make single workers work more, travel more, and have less flexible schedules? If so, a lot of them aren’t too happy about it. Ask yourself these questions about your work/family benefits.

Are employees with children given more flexibility with their schedules?

Are employees without children (unofficially, usually) expected to work longer hours?

Do employees with children get more benefits coverage for dependent care?

Do married employees get to choose vacation and holiday time first?

Are single employees or childless employees expected to travel more?

When you ask for feedback on work/family programs, do you ask everyone?

SOURCE: Positive Leadership newsletter, Ragan Communications, Chicago, IL.

Knowledge Management is a popular buzzword nowadays. If you’re beginning a KM initiative, here are some questions you should ask yourself about the office environment before you begin.

1. Is useable information systematically inventoried, catalogued and stored with the appropriate technology?

2. Is knowledge easily accessed and disseminated by everyone in the organization?

3. Is research and development at all levels encouraged?

4. Are new ideas actively developed and marketed to provide new sources of revenue?

5. Is training provided in IT systems, which enable people to acquire, inventory and disseminate the information they need?

6. Do the formal and informal reward processes reward knowledge sharing?

7. Are senior managers good role models for knowledge management and sharing?

8. Does the physical office/work setting facilitate shared learning and knowledge?

9. Are negative politics and institutional silos effectively challenged?

10. Is there a clear shared vision, and are values clearly stated, about the effective creation and sharing of knowledge?

SOURCE: Trans4mation Training Ltd., March 4, 1999.

Are you thinking of instituting an ethics/compliance program?

Arthur Andersen surveyed more than 2,800 employees of six large U.S. companies with ethics programs in place. It found that the key factor in the success or failure of the program is employees’ perceptions of management’s motivation for the establishment of the program.

When employees perceive that the program was created to help guide behavior and establish or reinforce company values, it is more likely to be successful than if employees perceive it to be created to prevent, detect and punish violations of the law, or to improve the company’s image.

In fact, the study found that if employees believe the program was set up to protect top management, the program can result in more unethical conduct than if the company had no program.

SOURCE: Arthur Andersen, New York, February 1, 1999.

While many claims of harassment and discrimination are legit, there are quite a few chronic suers out there. Michael D. Karpeles, a partner and head of the employment law group at Chicago’s Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz, Ltd, offers this advice to employers to protect them from such plaintiffs.

Be suspicious of job candidates who have work histories that reflect a series of job changes every one or two years.

To learn more about a job candidate’s past, let the applicant do most of the talking and schedule successive interviews, if necessary, to dig out the history you are seeking.

After screening for job skills and experience, base your final selection of a job candidate on how well his or her work-related values match those of your company.

While some past lawsuits can be taken into account by a prospective employer, be aware that employers may not retaliate against a job applicant for past charges of discrimination with the EEOC or state or local human rights agencies.

As a way to minimize frivolous claims against the company, write employment contracts that spell out, in detail, the conditions of employment and the basis for termination.

Do not agree to settle every claim out of court.

SOURCE: Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz, Ltd., Chicago, February 19, 1999.

Sooner or later, everyone experiences disappointment, discouragement, anxiety, frustration, fear … and the list goes on. All of these contribute in some way to a heightened stress level that impacts negatively on sales performance and results. Here are a few tips to consider the next time you feel emotionally out of control.

1. Evaluate the conditions/circumstances in light of your long term experience, goals and/or results.

2. Keep a journal of these situations and how they turned out. Most of the time there are positive lessons if you will just look for them.

3. Recognize that life and people are not perfect.

4. Just suck it in and get over it.

5. Look for the positive in the perceived negative.

6. Develop a mentor or coaching relationship to help you through these difficult times.

7. Stay focused in the present.

8. Expect a positive outcome.

9. Do something. Take some positive action.

10. Remember stress is an inside-out reaction to outside-in circumstances, events and people.

SOURCE: Tim Connor, Connor Resource Group, Davidson, NC

Here are some steps you can take to avoid or resolve retaliation claims:

1. Implement a stand-alone anti-retaliation policy. An explicit policy that announces that unlawful retaliation will not be tolerated should contain internal reporting mechanisms similar to those in unlawful harassment policy.
2. Train employees on anti-retaliation policy and document that the training has occurred.
3. Identify and document when statutorily protected activity, such as claims of discrimination or harassment, have occurred. Retaliation occurs in response to these.
4. When retaliation complaints are made take them seriously and conduct a separate investigation. Finding for the plaintiff on charges of retaliation when the underlying charge of discrimination has been dismissed is a classic compromise by a jury. Retaliation complaints must be handled as carefully as the original complaint.
5. Consider using an outside investigator for major retaliation complaints. The ability to show that a neutral investigation was conducted can be crucial to a defense.
6. Don’t become a victim of Litigation Fear. Don’t let fear cast a lifetime protective shield around a complaining employee. Such employees must still be disciplined for workplace offenses, but documentation must be airtight.

Source: Sheshunoff, Austin, TX, February 17, 1999

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Here are some strategies from experienced managers on how to let go of an employee:

• Make thorough preparations before firing an employee.
  Document a new hire s performance from the beginning. Don’t focus on the negative, but don’t ignore the negative.

• Make sure they’re not surprised.
  No one should be shocked to be let go. You should be offering feedback and criticism along the way. Other options must be explored first before firing.

• Offer a “Career Decision Day.”
  Give them a day off with pay to decide whether they should 1) leave with severance or 2) improve in all areas. Set specific deadlines for improvement.

• Don’t mix the good and the bad.
  Don’t be so nice when letting someone go that they are confused about why it is happening.

• Don’t talk about it.
  Don’t look for support, and to try to rationalize it with other managers or employees. It’s unprofessional, and could pave the way for a libel lawsuit.

• Be ready to be angry.
  Emotions are likely to surface if the employee questions your decision. Don’t argue with him/her.

SOURCE:Positive Leadership, newsletter, Ragan Communications, Chicago, IL.

Do you want to be a “success”? According to Doris Lee McCoy, Ph.D., Author of Mega Traits, successful people have these traits in common.

• They enjoy their work.

• The have a positive attitude and plenty of confidence.

• They use negative experiences to discover their strengths.

• They’re decisive, disciplined goal setters.

• They have integrity and help others succeed.

• They’re persistent.

• They take risks.

• They’ve developed good communication skills and problem-solving skills.

• They surround themselves with competent, responsible and supportive people.

• They’re healthy, have high energy levels, and schedule time to renew themselves.

• They believe in a higher power, or, sometimes, just plain luck.

• They have a sense of purpose and a desire to contribute to society.

SOURCE: Doris Lee McCoy, Ph.D., Author of Mega Traits