Business is picking up in the United States, according to North Carolina-based business strategist and futurist Roger Herman. The latest indicator is significant increase in the use of temporary workers.
Employers need people to get the work done, but managers are not yet allowed to add “headcount”. The increase in business has not been sustained long enough to authorise hiring permanent staff again.
Companies still under hiring freezes can hire temporary employees without long-term commitment. Temps might be more expensive per hour, but that’s all right for the short-term, suggests Herman.
The current phenomenon repeats what happened in the 1990s before the boom economy kicked in and generated tight labour market by the end of the decade. The increased use of temporary employees – at all levels – is precursor of the shift toward hiring permanent employees again.
A high proportion of temporary workers are, however, looking for permanent full-time work. Under the temp-to-perm arrangement, people can use temporary assignments to gain full-time jobs. Does it work?
According to Adecco, the largest temporary employment agency in the world, leveraging temporary jobs to permanent assignments does work. In study conducted in the 1990s, during an economic period comparable to 2002, 85 percent of temporary workers wanting full-time permanent work found jobs within six months.
Herman believes that the US will see this kind of transition again. “The increased use of temporary workers is good sign for the economy,” he says and it’s good sign for people anticipating the transfer from temp to permanent.
However, management guru Peter Drucker suggests that major change in the way organisations employ people is taking place in the US. Organisations that have downsized might not directly re-employ the people they need.
Drucker suggests in recent Harvard Business Review article that two extraordinary changes have crept up on the business world without most of us paying much attention to them.
He says “a staggering number of people who work for organisations are no longer traditional employees of those organisations” and, second “growing number of businesses have outsourced employee relations; they no longer manage major aspects of their relationships with the people who are their formal employees”.
He suggests the trends are “unlikely to reverse themselves anytime soon” and in fact they will probably accelerate. The “attenuation of the relationship” between people and the organisations they work for “represents grave danger for business”, he warns.
“It is one thing for company to take advantage of long-term freelance talent or to outsource the more tedious aspects of human resources management. It is quite another to forget, in the process, that developing talent is business’ most important task – the sine qua non of competition in knowledge economy. If by off-loading employee relations, organisations also lose their capacity to develop people, they will have made devil’s bargain indeed,” says Drucker.
Given the increasing number of US-owned companies operating in New Zealand, managers should watch this trend carefully.