As companies try to streamline operations and increase profits, human resource professionals are now looking at employees in a different light. In addition to finding the right candidate for the job, they are looking at how to cut costs per employee while still maintaining quality services for clients. The amount of money spent searching for, hiring, compensating and training an employee is examined and used to help determine profits and loss for a company.
As businesses look at new avenues to reduce overall costs, human resources management has evolved to include different types of employment, including more part-time employees and contractors. Particularly in light of the recent banking disaster (2008/2009), trends towards lower cost employment have grown increasingly common. HR professionals and departmental managers must be aware of the tradeoffs and opportunity costs of the models they chose to employ.
Part-time employment trend
In red, we can see that U.S. part-time employment has been on the rise consistently, with a particularly large jump in 2009 as a result of the banks failing to manage risk and the subsequent recession.
Part-Time Employees
While there is no standard definition of an employee in the U.S., most companies define part-time employees as those who work 35 or fewer hours per week. In addition to working fewer hours, part-time employees don't usually qualify for benefits such as health insurance, 401K, or paid vacation time.
Pros
The benefit of using part-time employees is mainly that the cost per employee for hiring, orientation, and training is less than for full-time workers. Another benefit of employees that work fewer hours is that employers can be more flexible with scheduling. If a position requires long hours to fill, hiring two part-time people can make scheduling easier than with one full-time employee. It also helps avoid overtime or time and a half, thereby reducing overhead for an employer.
Hiring a greater volume of individuals, but for fewer hours each, also provides more diversity in perspective and skills, which potentially drives higher value (though with more managerial time investment required). This can be particularly useful if a manager is looking to ultimately hire one full-timer and first wants to test a few people to assess skills and organizational fit.
Cons
There are downsides to hiring part-time employees as well. Full-time employees often consider their job a career, and will utilize long-term goals such as promotions and overall organizational success as motivators. Full-timers can also be invested in (e.g., through training and education) with more potential for a return on investment. Part-time employees are more transient, and since they're more likely to come and go, long-term motivational strategies are less effective with part-timers.
Contractors
Unlike full-time and part-time workers, contractors aren't official employees of the company. They are hired for a specific position or task and consider the organization a client. Contractors often have more than one client to which they offer similar services, and are therefore specialists. As contractors aren't employees, companies don't have to offer benefits or pay taxes such as payroll or social security. Contractors invoice the companies they work for, often on a weekly or monthly basis, and pay their own insurance and taxes.
The pros and cons for part-timers are generally the same as for contractors, where specialists are being hired for short-term contracts (and thus are motivated by the completion of a given task as opposed to by the long-term success of their clients).
Positions that are often filled by contractors include:
- Accounting
- Sales
- Construction
- IT (programming, web development, etc.)
- Design (creating ads, logos, etc.)
- Logistics (e.g., Fedex, UPS)
Human Resource Decisions
As always, trade-offs are inherent when making these hiring decisions. HR professionals must discuss with other management to determine what skills are needed over what period of time, and what resources are available annually to fulfill these needs. If it is a long-term project likely to evolve, with complex political and social interactions and relationship building, a full-timer is probably required. If it is a specialized, short-term task, a contractor or part-timer could be more appropriate. Of course, the limitations of resources impact this decision enormously, as the financial collapse underlines via increasing trends in part-time hiring.