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"...and that high performing knowledge workers are not interchangeable, unless processes are so standardized that diversity and inspiration are no longer possible."

In our increasingly service-based western economies, the majority of jobs are standardized and diversity of output is managed by systems and procedures. Think of call centre reps (service not sales) or the people monitoring the computers that process banking or insurance transactions. They have no control on the amount of work they process as they are reactive in nature. The "job" they do defines the value their work provides to the organization. Their work is essential because we want our calls answered by someone who can provide answers and we want our bank cards to work each time we swipe them.

Firms in such service industries have to rely on an ongoing employment relationship in order to be comfortable that enough will show up for work that services will be delivered each day. Hence the use of non-cash components of total rewards - vacation, medical benefits, recognition. None of the latter are typically used on contingent employees; they get cash only. The tradeoff for the uncertainty of their employment is usually a premium cash level, but an amount typically still less than the value of a permanent employee's total reward package.

I wonder if the publishers of Time will be comfortable if 40% of their printing, distribution and web employees are contingent in 2019? Will the uncertainty of their ability to publish thousands of copies of their weekly publication push them to ensure their job-based pay is attractive enough that they will have a sufficient permanent workforce to enable them to reliably deliver their business product?

Throwing our job-based pay really is throwing out the baby's bathwater. The baby will get cold and blue and not produce much of value.


We couldn't agree more with this statement:

Why? Because running a business with 40% of your workforce contracted from a local temp agency that also serves your competition...

Not only from the staffing agency but with the use of payrolled independent contractors.

We have a large client in Canada and this is the main reason they don't payroll their independent contractors through a staffing agency. Those staffing agencies take the referred talent that was referred to them by the client and when the assignment ends, they place that contractor back out in the market. Often at that client's competitor because they market their rich industry experience. If staffing companies are telling you that they are not using payrolling as long term recruitment strategy, then think again.

If companies have large groups of independent contractors and are thinking of outsourcing them to a staffing company. Think twice... The risk is greater than the reward.

For some real world examples of this and other risks, please check out the PSC Blog at: www.blog.paymentservicescorp.com

Thank you Ian and Ted for adding rich detail to this discussion. You've both underlined the inherent risks of relying too heavily on contingent labor, especially in areas that touch on 'core' business. Great food for thought!

Laura, we may not be there yet with a results-based compensation system, but we are with after-the-fact recognition and reward. These strategic efforts can fairly and positively recognize those in any organization (from the sales person, to the call-center, to the nurse) for delivering desired business results within the context of company values. While it may not be easy, possible or even desirable to compensate a nurse for bottom line business results, we would most certainly want to recognize and reward a nurse for work or performance that saved a patient's life, eased their recovery or simply reflected well on the medical center and its reputation.

Derek thank you for your insightful comment. I agree it's in everyone's best interests to recognize and reward a job well done and especially like the idea of rewarding for work that reflects well on an organization.

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