Reference no: EM133179019

Case: In 2010, Sector INC. a large manufacturer of computer printers and other peripherals, established a task force to determine the most appropriate use of contract workers throughout the company. The company had started to rely on contract, part-time, and temporary help agency people to fill temporary jobs. At the time, this represented less than one percent of Sector INC. 's workforce, and the company wanted to review these practices to ensure consistency and effectiveness.

After reviewing current ad hoc practices, the task force concluded that Sector INC.  needed contract workers when demand for the company's products expanded rapidly or a new product is launched. Sector INC.  needed this workforce flexibility because of uncertain production demand beyond the short term. At the same time, the task force warned that treating contract workers the same as permanent employees would undermine the benefits of flexibility, create false hopes of permanent employment among contract workers, and possibility create feelings of inequity between the two groups. Thus, policies were introduced treated contract workers differently from permanent employees.

Sector INC. 's task force established two contract worker categories: on-call and on- contract. On-call people are employed by Sector INC. as part-time staff. They work a full day, but only up to two-thirds of the hours of a full-time permanent employee. Their managers can alter their work schedules at will to suit production demands. On-contract people are employed full-time by Sector INC.  for a fixed period, usually six months. Their contract may be renewed up to three times for a maximum employment of two years.

On-call and on-contract employees received no employee benefits other than the government mandated minimum vacation and holiday pay. Benefits therefore represented approximately 10 percent of their total pay, compared to nearly 40 percent for permanent employees. However, contract workers earned the midpoint of the pay grade for their job group, which represented 15 percent above the entry rate. This rate was paid even when the contract worker lacked experience in the job.

Sector INC. 's Contract Workforce Problems

In 2013, three years after Sector INC. 's task force recommendations, the contract workforce policy was in trouble. Current practices succeeded in creating a more flexible workforce, and there was some evidence that using contract workers increased profitability. However, these practices created unanticipated problems that became apparent as the percentage of contract workers increased.

One problem was that few people wanted only contract employment. Most were seeking full-time permanent work and were using their contract position as a steppingstone to those jobs at Sector INC. The result was that many contract workers remained for the entire two-year maximum period and beyond. The company was reluctant to apply the task force's recommendation of not renewing contracts beyond two years because of the perceived arbitrariness of this action as well as loss of knowledge to the organization. Several contract staff members asked the company for an employee-paid benefit package (benefits are mainly employer-paid for permanent employees). However, Sector INC. rejected this because it would add further permanence to their employment relationship.

Sector INC. 's managers also began to complain about the company policy that contract workers could not be offered permanent employment. They appreciated the opportunity to select permanent employees based on observations of their performance in on-contract or on-call positions. Sector INC. 's task force had warned against this practice because it might create inequities and raise false expectations about the likelihood of permanent employment. Managers acknowledged this risk, but the inability to permanently hire good contract staff was frustrating to them.

The third problem was that Sector INC. 's treatment of contract workers was incompatible with its organizational culture. Sector INC. had a strong culture based on the philosophy of employee wellbeing. The company had a generous benefits package, supportive leadership, and a belief system that made employees a top priority in corporate decisions. The company did not treat contract workers in a way that was consistent with this philosophy. Yet if Sector INC.  treated contract workers the same as permanent staff members, then flexibility would be lost. For example, managers would continue renewing contract workers even when their employment was not essential and would be reluctant to schedule on-call people at awkward times

Sector INC. 's team orientation was also incompatible with its use of contract workers. Permanent staff members frequently gathered to discuss organizational and group decisions. Contract workers were not invited to these team activities because they might be working at Sector INC.  for only a few more months. This barrier created some awkward moments for managers as contract workers continued working while permanent employees went to meetings and team sessions.

As these problems intensified, senior management formed another task force to re- examine Sector INC. Inc. 's contract workforce policy. The company needed contract workers, but it was increasingly apparent that the current practices were not working.

Question:  

1. what is the root cause/basic?, underlying issue(s) is/are in the case. 

2. How urgent is the issue? Does it need to be immediately resolved or does the company have some time in coming up with a response?

3. How important is the issue? Is it central to the organization's operations or a peripheral issue?

4. What are the causes and effects that you've identified based on your analysis of the case data?

5. What impact(s) does the problem or issue have on the organization in terms of costs, quality, customer service or innovation, etc.?

6. What are the constraints and opportunities operating in the case? What does the organization need to consider in coming up with a solution?

7. Once you've identified the problems, use your course concepts to help you brainstorm alternatives, make recommendations, and identify steps for your implementation plan.