Reference no: EM133177393

Sector INC Contract Workforce

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.