Are temporary employees best for business flexibility?

Roger OakdenGlobal Logistics, Logistics Management, Logistics Planning, Procurement2 Comments

Warehouse employees

Employment options for long term success.

Are you using ‘weasel’ words? This is the expression for words used to cover the true meaning of a situation. An example is ‘flexible labour’, a term used as a cover for the actual situation of irregular hours and underemployment of people. Both shippers and 3PL state that due to the demands of customers and to achieve business flexibility, they must employ people on a short term basis.

Flexible and Flexibility are becoming the all too common terms used to define services businesses; but, they can be management speak that provides a convenient cover for the lack of business strategy, poor planning systems and support for a ‘can do’ culture in place of planning. What does ‘flexibility’ mean? Its dictionary meaning is ‘quality of being pliable; adaptability, versatility’. My November 2016 blogpost titled Flexibility in Logistics needs control of customer orders discussed the planning needs of an organisation wishing to be flexible. Not required was to be ‘pliable’ – that is ‘easily influenced’ (by customers?)!

There are regular instances currently occurring across Australia of service businesses conducting ‘sham contracting’, ‘under the table’ labour contracts, underpayment of wages and non-payment of overtime. At some point in the proceedings, the employer will use the excuse of ‘the need for flexibility’ to justify their actions. This is the end result of believing your own statements.

Logistics professionals must be careful in adopting weasel words, because, if used often, the speaker begins to believe them. You need to be clear about what you really mean, so that it is easier for you to challenge your own statements. So, if to be flexible as a business you must plan the outputs and inputs at the inflection point called the Order Penetration Point (OPP), then it follows that you plan the internal resources, one of which is labour.

Flexibility as a business model requires a more flexible workforce. However, the range of employment options provide for ranges of flexibility:

  1. Full time basis (37-40 base hours per week plus annual leave and other benefits). Overtime is paid for excess hours worked within a week. Employees can be re-allocated to jobs within the organisation, depending on their skills and demands from customers and suppliers
    1. A seven day per week operation can have one crew work four days each of 10 hours and a second crew work weekends of three days by 10 hours, which compensates for working at weekends
    2. A 24 per day operation can have the common three or four shift employment situation
  2. Permanent part-time, based on set days and hours of work
  3. Hire on an annual hours basis. This requires employees to work variable hours per week but for a fixed wage or salary; they are only paid overtime rates after the completion of their annual hours. Employment includes annual leave and other benefits
  4. Flexible part-time whereby (say) three people are employed to cover two jobs of similar skills and knowledge requirements. The group members negotiates their individual work hours each week to suit work demands and personal circumstances
  5. Contractors with specific skills hired to complete a defined project-based task, within a defined time period
    1. Seasonal contractors with defined skills who are re-appointed each season, typically in agriculture and its downstream production operations
  6. Direct hiring or through labour hire agencies:
    1. ‘independent’ contractors that supply their own equipment and tools, but follow instructions concerning hours and type of work
    2. employees on flexible hours (casual) per day or week; ‘on-call’ for when days and hours of work are provided
    3. ‘hire and fire’ on a daily basis

Options 1 and 2 are the most limiting when viewed against the need for flexibility. However, the aim of building a successful long-term business is unlikely to be achieved through Option 6, employing casual and short term contract staff. It does not build a team when the team members are not sure when their next employment period and payment will occur.

This leaves Options 3 and 4 as the basis to build your business for the long term and achieve flexibility objectives. With permanent and committed staff, investment in training can be made to ensure a Logistics Service Provider (LSP) business is responsive and reliable. Option 5 exists for achieving outcomes in specified projects, not hiring people on short term contracts to perform regular jobs that do not change.

The real situation

Unfortunately, what I would like as an ideal situation and what Logisticians must deal with on a daily basis can be very different. So, how should you manage a situation where senior management has established a policy of employing Option 6, temporary employees? Even if they are employed through labour hire agencies and therefore remain employees of the agency, the most important principle is that temporary employees are people, to be treated with respect. This requires operational managers and supervisors to be trained.

A critical area is the expectation of managers and supervisors concerning the capabilities of temporary employees. As a group, they are likely to have a range of capabilities and skills, but there is only a limited time to match them with workplace expectations. Of necessity, work expectations must not be high, but must be clearly defined. This will also include how official feedback on employee performance will be provided.

With expectations defined, you can identify how temporary employees will be inducted – provide information on physical locations in the workplace, safety, ‘how we do things around here’ and the hours and payment. The induction, including a tour of the facility, should be done by the immediate supervisor or their delegate; not by labour hire agencies.

Through the day or shift, managers should be ‘managing by walking around’ (MBWA) and talking with both permanent and temporary employees about the objectives, targets, tasks and challenges. ‘Thank you’ and feedback (even if it is to ‘find out’ and report back) is provided, so that temporary employees see this as normal behaviour.

MBWA with conviction is a critical element of management for all employees. For temporary employees it shows that management does care, even for those people employed for a short period. This helps to provide a level of confidence in the tasks done and satisfaction on both sides with performance and achievement of targets.

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About the Author

Roger Oakden

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With my background as a practitioner, consultant and educator, I am uniquely qualified to provide practical learning in supply chains and logistics. I have co-authored a book on these subjects, published by McGraw-Hill. As the program Manager at RMIT University in Melbourne, Australia, I developed and presented the largest supply chain post-graduate program in the Asia Pacific region, with centres in Melbourne, Singapore and Hong Kong. Read More...

2 Comments on “Are temporary employees best for business flexibility?”

  1. Roger, this is a well balanced article. Having built a successful 3PL business using in part casual labour hired through labour hire agencies I can further expand on your article. Initially we used labour hire as we did not have the consistent work plus it allowed us to manage our cash flow better. The employees were paid weekly but we paid the labour hire agency at 30 days – labour being the biggest cost in a 3PL. As the business grew we gradually transfered the good people onto our company payroll. Using MBWA we ‘engaged’ by communicating with the casual employees as being part of our business – treated them with respect. Also for SMEs using a labour hire agency allows them to properly vet new employees as typically SME owners and managers do not have time or expertise. If the employees are good they are kept on, and maybe transfered to permenant status and the poor performers are not re-engaged. The Australian labour laws around ‘unfair dismissal’ make poor hiring decisions expensive and distracting time and resource wise. In conclusion, a blend is best, in particular having a pool of casual employees for peak periods. These casuals should be from groups who are not necessarily seeking fulltime employment. For example, university students, mothers with school children etc

    1. David. Thank you for the excellent comments. These will add to the understanding by readers about the range of factors to be considered in an organisation’s labour hiring policy.

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