Disposable Workers, Newton’s Third Law, and The Lock Down

Don't wait until the last minute to extend consultants and other key non-employees.

The most recent issue of BusinessWeek has an interesting article about The Disposable Worker. Long story short: fewer people are working as full-time W-2 employees and more are working as one of the following:

  • temps
  • part-time workers
  • independent contractors
  • other types of “agents”

Now, I’m not about to write “the post” that discusses the macroeconomic trends brought about by these changes. Suffice it to say for now, the increased use of “non-employees” is affecting many, many things.

In this post, I discuss the often overlooked risks facing organizations that rely on people like me.

Benefits to Employers

For employers, the benefits of using “non-employees”, for want of a better term, include:

  • avoiding paying benefits and paid time off
  • employee-based taxes such as unemployment insurance
  • greater overall flexibility with respect to labor costs

If an organization’s goal is to minimize short-term cost savings, then it’s hard for me to argue against using consultants, temps, and independent contractors. Cost aside, contractors and temps have no employment contracts and we’re generally not covered by US labor laws. For example, I cannot tell my de facto “boss” that I’m taking FMLA. This is not to say that I don’t have any rights in the workplace; it’s just that I don’t have as many rights as my boss. What’s more,  government organizations such as the EEOC and OSHA are way to busy these days to take claims from people like me.

Risks to Employers

Newton’s Third Law states: “To every action there is an equal and opposite reaction.” Organizations need to keep this in mind. Even in a tough economy, key independents and temporary workers do get other offers.  For much more on this, check out the book Free Agent Nation. In short, non-employees are always on the lookout for the next gig.

To be sure, consultants working for firms as proper full-time employees will collect a check next week whether their clients retain them or not. (Unless, of course, they are laid off.) Still, organizations need to remember that consulting firms are constantly trying to place their people, often whenever and wherever they can.

On my previous consulting engagement, the organization lost several key consultants because its CIO essentially attempted to extend consultants on their penultimate days.  For two reasons, this always irks me.

First, it smacks of hubris and narcissism.What do you mean there are other organizations out there? You mean that people aren’t waiting by the phone for us to extend them?

Second, while I understand that budgets are tight, why would a CIO pose substantial risk to its organization by letting key people walk when your employees have not sufficiently learned from those consultants? This is a point that I make in both of my books.

Simon Says

Don’t wait until the last minute to extend consultants and other key non-employees, particularly as your project reaches a critical state. Follow these guidelines and you can maximize the chance of a smooth transition and minimize the chance of scurrying at the last moment:

  • let everyone know well ahead of time when non-employees are scheduled to leave
  • make sure that end-users know this and have the time to spend with “disposable workers” before they are off to another project
  • if an extension is necessary, let attempt to arrange this as early as possible to ensure that you can lock down the resource
  • by all means, don’t complain when that resource has found another gig

Feedback

What do you think, blogosphere?

philanimated

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4 Comments

  1. Amanda Tarrant

    I’m not sure that I agree with you. Sometimes employers don’t know until the end of a project if they’ll need people. If you want more stability, work as a W-2 employee.

    Reply
  2. Amy Marie Brown

    I understand what you’re saying but this is life in the 21st century. Organizations can’t plan as much as they probably should. It was a very different world ten years ago during the dot com boom. Employees had all the power.

    Reply
  3. philsimon

    Thanks for the replies, Amanda and Amy.

    Perhaps I just have developed the bias of a consultant over the last decade. I certainly know that the ball’s in the employer’s court with a ten percent plus unemployment rate.

    I merely wanted to call out the risks of waiting until the last minute to lock down resources.

    Reply
  4. David Kausch

    That was an excellent read. While I was employed with ATT at a call center, I have seen first hand what happens with poor planning on the part of the company when it comes to consultants. Example: Purchase a 3 million dollar piece of equipment.. hire a consultant to come in and install it and then let him walk out the door before he even trains anyone on how to use it.. just because there was a budget shortfall? That was the most expensive book end they ever bought.

    Also.. and this is my observation: Many companies will let go of contractors suddenly for no reason or ones made up. Why? Because the employee’s see that they have someone that is driven, maybe smarter and willing to do what has to be done to get the job done. So being the hired gun brought into the mix to fix problems.. causes problems with the employee’s since they feel they are made to look bad or lazy or will be expected to perform to the level of these individuals. So the quick fix is to get rid of higher expectation.

    There has been a current trend to attempt to bring on consultants at rates way lower then traditionally offered. Many are self employed and in order to maintain all the required insurance’s, licenses and so forth, a much higher pay scale is required to cover all of these. Yet these rates are not being offered and the quality people are just not jumping at the offers anymore.

    Reply

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