The Possible Future for Company Staffing Models

Last week I discussed the increases in temporary worker hiring. Historically, this trend has signified the first step towards lowering unemployment during recessionary periods. But, this time the temporary hire upsurge may signify something different.

In a recent issue of Workforce Management Magazine, Irwin Speizer made the following observation about the expectations of one labor law firm in California:

“Something really remarkable is happening,” says Garry Mathiason, vice chairman of Littler Mendelson in San Francisco. “The world is starting to change.” In the future, he says, companies will likely make wider use of staffing methods similar to those practiced by the film industry. There, entire crews of contingent production workers are assembled for a movie, then disbanded once it is finished. Littler is so convinced that the trend will pan out that it has formed a new contingent workforce unit that will focus on advising clients of legal issues involving contingent labor. The law firm figures that the increasing appetite for contingent workers will present a host of new issues for corporations—particularly human resources departments.

Because of uncertainties about a potential double-dip recession, temps and contract workers are being sought in sectors not usually associated with contingent hiring practices:

Companies are not just looking to use more contingent workers for lower-skilled jobs; they want to expand into higher-level positions as well, Joanie Ruge (VP of Adecco Group North America, staffing firm) says. “More and more we are seeing requests for professional skills: engineers, information technicians, health care workers, specialists in accounting and finance. Companies are starting to look at really using a portion of contingent labor in even the more highly skilled positions.”

In this most serious national recession since the Great Depression, companies are in a survival mode and have cut costs in order to get through these difficult times.

Those cuts reflected a desire by corporate leaders to react more quickly to economic shifts and limit the potential economic harm from a deep downturn. That same logic may result in a broader use of contingent workers as hiring picks back up, since contingent workers are easier to cut if the recovery proves to be less than solid. Ruge says she is hearing increasing talk among corporate executives about the possibility of raising the percentage of contingent workers to 20 or even 30 percent of their workforces.

This leads me to the following point:

Unless we put a long term economic policy in place to encourage capital investment and job creation here in the United States, expect companies doing business in the U.S. to be reluctant to hire permanent employees.