| About InfoWorld : Advertise : Subscribe : Contact Us : Awards : Events : Store |
 |
||||
|
||||
 | ||||
 |
|
|||
 | ||||
|
|
|
||
|
||||||||||||||||||||||||||||||||||||||||||||||||
 NEWSThe end of work as we know it By John Kador August 18, 2000 JOBLESS, BUT NOT WORKLESS, is the wave of the future, says James R. Ziegler. As executive director of the Pleasant Valley, Calif.-based Professional Association of Contract Employees (PACE), Ziegler is onto something. The Internet economy may finally put to sleep an Industrial Age dinosaur: the permanent job. Recent dot-com downsizings in the wake of the Wall Street meltdown demonstrate that the term permanent position is an illusion. All jobs, whether by design or not, are temporary.
The numbers are big: In the United States during just the first quarter of 2000, an average of 2.88 million temporary workers were employed daily, a 7 percent increase from the same period in 1999, according to the American Staffing Association's quarterly member survey. Estimates on the size of the contingent labor pool vary from 10 to 35 percent of the total workforce, says Kathleen Eaton, an analyst at Net-Temps, a technical-staffing company based in North Chelmsford, Mass. Temp vs. perm battlefield If you're not a member of the contingent workforce, you're a permanent employee, right? Don't look to your employee handbook for support. Employers will use the term temporary but fear that workers will take permanent literally -- and will take them literally to court. Instead companies prefer to denote former permanent employees as full-time employees. Is the grass greener? The use of contract employees at some companies has generated controversy. Full-time employees often resent these contingent workers who perform relatively the same tasks for as much as double the in-house employee hourly rate. Full-time employees don't realize or they forget that contingent workers receive few, if any, employee benefits. The benefit void has been attacked by the contingently employed, some of whom log years at a single company. In recent history, Microsoft's eagerness to use contract workers brought trouble for what some cited as an abuse of the practice. The company was criticized for hiring contract workers, or "permatemps," essentially on a full-time basis in order to avoid the cost of benefits, including stock options. As a result of legal actions and pressure from unions, Microsoft in February cut back on the use of contract workers and now places limits on their tenure with the company. Nevertheless, the practice of using contingent workers has been so widespread at Microsoft that contingent workers there have successfully lobbied for benefits traditionally reserved for full-time workers. The anti-temp forces As the contingent labor pool has grown, so too has the surrounding controversy. Some opponents lament the end of corporate paternalism toward the worker, arguing that companies turn temps into commodities to be discarded when their skills are no longer needed. Others argue that companies fill jobs with temps, who are purported to be the least powerful and lowest paid of all employees. In other words, the workers most likely to be forced to accept temporary work are the ones least able to afford periods of unemployment between assignments. Opponents say companies offer more incentives to regular workers who have skills essential to meeting customer demands and which are not readily available in the open market. Some call this practice exploitation. Others, including members of the contingent IT workforce, simply call it yesterday's economy. Combine the current hourly wages for contractors with the power and desired skill sets that tech talent possesses, and does the exploitation argument hold water? Increasing numbers It might be a stretch to believe that the growth in the contingent technical workforce is due to an easy exploitation of that talent. Recruiting and signing on technical temporary staffers can be as difficult as recruiting full-time IT professionals. Given demand for skilled IT workers, many techies prefer the flexibility and high fees that an alternative work arrangement can bring. There seems to be little, if any, immediate slowing in the growth of the contingent workforce, industry observers say. In a survey conducted by Net-Temps, 96.5 percent of surveyed contractors said that they intend to continue working as contractors for as long as they are able. This is not your father's career The increased use of and opportunities for the contingent workforce in the information technology industry are fueled by the very thing spurring the industry's growth -- the World Wide Web. The Net has disrupted the economy so completely that the old model of working for one company until retirement seems quaint. Today a career is not made with one organization; it's made of a series of projects and problem sets. This change opens the door to the possibility of a successful white-collar career as a contingent worker: The temporary labor pool has gone upscale, representing not only blue collar and secretarial but also technical, professional, and managerial workers. This breed of temporary also has access to increasing professional support: They can subscribe to industry newsletters or join unions and associations organized to promote their causes. Technical contract employees differ from temps in that the former provide specific, advanced, technical and professional skills. As a result, they are paid more than nontechnical temps. Technical temps also tend to have longer assignments. In other respects contract employees are similar to regular temps. A breed apart Not everyone is cut out to join the contingent workforce. To be a successful member of the alternative army of workers, a recruit must be comfortable handling the responsibility for his or her own future. Contractors and technical temporaries, while in demand, cannot always be sure what the next assignment will be. There is still some risk to not being an in-house employee. But the opportunities abound for IT professionals who want alternatives to regular, full-time work. Contingent workers, consultants, contractors, and free agents are wooed by job board providers and temporary help agencies, such as Ants.com, Manpower, and Fanning/Uniforce. "These people are an enterprising group who are quite happy steering the course of their own careers. For at least three-quarters of independents, the choice to go solo was not economically necessary but instead driven by an entrepreneurial spirit. To be one's own boss was most important to male contractors, whereas their female counterparts appreciate the scheduling flexibility and increased ability to tend to family matters," Net-Temps' Eaton says. Defining the titles: Contractor or technical temp Contract employees are skilled temporaries who are employed by a contract employment agency. These leased employees, or technical temps, are then assigned to a client company under terms specified by a contract between the agency and the client company. Contract employees do differ from other temporary employees: A contract employee has specialized job skills usually not available within the client company. They also are paid a higher rate than the full-time in-house staffers. The hiring agreement can include a fee for a specified project or a commitment for a certain number of days of service. These arrangements are often handled through a recruitment firm or headhunter. The firm's client company does not handle employment taxes and benefits: The independent contractor is not their W2 employee. The Internal Revenue Service has strict rules for defining "independent contractors" and imposes penalties for employers who misclassify employees as independent contractors. Dependent vs. independent At one end of the spectrum are agency-dependent contract employees. Agency-independent direct consultants are found at the other end. All contract workers fall somewhere on this continuum. Control differentiates the two. In the agency-dependent model, the agency locates the assignment, recruits the contractor, and negotiates with and bills the client. The agency withholds applicable taxes from the contractor's regularly scheduled payroll check. The difference between the client bill rate and the contractor pay rate (minus taxes) is the agency's revenue. Just where a contractor settles on the continuum is a personal decision that has to do with comfort level and immediate circumstances. But most of all it has to do with the free agent's understanding of how the contracting industry operates and how he or she uses that information to its best advantage. Income and professional security are strongly influenced by where you fall along the continuum. For someone who wants to retain 100 percent of the fees from the assignment, he or she would ideally work as an independent contractor. However, independents are responsible for finding assignments, billing for time, and paying all applicable taxes and liability insurance. Find representation or go it alone? In considering a stint as a temporary worker, you must decide whether to be agency-independent or agency-represented. Both hold advantages. Millions of troops in the alternative workforce army prefer working with an agency. Someone else -- the agency recruiter -- is scouting the temp-assignment horizon. Employers routinely hire temps to perform Web maintenance or coding or to fill in when e-commerce loads increase -- during the holiday shopping season, for example. However, the choice isn't always available on desired assignments. To limit liability, some enterprises will not work with self-employed independent contractors because these indies are not incorporated and often have limited, if any, insurance coverage. Other companies prefer to forego the administrative nightmare of working with hundreds or thousands of independent contractors. These agencies provide the bodies and simplify the paperwork. Consultants Consultants belong to a special class of independent contractors. They are paid to offer advice or to carry out a defined project with a specific deliverable. Consulting companies are made up of anywhere from only one to thousands of employees. For billing purposes, the client may require a consulting firm to report aggregate hours broken down by the project. The individualized work efforts of consulting firm employees are never tracked by the client, as is the case with contractors. Be wary about the consultant label. Independent contractors are often wrongly referred to as consultants. Recruiting companies also call themselves consultants because of the role they play locating qualified workers, but the term can stretch credibility. Employee leasing Leasing isn't just an automotive term anymore. Employee leasing involves a company outsourcing complete human resources administration for a class of employees. Companies such as Microsoft are famous (or infamous) for contracting with an employee leasing company to supply programmers or analysts on a long-term basis. Leased workforces can range in size from one to several hundred employees. A team leader, often an in-house employee, supervises these permatemps. The agency is the employer of record and takes care of all hiring, payrolls, administrative paperwork, regulatory matters, and benefits. In addition to programmers, database administrators are often found in this arrangement. Free-agency benefits As Microsoft officials know, benefits, especially stock options, can be a big issue for both contingent and permanent staffers. PACE's Ziegler has a mission: "My goal is to make it possible for a downsized, full-time employee to enter the contingent workforce and not give up any benefits, and at the same time to have the advantages of the self-employed." He says PACE makes that possible by handling many of the tasks -- obtaining medical insurance, funding the contractor's pension plan, negotiating with employers -- that contractor traditionally neglects. The talent war opens opportunities As the war for talent intensifies, so will the expected demand for temporary workers with professional skills sets. Ziegler believes that free agency is the model for the future workforce. "Companies are starting to outsource all their operations and keep only middle-management people to make the strategic decisions," says Ziegler, author of the Contract Employees Handbook. In the Net economy, the shortage of talent is an employer's main constraint. The Net economy also is spawning new types of representation for contract workers, including full-service and pass-through agencies. The question is how to protect yourself and optimize opportunities. John Kador is a business author based in Geneva, Ill. Contact him at www.jkador.com .
 RELATED SUBJECTS  Professional DevelopmentSPONSORED WHITE PAPERS 
SPONSORED LINKS
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||
|
||||||||||
