Contractors in the Workplace

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Contractors in the Workplace

• Stephen R. Barley
• Management Science and Engineering
• Center for Work, Technology and Organization
• Stanford University

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Informants Characteristics
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Why do Firms Hire Contractors

• Reduce Indirect Labor Costs
• No employment taxes
• No health insurance or pension payments
• Escape costs of recruiting, training and
  terminating employees
• Lower infrastructural costs.
• Flexibility in the face of an uncertain market
• Wages
• Numerical
• Functional
• Acquire Skills that Firm Lacks
• Inflate productivity figures and firms
  evaluation
• Salvage projects in crisis
• Screening
• Do work that permanent employees dont want to do

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Extent of Use

• 70-80 of U. S. Firms use some form of contingent
  labor, including part time workers.
• 45 made use of staffing agencies and 44
  independent contractors.
• In 2000, 45 used IT contractors.
• Industries in which our contractors had worked
  hardware, software, banks, retailers, railroads,
  universities, automobile manufacturers, aerospace
  firms, hospitals, biotech firms, defense
  contractors, non-profits, household goods, state
  government, federal government.

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Types of Contractors

• Independent contractors usually incorporated
• W2s -- placed through staffing agencies which
  serve as an employer-of-record.

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Roles Contractors Play

• Gurus acknowledged experts in their fields.
• Hired guns highly skilled workers brought it to
  do key tasks.
• Warm bodies extra labor, may do tasks that
  employees dont want to do.

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Overview

• Dynamics of commodification and differentiation
• Dynamics of integration and expertise
• How contractors were perceived and treated
• How contractors managed the situation

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Managing Contractors as Commodities

• Limit involvement to directing task performance.
• Abdicate other managerial responsibilities to
  staffing agencies.
• Take practical and symbolic steps to limit
  trappings of membership in the firm.

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Tasking

• I say, Heres the scope of work, what to
  expect. Here are the individuals with whom you
  have to work. Heres the training--knowledge
  transfer--that I expect to take place. These are
  the team meetings that are going to occur, the
  notes that are going to be published, the
  documentation thats required, and then disappear
  in two months when were satisfied.

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Evaluating

• If you have a performance problem with a
  full-time engineer, you've got to protect
  yourself legally. So you go through a lot of
  steps to give the engineer every possible chance
  to succeed. You have a talk with them. Send them
  e-mail if the problem persists. Have another
  talk with them and try to agree on specific goals
  that they can achieve in a short time frame. If
  things get really bad, you can put them on
  something called a performance plan and after a
  period of time they have to show concrete
  progress thats documented in HR. Only then you
  can begin the process of firing them. With
  contractors you generally dont do all that.
  Its pretty clear from the start what the
  contract is about, so they've already got a list
  of concrete goals. If it's not working out
  youll talk with them, but over a much more
  compressed period of time. If it doesn't work in
  weeks, they can be gone.

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Ways of Differentiating Contractors

• Distinctive ID badges
• Space
• Restricting attendance at events
• Withhold t-shirts, marketing collateral and gifts
• Deny passwords
• Require self-identifying voice mail and email
  signatures
• Require contractors to work at night
• Require guards to accompany contractors to
  bathrooms

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Walking the Fine Line

• Managing and integrating are two separate issues.
  One is easy the other is hard. Managing is
  easy because we give these guys (QA contractors)
  a very discrete list of things that we want them
  to do. We work with them to establish a time
  line, and then we hold them to it. And that
  makes it pretty easy to manage, right? (He
  smiled ironically.) Integration into the team is
  a little more problematic because I have to be
  very careful to not include them in the employee
  perks sort of stuff that we do. I really try to
  maintain a clean separation, at that level,
  between the regular employees and the contractor.
  On the other hand, they have to work closely
  with the engineering team because they have to
  ask the right questions to get the job done.
  They have to interact with their fellow QA peers.
  So there's an interesting tension there.

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Ways to Integrate

• Locate contractors near permanent employees
• Visit contractors
• Hold impromptu team parties.
• Circumvent policies
• Ignore Policies

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Dependence

• Frankly, in many ways contractors are sometimes
  better than permanent employees, just because you
  have the right skill set. Theyre better
  trained. They are focused on the job because they
  don't have to worry about anything else. But
  theres a downside. We're getting in the mode of
  having them come in and build new things and when
  the contract is up and they walk out the door,
  the people who have to maintain it have no idea
  what the code looks like.

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ExtensionThe response to dependence

• The pro of contracting is people want you. You
  know, youre not being abused because they really
  want you there. Theyre behind they need your
  expertise. The people they have cant do your
  work. For instance, you know, Im at Motorola.
  I had a six-month contract that was up in
  January, and Im still there. Theyre laying off
  15,000 people, but Im still there. The reason
  Im still there is because they cant find people
  inside that can do the work I can do.
  (Verification Engineer

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Extension Response to Dependence

• At Seamax the original contract was for 10 days.
  They were a very small companyhad 30 employees.
  They told me they only had enough money to pay
  me for 10 days. Presidents of that company have
  come and gone. Department heads have come and
  gone. The ownership of the company has come and
  gone. Even the companys name has changed. Im
  like the guy at the post office. No matter who
  gets elected to Congress, I still deliver your
  mail. In fact, the guy that hired me was VP of
  their internal operations. He brought me in and
  told me, We dont have a lot of money. If you
  cant do it in 10 days, tell me now. A year
  later he left the company. I was still there. A
  year after he left, he stopped by, he walked in
  the door, and when he saw me he said, What the
  hell are you doing here? Same thing. Hes
  been back twice in the last two years and Ive
  been there both times. They now have 800
  employees. Therere only 24 that have been there
  longer than I have. (Software Developer)

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Tales of Respect

• Becoming an Advisor and Confidant
• Being asked to go perm
• Being made a lead.

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Tales of Resentment

• Lack of Commitment
• Inequity

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Forming an Identity

• How will I approach the work?
• How will I approach relationship?
• How will I present myself to myself and others?
• THE ITINERENT EXPERT