A false economy

Posted on 20 Sep 2013 by The Manufacturer

In the midst of debate over the ethics and legality of zero-hours contracting Neil Pickering, marketing manager at Kronos, argues that the employment model could damage long term productivity in businesses if it continues to proliferate.

Neil Pickering, Kronos

Much has been documented in recent months regarding zero hours contracts, prompted by a CIPD report claiming one million workers are on zero-hours contracts. This figure is far more than the 250,000 official estimate from the Office for National Statistics (ONS), and has now generated interest from government bodies and politicians alike.

As such, Vince Cable, the business secretary has commented on the controversial contract method saying ministers could legislate to allow people on zero-hours contracts to work for more than one employer. While he ruled out categorical banning of the controversial contracts altogether, he said the Government was looking to prevent employers from requiring people to work for them exclusively, unless they were prepared to guarantee their hours.

The future for zero-hours contracts is far from certain. The widespread press attention and interest from Government, unions, employment bodies and other organisations means that tighter legislation can only be a matter of time.

The current landscape

Zero hours contracts are growing in popularity. As a consequence of the tough economic conditions of recent years employers are increasingly seeing them as a cost-effective and easy solution to staffing issues and managing resources in line with fluctuating customer demand.

Employees who sign a zero hours contract agree to be available for work as and when required but no particular number of hours or times of work are specified. This arrangement has clear benefits for employers but increasingly issues around the legality of such contracts and the implications on the employees themselves have led to significant concerns.

The findings revealed from the CIPDs recent survey highlight the true extent to which the zero hour contracts are becoming increasingly prevalent in UK businesses and the workforce considerations needed to manage the changing employment landscape.

However, the results of the research show that many employees are not necessarily unhappy being on zero hours contracts.

Over half (52%) of respondents and they don’t see them failing to provide them with sufficient hours to have a basic standard of living.

Certainly zero hours contracts are very much on the business agenda but is anyone really getting value from them?

An element of control

Whilst it can be argued zero hours contracts can offer a ‘quick fix’ for businesses in terms of flexibility, this is no substitute for control.

In the long-run organisations need accurate, real-time visibility across their whole workforce.  Managers need to understand the importance of being in control of when employees are working, where they have been deployed and the skill sets at their disposal.

The ability to deploy the best possible resource, in the right place at the right time can have a significant impact on business performance. From improved quality in production, faster time to market and better customer service, the impact of effective workforce management can drive revenue and customer satisfaction.

Of course organisations will suffer from unexpected fluctuation in resourcing requirements and there will be times when they will need to dramatically ramp up, or down, their employee base.

But where employers have a well-balanced workforce with a mix of full-time/part-time and flexible contracted employees, managed by a fit-for-purpose workforce management system – there should be no problem meeting customer demand in most industries.

In comparison, widespread deployment of staff on zero hours contracts is actually an inefficient staffing solution which could lead to wasted time and money and missed opportunities to improve the bottom line.

Morale and Engagement

Managers also need to review how their resourcing solutions effect staff morale and employee engagement. It’s vitally important to ensure that all employees – zero hours contractors or otherwise – still feel part of the overall organisational culture.

One pain point for managers can be that seasonal, part-time and casual workers become disillusioned with the apparent lack of prospects from their current contractual situation and feel cut-off from the main workforce.

To combat this, managers must create a culture of confidence amongst the workforce and reiterate the value added by all workers, regardless of whether they are full-time, part-time or zero hours contractors.

Where next?

With the recent revelation at the true extent of UK employees being on zero hours contracts the onus must be on managers to look at more sustainable, holistic solutions.

For example, review the technology they use to manage their workforce and how they interpret the workforce data and insight available to them. By doing this they can reduce the unpredictability and workforce challenges which they may face in the future and the need for zero hours employees.