THE EFFECT OF SHORT-TERM EMPLOYMENT CONTRACTS ON STAFF MOTIVATION IN NIGERIA

CHAPTER TWO

REVIEW OF LITERATURE

INTRODUCTION

Our focus in this chapter is to critically examine relevant literatures that would assist in explaining the research problem and furthermore recognize the efforts of scholars who had previously contributed immensely to similar research. The chapter intends to deepen the understanding of the study and close the perceived gaps.

Precisely, the chapter will be considered in three sub-headings:

• Conceptual Framework
• Theoretical Framework, and
• Empirical Review

2.1 CONCEPTUAL FRAMEWORK

Motivation

Motivation is an idea utilized in numerous distinctive setting and in each has a somewhat extraordinary definition. In any case, while examining the employee motivation, it is defined by Heathfield (2017), as "worker's inborn excitement about and drive to accomplish activities identified with work". In light of Heath field's article, it is an internal drive that makes employees to choose to act. However, organic, judicious, social, and enthusiastic factors influence the worker's inspiration. (Heathfield 2017)

Financial Incentives

An incentive is a reward given to a person to stimulate his or her actions to a desired direction (Ojeleye 2017). Incentives have motivational powers and are widely utilized by individuals and large organizations to motivate employees. They can either be monetary or non–monetary. Lazear, (2006) is of the view that monetary Incentives are financial incentives used mostly by employers to motivate employees towards meeting their targets. Money, being a symbol of power, status and respect plays a big role in satisfying the social–security and physiological needs of a person. Money however, seizes to be a motivator when the psychological and security needs are satisfied. At that point it becomes a maintenance factor (Shuja, Li, and Shamim, 2016).

When creating a reward program to motivate employees, decision makers and company owners need to understand that the reward or incentive neither guarantees quality output nor loyalty but just a bonus that encourages workers to meet their goals without compromising on quality.

A financial incentive is money that a person, company, or organization offers to encourage certain behaviors or actions, especially actions that wouldn’t have occurred on a normal day. Financial incentives may be monetary benefits that a company offers to its customers or employees to motivate certain behaviors or actions.

Financial incentives can also be seen as a monetary benefit given to customers or companies to get them to do something they normally wouldn’t do. It is money offered to get them to try new things offered. The event might not have happened without the incentive.

Employers have certain financial incentive programs to encourage greater commitment, productivity and loyalty among employees. Some of the incentive packages include; stock options, profit sharing, raises, bonuses and commissions.

Bonuses and commissions: A bonus can be defined as a payment an employer makes to his employees in addition to their basic salaries. Bonuses could either occur monthly, quarterly or just once in a year. Employees receive extra cash depending on the level of sales and profits of the organization.

Bonuses reflect how well a department or the organization as a whole has done over a certain period of time. A department manager may get a bonus because his/her department performed well.

Commissions and bonuses are similar, however commissions are mostly linked to an individual’s performance.

Sales people are more likely to receive commissions than accountants, but accountants might receive end of year bonuses.

Raises: Raises means ‘salary increase’. These are mostly offered to employees who have worked in a company for a considerably longer period of time. Employees greatly appreciate raises which occurs mostly once a year. The amount of increase on the employee’s basic salary depends on the company’s philosophy, workers performance, profit margin, rate of turnover and other factors. Some companies also give pay rises to employees who have reached a certain level of production or those who have completed the required training programs. Some offer annual salary increment to loyal workers. (Ekwochi & Okoene 2019).

Stock options: A stock option is an employee’s right to purchase stocks of the company at a fixed price, and in most cases the stock price for employees is lower than the market price.

Hameed, Ali & Arslan, (2014) highlights the benefits of monetary incentives as thus:

1. Boosts morale – employees like to be recognized and rewarded for improved performances. Monetary rewards not only boost morale for high performance but also improve productivity. This is because employees will always work hard to surpass their employers’ expectations so as to earn an incentive.
2. Easy and direct – monetary incentive is a straightforward way of rewarding deserving employees. It is easily noticed and adoptable.
3. Improves the working environment– it makes employees develop a feeling that their work is noticed and that they will be paid for further accomplishments and achievements. This improves the working environment as employees build a positive approach to work and become more innovative in adopting different ways of operation
4. Element of life control – some employees consider monetary incentive as an extra source of income or side hustle. This offers an element of control to their income since they know they can increase their overall earnings and still get recognized for it.
5. No personalization – Non- monetary incentives need to be tailored to suit individual preferences. This is not the case for monetary incentives as almost every need has money value attached to it and therefore will provide direct satisfaction to employees.

Training and Development

Beckhard Richard (1969) defined “Organization development” as a planned, top down, organization-wide effort to increase the organization’s effectiveness and health. Organization Development is achieved through interventions in the organization’s “Processes” using behavioural science knowledge. Organizational Development is a Complex strategy intended to change the beliefs, attitudes, values, and structure of organizations so that they can better adapt to new technologies, markets, and challenges. (Patrick J. Montana and Bruce H. Charnov 2000).

In order to ensure that our employees are equipped with the right kind of skills, knowledge and abilities to perform their assigned tasks, training and development plays its crucial role towards the growth and success of our business. By choosing the right type of training, we ensure that our employees possess the right skills for our business, and the same need to be continuously updated in the follow up of the best and new Human Resource practices. To meet current and future business demands, training and development process has assumed its strategic role and in this regard few studies by Apospori, Nikandrou, Brewster and Papalexandris’s (2008), have attained much importance as these highlight the T&D practices in cross-national contexts. Apospori et al. (2008) had deduced that there is a considerable impact of training on organizational performance.

According to Aguinis et al (2009), Training and development involves improving the effectiveness of organizations and the individuals and teams within them. Training may be viewed as related to immediate changes in organizational effectiveness via organized instruction, while development is related to the progress of longer-term organizational and employee goals. While training and development technically have differing definitions, the two are oftentimes used interchangeably and/or together. Training and development has historically been a topic within applied psychology but has within the last two decades become closely associated with human resources management, talent management, human resources development, instructional design, human factors, and knowledge management.

Training and development describe the formal ongoing efforts that are made within organizations to improve the performance and self-fulfillment of their employees through a variety of educational methods and programs. In the modern workplace, these efforts have taken on a broad range of applications, from instruction in highly specific job skills to long-term professional development.

In recent years, training and development has emerged as a formal business function, an integral element of strategy, and a recognized profession with distinct theories and methodologies. More companies of all sizes have embraced “continual learning” and other aspects of training and development as a means of promoting employee growth and acquiring a highly skilled work force.

In recent times, the quality of employees and the continual improvement of their skills and productivity through training are now widely recognized as vital factors in ensuring the long-term success and profitability of small businesses. Charlene Marmer Solomon in Workforce said “Employees today must have access to continual training of all types in order to keep up. If you don’t actively stride against the momentum of skills deficiency, you lose ground. If your workers stand still, your firm will lose the competency race.”

In most cases, ‘training and development’ are used together to describe the overall improvement and education of an organizations employees. Although they are closely related, there are important differences between the terms that center around the scope of the application. In general, training programs have very specific and quantifiable goals like operating a particular machine, understanding a specific process or performing certain procedures with great precision. Developmental programs on the other hand concentrate on broader skills that are applicable to a wider variety of situations such as decision making, leadership skills and goal setting.

Job Security

Job security is defined as the assurance in an employee’s job continuity due to the general economic conditions in the country according to James (2012) cited in Adebayo and Lucky (2012). Adebayo and Lucky (2012) ascertain that it is concerned with the possibility or probability of an individual keeping his/her job. It deals with the chances of employees keeping their jobs in order not be unemployed according to Simon (2011). Jobs which are not backed by indefinite contract or cannot be guaranteed for reasonable period are deemed to lack job security. It is also seen as the employees free from the fear of being dismissed from his/her present employment or job loss.

A job with a high level of security is such that the person with the job would have a small chance of becoming unemployed. Factors affecting job security is dependent on economy, prevailing business conditions, and the individual’s personal skills. It has been found that people have more job security in times of economic expansion and less in times of a recession. Unemployment rate is a good indicator of job security and the state of the economy and is tracked by economists, government officials and banks. Government jobs, educational jobs, healthcare and law enforcement are considered very secure while private castor jobs are generally believed to offer lower job security and it usually varies by industry, location, occupation and other factors. Personal factors such as education, work experience, job functional area, work industry, work location e.t.c, play an important role in determining the need for an individual’s services and impacts their personal job security.

When we go to work, we want to know that our jobs are safe and that we are valued by management. As a manager of a group of employees or the owner of a business, its important to understand that people want to feel safe and secure. It is going to be very difficult for employees to put in their best work if they have to worry about the future of their job. If you want your employees to work to the best of their abilities, you need to make them feel they’re valued, safe and secure both now and in the future.

Job security is rarer than ever before. In a global economy that boasts of countless cheap labor alternatives, people feel like their jobs might be tenuous. They are bothered that they could be replaced by cheaper labor from abroad, a new hire fresh out of university or even a digitalized computer program.

When it comes to improving your financial stability, keeping your career goals on track is the most important thing you can do. Employees who settle into a long term position are likely to achieve their career goals, and this will positively affect their professional lives and financial situations. By doing their best work and concentrating on their career trajectory, they can build status in their field and save for retirement. Employees who don’t fear for their jobs will perform at their highest levels and you are likely to get the best out of them when they feel secure. When employees don’t feel constant worry about their jobs, they can relax and settle into doing their best work.

Some professions and employment activities have greater job security than others. Job security is an employee's assurance or confidence that they will keep their current job for a longer period as they so wish (businessdictionary.com). It is the assurance from the company or organization that their employees will remain with them for a reasonable period of time without being wrongly dismissed (Adebayo and Lucky, 2012; Simon 2011).

Quite a number of factors such as employment contract, collective bargaining agreement, labour legislation and personal factors such as education, work experience, job functional area, work industry, work location, etc., play an important role in determining the need for an individual's services and impacts their personal job security (Adebayo and Lucky, 2012). In another extreme, essential or necessary skills and past experience required by the employers and subject to the current economic condition and business environment could also guarantee individual’s job security (Adebayo and Lucky, 2012).

Generally, certain types of jobs and industry jobs have been perceived to have high job security. For instance, government jobs, educational jobs, healthcare jobs and law enforcement jobs are deemed to be very secure while on the other hand, jobs in the private sector are widely perceived to offer lower job security which may also be according to industry, location, occupation and other factors (Adebayo and Lucky, 2012). However, in the final analysis, Adebayo and Lucky (2012) noted that people's job security eventually depends on whether they are employable or not and if businesses have a need for their skills or not. Although, employment laws can offer some relief against unemployment risk, they only have a marginal contribution to the job security of individuals. The fact remains that; individuals need to have the right skill set to have good job security

Job security is best used as a motivator, when people see that there’s a direct correlation between their performance and their future with the company, they are definitely going to put in their best. Another effective way of improving employee engagement and increase their sense of security is by motivating them with stock options and retention bonuses whenever possible.

Employee commitment

Employee commitment is a noteworthy piece of the worker inspiration, and it is defined as the person's enthusiastic and intelligent inspiration toward business related objectives. It implies that employees are sincerely associated with and focused on their work, and in this manner their activity execution is higher. Nonetheless, it is still discussed whether full-time engaged employees make organizations effective, or if it is the success of the organization that makes their employees more engaged. There are numerous ways to consider when trying to drive employee engagement as a manager. An establishment of trust between an employer and employees is a significant factor, so as to cause the workers to feel regarded and to open up to their undertakings. Standard correspondence about the workers' objectives and giving consistent criticism about their exhibition is significant so as to tell them what is required from their exhibitions. Furthermore, steady training and giving clear advancement objectives give the employee a superior chance to see how to develop career-wise.

In order to engage the employees effectively to their work assignments, it is significant that they are motivated, and that it is clearly shown how important their support is for the organization. Perceiving great exhibitions and remunerating them is as significant as helping workers to perceive how important and valuable their endeavors for the organization are. Notwithstanding the employee’s own objectives, the manager ought to convey routinely likewise the organization's objectives and guarantee workers' assignments and work are lined up with corporate targets, so as to affirm that their presentation is useful for the association. (Mone and London 2010, xvii) The employee’s commitment is appeared to foresee the exhibition of both a worker and the work unit, and it is making the business-related assignments more productive and advantageous. Studies show that few Asian nations and barely any European nations, for example, Japan, China, Italy, and Netherlands, have the most reduced degree of employee commitment, while the United States and India have the most significant level. This doesn't imply that the nations with a low degree of worker commitment wouldn't act in the assignments as productively, however the employees are not as focused on their jobs in the company and they don't bring their full selves into their errands. (McShane and Glinow 2016)

Rewards

Rewards are a type of reinforcers which are stimuli that increase the probability to reach a desired response. The two main types of reinforcers are positive and negative, and both are used to achieve the wanted outcome. The positive reinforcers are added to the situation, and they are what the object desires. The negative reinforcers are used by being removed from the situation, which can be seen as a removal of punishment. The rewards are positive reinforcers, and the more frequently used, the better the performance will be. (Lepper & Greene 2016, 13) As mentioned above, rewarding employees is highly important for retaining them and increasing their motivation. Rewards can be classified into groups based on their characteristics, as seen in Figure 3. Two main groups of rewards are extrinsic and intrinsic rewards. There can be both financial and nonfinancial extrinsic rewards, and also the financial rewards can be divided into performance based and membership-based rewards. (AbzalBasha 2016)

Intrinsic reward is an outcome that gives satisfaction for the employee, for example pride from one’s work, more responsibility, or a participation in decision making, while extrinsic rewards are tangible, for example salary, benefits, promotions, or incentives. The extrinsic rewards are divided based on their type to financial rewards, which include salaries, bonuses, and incentive payments, and non-financial rewards, such as medical care, flexible work schedule, or a secretary. The financial rewards can be either performance based, which includes an incentive pay, group bonuses, and commissions, or membership based, which covers such rewards as basic pay, pay for time, or rental allowance. (AbzalBasha 2016, 646) It has been found out that the nonfinancial rewards, such as additional holidays and team events, can improve employees’ motivation, and increase their loyalty and commitment to the company. Therefore, the purpose of the reward management is to ensure that the value of employees and their contributions to the company is being recognized and rewarded.

A well-functioning reward system helps organizations to attract the right people at the right time for the right jobs, tasks or roles, it helps managers retain the best people by recognizing and rewarding their contribution, and it motivates employees to contribute to the best of their capability.

In addition, the reward system might have multiple secondary objectives, such as being affordable for the company, and fulfilling the employee’s basic human needs. The reward management should also be strategically aligned with the company’s business objectives, and agree with legal requirements, for example every employee’s rights. (Shields et al. 2016) However, based on RuvimboTerera and Ngirande’s study (2014), rewards lead to an employee retention but not actually to a job satisfaction. The job satisfaction and rewarding are two extremely important dimensions in the job retention, but do not impact each other. When using a reward system, it is important to know that the effect is focused on the job retention, and alone does not impact the job satisfaction. (Ruvimbo, Terera & Ngirande 2014).

Recognition

Recognizing employees is defined as “constructive act of appreciation for a person’s contribution, in terms of both work practices and personal investment”. Basically, it means appreciating the employee’s performance or commitment in some way, that the employee knows his or her value. In order to maximize the results of recognition, it should be given systematically both officially and casually. (Brun & Cooper 2009, 23) Recognition is considered a type of reward, and it can be seen as a non-financial reward. It is a tool to increase employees’ performance by encouraging them, and thus motivate them. Based on documents from multiple organizations, high salaries do not satisfy employees the same way as praises and recognition.

A study by Whitaker (2009) shows that the financial rewards motivate employees in short term, but the non-financial rewards affect in a long term. (Haider et al. 2015) Recognition is a cost-effective tool to motivate employees and thereby improve their job performance. Based on a study considering the recognition in groups, it was found out that the recognition causes a significant increase in job performance, and it works best exclusively, but not too exclusively. For example, in case of a team of eight employees, praising top three members leads to the strongest increase in performance, compared to recognizing everyone, or the best one. However, it was also found out that praising every member of a team increased their performance. (Bradler et al. 2016)

Based on different researches, four different ways of recognizing employees have been identified. They include; recognizing the employees’ value, recognize the quality of their work, recognize the effort and investment in their work and recognize their results.

Recognizing employees’ value refers to paying attention to their skills and qualities, while recognizing the quality of their work is based more on their actions. Even when the results are not satisfying, employees might have put a lot effort to it, and that is when one should recognize the employees’ investment in work. Lastly, recognizing employees’ results is primarily about their contributions to strategic goals and achieving them. (Brun & Cooper 2009)

Productivity

Glen (2014) stated that the manufacturing sector is an ever-changing beast and every year, the industry is faced with fresh challenges. The author stated that virtually all media houses constantly report the closure of industrial units, labor disputes between employers and their employees or reductions in the labor force due to recession and other economic dynamics. As a result, the image of manufacturing industries have been marred by low wages, high labor turnover, inadequate working conditions, poor performance and productivity (Githinji, 2014).

Productivity can be referred to as the quantity of work that is attained in a unit of time by means of the factors of production. These factors include technology, capital, entrepreneurship, land and labor. It is the link between inputs and outputs and increases when an increase in output occurs with a lesser than comparative increase in input. It also occurs when equal amount of output is generated using fewer inputs (ILO, 2005).

Bhatti (2007) and Qureshi (2007) were of the perspective that productivity can be seen as a measure of performance that encompasses both efficiency and effectiveness. It can also be referred to as the ratio of output or production capacity of the workers in an organization. It is the correlation that exists between the quantity of inputs and outputs from a clearly defined process. The performance of a business which determines its continued existence and development is largely dependent on the degree of productivity of its workers. Yesufu (2000) stated that the prosperity of a nation as well as social and economic welfare of its citizens is determined by the level of effectiveness and efficiency of its various sub components.

Productivity is a total measure of the efficiency or capacity to transform inputs that is raw materials into finished products or services. More precisely, productivity is a measure that indicates how well essential resources are used to accomplish specified objectives in terms of quantity and quality within a given time frame. It is suitable when measuring the actual output produced compared to the input of resources, taking time into consideration. Hence, productivity ratios indicate the extent at which organizational resources are effectively and efficiently used to produce desired outputs. Efficiency takes into account the time and resources required to execute a given task. Therefore, it can be concluded that effectiveness and efficiency are significant predictors of productivity.

The relationship between Motivation and Productivity

Generally, studies conducted on the impact of motivation as it relates to workplace productivity has drawn significant attention in the aspect of management; however it has been basically disregarded by most establishments. This may be due to the fact that the concept of motivation is complex and relative in the sense that what may appeal to an individual may not appeal to another (Reilly, 2003).

Generally, most organizations through the use of incentives seek out ways to motivate their work force. These incentives could be in form of good working conditions, work environment and compensation amongst others. Incentives are regarded as variable payments (monetary and non-monetary) made to workers or a team of workers based on the quantity of output or results attained. On the other hand, it can be seen as payments made with the purpose of stimulating workers’ performance and productivity levels towards achieving greater objectives (Banjoko, 2006).

Incentives can also be described as any compensation with the exception of basic wages or salaries that varies based on the capacity of the workforce to attain certain standards, such as pre-determined procedures and stated organizational goals and objectives (Martocchio, 2006). Therefore, one can conclude that there is a link between motivation and productivity this is due to the fact that a lack of motivation leads to a decrease in productivity and vice versa.

Also, previous studies has revealed that at various points in time, low productivity levels have been documented in virtually all establishments be it government or private sectors in Nigeria (Mbogu, 2001; Ezulike, 2001; Iheriohanma, 2006); also conclusions from further studies show that low levels of productivity can be elevated if workers are provided with adequate motivation which may or may not be financial (Tongo, 2005).

In terms of productivity, members of a workforce may vary in terms of how much value they bring to the organization, which is certainly not limited to the activities they perform but also how well they perform such activities; generally organizational performance is largely dependent on the level of productivity of the workers and various departments that make up the organization. Therefore, it is imperative that organizations fairly reward their workforce based on relative productivity and performance levels (Martocchio, 2006).

Finally, for workers to perform at higher levels, the organization has a crucial part to play in ensuring that it highly motivates the members of its workforce in order to attract, retain, and improve productivity levels of both workers and the organization as a whole (Reilly, 2003).

Concept of Short Term Contract Employment

Among a range of classifications available, short term employment is variously referred to under the titles “contingent” (Belous, 1989, cited in Lips, 1998), “irregular”, “non standard”, or “atypical” (Bourhis and Wils, 2001) employment. By and large, the terms refer to those who are employed in jobs that do not fit the traditional description of a full-time, permanent job (Brosnan and Walsh, 1996). Short time employment is generally understood to encompass short term employees recruited by short term consultants or agencies which are external to the employer, or those hired directly by the company to be short term employees, contract employees, subcontractors, consultants, leased employees, part-time employees and self-employed.

As a distinct labour subset, however, “short term employment” is commonly defined as: A job where the individual does not have an explicit or implicit contract for long term employment, the short term nature of the job being recognized by both parties (Nardone et al., 1997). The different descriptions and definitions of short term employment, and the linked uncertainty, offers a challenge to scholars of research as any educated guess of the size of the short term workforce depends on the definition that is used (Risher, 1997). Moreover, official statistical collections on labour market trends have often not kept pace with apparent changes in work (Callister, 1997). Short term employment has increasingly become part of the labor market in the European Union and its member states, with an average incidence of about 13 per cent in 2000 (OECD, 2002).

In spite of measurement problems, commentators are in accord that the short term workforce has become a significant employment option (e.g. Herer and Harel, 1998). Mangan (2000, p. 24) states that: Between 1983-92, short term employment in the USA increased almost 250 per cent – ten times faster than overall employment in that country. Socio-economic variations including those related to globalization and faster innovativeness have brought about changes in workforce structures that facilitated the growth in short term employment (Brosnan et al, 1996). Short term employment is a means of job continuity in an era of restructuring, redundancy and unemployment. Such job continuity is replacing job security for many professionals and short term work is a way to stay continuously employed (Brosnan et al., 1996). Short term employment may open up opportunities for previously unemployed people to find employment (Callister, 1997), and it provides foot-in-the-door opportunities and experience for people (re)entering the workforce. Callaghan and Hartmann (1991) found that some workers, such as parents caring for children, students, or retired people, might have a preference for parttime or short term employment that allows them the flexibility to work the hours that suit them without making a full-time, long-term commitment to a single employer.

Callaghan and Hartmann (1991) refer to a study, which indicated that women short term workers had more education than women workers in permanent employment, and are neither unskilled nor in lower level positions. Callister (1997) indicates that short term employment can offer long-term advantages to some workers; for example, it can foster lifetime participation in paid work by women. He further found that many short term employees voluntarily take up this form of employment for the flexibility and opportunities for skill advancement that it provides. Short term employment also provides people with the opportunity to “try out” new organizations, industries, and occupations without the long-term commitment (Lips, 1998). Moreover, short term employment is increasingly being used to facilitate the transition from situations such as unemployment, studying, time off work by women to have children, and redundancy, back to a permanent work situation (Lips, 1998).

Reasons for employers to use short term workers

According to the Dual Labour Market model (Connelly & Gallagher, 2004), organizations are composed of two main groups of workers: the core (or primary) group and the peripheral (or secondary) group. Core workers are mostly “standard” or permanent employees. These employees work under the so called standard employment relationship (SER), which, according to certain authors (De Cuyper et al., 2008), has some typical characteristics: it offers continuity of employment, which gives the workers a certain level of security regarding their working situation; the employees work in the employer‟s workplace and receive employer‟s supervision. The peripheral group is mostly “nonstandard” or short term workers, and includes short term agency workers, short-term, and independent contractors (Connelly & Gallagher, 2004). All these types of employment are different from the standard employment in aspects such as working hours, terms of the contract, access to fringe benefits and supervision received. Most of the companies have a certain number of short term workers as a way to deal with periods of decreased productivity or lower demand. This characteristic is considered by many authors as a quantitative (or numerical) external flexibility, concerning employees who belong to the “external” part of the company and not to the “core” (Valverde, Tregaskis, & Brewster, 2000). There are three main reasons for employers to use short term workers, flexibility of staffing, reduction of costs and ease of dismissal.

Staffing Flexibility

Due to the rapid innovativeness in science and the ever increasing competitiveness, companies have established policies of flexibility and adaptation to the economic changes in order to keep profits as high as they can (Kalleberg, 2000). Given that employment situations all over the world has become more competitive and unstable, many companies and organizations have inclined to present more flexible employment conditions, focusing on prospective tribulations (such as lower demand of the market) and the possibility of lay-offs (OECD, 2002). Most companies experience variable demands of work. When demand is high, the usual response is overtime work sometimes augmented by the recruitment of temporary employees (Graham & Benett, 1995).

Reduction of Costs

A key benefit in utilizing short term employees is the reduction of recruitment costs (Allan, 2002; Gunderson, 2001). This is especially noticeable with agency workers actively recruited by employment agencies, rather than by their eventual employers (Forde, 2001). Indeed, recruitment services by the employment agencies are sometimes extended to the recruitment of permanent personnel (Autor, 2001) and in the United Kingdom represent 7 per cent of invoiced sales turnover within employment agencies (REC, 2003). Decreasing employee costs within an organization is a critical aspect of strategic human resource management with regard to competitive global market (Allan, 2002). Nonetheless, in the United Kingdom the reduction of wage and nonwage costs have not been cited as a primary reason for using short term workers (Atkinson et al., 1996). In other European countries, such as Greece, it was also found that costs failed to justify the use of short term workers (Voudouris, 2004). Kandel and Pearson (2001) suggested that short term workers may actually be more expensive to an organization due to increased marginal costs. This was especially noted in relation to the possible reduction of productivity that may result when short term workers take time to learn the job (Allan, 2002).

Accordingly, short term employees are not cheaper in terms of wages than permanent staff.Reduction of recruitment costs was also extended to using other short term workers. For example, in the National Health Service (NHS), casual workers may be employed temporarily from an NHS bank, which acts as an internal employment agency. The recruitment of seasonal workers was also similar to casual workers, whereby in one example it was shown that organizations in the tourism industry tended to embrace the seasonality of their work and, as such, hire seasonal workers from a known pool of staff (Jolliffe and Farnsworth, 2003). Fixed-term contractors may also be employed in this way, with the same contractors repeatedly employed by the same organization, especially if that organization is large and bureaucratic (Davis-Blake and Uzzi, 1993).The occasional usage of short term workers to cover short-term absences of permanent staff may not present a particularly high cost to an organization; however, in terms of necessity it may be essential to cover the workload of key members of staff who are absent on a short term basis (Atkinson et al., 1996). This short-term cover may be achieved through permanent workers; increasing the amount of hours they work through overtime or through learning new skills (Bergstöm, 2001). However, if this is not possible the use of short term workers may be ideal. For example, in a survey of 979 workplaces, Atkinson et al. (1996) found that 59.4 per cent of employers used short term workers for short-term cover whilst staffs were away on holiday or sick leave.Long-term and shortterm recruitment costs may be kept at a minimum by using short term workers (Gunderson, 2001). Nevertheless, these estimates tend to negate the managerial time spent in recruitment even if this was merely picking up the phone to a preferred supplier or contractor (Ward et al., 2001). Human resource managers must ensure that appropriate staffs are selected on the basis of skill and organizational fit (Feldman et al., 1994). Indeed, a recent study of US-based employment agencies highlighted the need for this activity as it was found that only 42 per cent of employment agencies checked previous places of employment and only 25 per cent checked for criminal convictions (Allen et al., 2002).

Ease of Dismissal

Another advantage of using short term workers was the ease of their dismissal (Allan, 2002). In the United States of America, Gunderson (2001) suggested that due to the lack of costs linked with laying off short term workers, they were an attractive option. It was noted within organizations that operated in the unpredictable market of workload (Allan, 2002). Indeed, in the UK, a strategic use of short term workers was to adjust the workforce to match demands. This gave organizations an advantage in terms of numerical flexibility employing “just in time” workers to cope with increased or decreased demand without resorting to making permanent employees redundant.Although the ability to bring people to work at short notice and let them go again gives organizations tighter control on their payroll costs, this may be to the long-term disadvantage of the organization. Short term workers may be less productive due to their time spent in learning new tasks (Allan, 2002). Increased pressure may be placed upon human resource managers or supervisors to induct and train the new short term workers (Allan, 2002). Further pressure may also arise as managers try to control the numbers of staff in accordance with workload (Henricks, 1997). In addition, permanent employees may not like the extensive use of short term workers, especially if they feel their employer would like to substitute them with more precarious working arrangements. This was certainly found in the USA by Pearce (1993) who stated that the employment of contractors resulted in negative attitudes towards the organization by permanent workers. These negative attitudes have also been extended to US-based nurses employed with casual and agency nurses and with UK permanent call centre workers working with agency workers (Biggs, 2003). Moreover, the influence of short term workers on permanent workers may be much more complicated than anticipated. Indeed, this area of research has so far been hampered by the lack of, and difficulty in obtaining, control groups that may offset the influence of short term workers on permanent staff (Biggs, 2003).

Effects of Short Term Employment to an Organizations

Unscheduled Turnover

The use of short term workers by firms includes, by definition, an element of scheduled turnover. That is, by their nature short term assignments have a planned ending date. However, firms that make extensive use of the short term labor market may also experience higher than necessary levels of unscheduled turnover when they fail to cope with human asset management dilemmas peculiar to short term workers (Breaugh and Starke, 2000). Unscheduled turnover is defined as the departure of short term workers prior to the scheduled end date of their assignments.

This same phenomenon, viewed from the short term worker‟s perspective, is referred to as early withdrawal (Backhaus and Tikoo, 2004). To the extent that unscheduled turnover occurs among short term workers, previously expected cost trade-offs between scheduled turnover and wage/benefit avoidance no longer apply, seriously threatening economic gains previously anticipated from the use of such workers. Human resource managers face an interesting conundrum in attempting to maximize the potential of short term workers. Traditionally, client firms invest little, if any, time or effort in the integration of short term workers, precisely because the assignments are short term by definition. On the other hand, failure to effectively integrate temporary workers into the firm may act to intensify the problem of unscheduled turnover (Breaugh, 2008). Such actions on the part of the firm may also result in short term workers‟ failure to acquire an adequate understanding of others‟ expectations and their own role-relevant boundaries, thereby depriving the firm of their maximized performance. Feldman (1990) noted that the very nature of short term employment increases feelings of divided allegiance on the part of short term workers. According to Parker (1994), underemployment, meaning both underemployments in terms of hours employed and underemployment in terms of suboptimal skill utilization makes short term workers less involved rather than more involved. Segal (1996) found that short term workers worked an average of 33.5 hours per week, while their permanent counterparts worked an average of 39.5 hours per week. Thus, involvement for short term workers is limited on a temporal basis alone simply because they have an average of six fewer hours per week to exercise that involvement.

Low morale

Historically, short term employees have been used to substitute for employees who are on leave, to fill in for a short time while the company screens applicants to hire a new core employee, and to expand a company's shortterm ability to handle an increased volume in jobs that are peripheral to core activities. This picture is changing in that, more often, short time employees are being used in what previously were core organizational jobs. This can have an effect on morale because both short time and core employees may be working side by side on the same job, but under different compensation and benefits terms. In addition, short time workers may not get the same training, thereby affecting the risk level in some jobs (Bourhis and Wils, 2001).A study by Harley (1994) showed that, regardless of size, sector or industry, there was an association between peripheral work and negative conditions in factors such as wage rates, job security, patterns of gender equality, training and career advancement opportunities, worker autonomy, as the rule rather than the exception. If these trends in short term employment growth continue, an increasing proportion of the workforce is likely to experience relatively poor working conditions. As the majority of workers in peripheral employment in Australia are women, the negative effects of its growth are unequally distributed across society, reinforcing existing patterns of social inequality (Harley, 1994). Many temporary workers actually prefer permanent work and enter short term employment relationships with the hope of obtaining employment in a permanence and skills advancement (Hippel et al. 1997). The longer temporary workers work as short term employees, however, the fewer new skills are learned and the less task variety experienced. Bourhis and Wils (2001) note that short term workers are less likely than full-time workers to have voluntarily chosen their employment status. Rogers (2000) questions the practical reality of many so-called advantages of temping promoted by the short term employment industry, asking just how many people are appropriately employed in temping according to the skill and qualification levels they possess, and just how many opportunities temps have to try new occupations and learn new skills. Further, Rogers questions just how many people, as a result of having temped in an organization, actually find permanent employment within an occupation, and at a rate of pay, commensurate with their qualifications.

Low levels of employee productivity

Feldman (1990) noted that the very nature of temporary employment increases feelings of divided allegiance on the part of temporary workers. According to Parker (1994), underemployment, meaning both underemployments in terms of hours employed and underemployment in terms of suboptimal skill utilization makes temporary workers less involved rather than more involved. Segal (1996) found that temporary workers worked an average of 33.5 hours per week, while their permanent counterparts worked an average of 39.5 hours per week. Thus, involvement for temporary workers is limited on a temporal basis alone simply because they have an average of six fewer hours per week to exercise that involvement. Perhaps even more problematically, client firms commonly view temporary workers as buffers against market downturns, effectively classifying those workers as expendable.

Because of this view, client firms also allocate fewer resources to training and socializing temporary workers than to permanent employees (Wiens-Tuers and Hill, 2002). This “restricted investment” on the part of client firms reinforces feelings of second-class citizenship among temporary employees and has the compounded effect of limiting both involvement in, and identification with, the organization. As a result, temporary workers may exhibit lower levels of continuance commitment toward the client firm than do permanent employees in whom the firm‟s investment is not similarly restricted. This may reduce their productivity at work.

2.2 THEORETICAL FRAMEWORK

Social Exchange Theories

According to De Cuyper et al. (2008), there is no available theoretical framework to analyse the effects of short term employment. Nevertheless, general psychological theories may offer a good starting point for the analyses, although these have mostly been developed against the backdrop of the permanent employment relationship. They can be organized in two main groups: work stress models, and social comparison or social exchange theories. The social comparison theory (Festinger, 1954) is the idea that there is a drive within individuals to look to outside images in order to evaluate their own opinions and abilities. These images may be a reference to physical reality or in comparison to other people. People look to the images portrayed by others to be obtainable and realistic, and subsequently, make comparisons among themselves, others and the idealized images. In his initial theory, Festinger hypothesized several things. He indicated that humans are compelled to appraise themselves by probing their opinions and abilities in assessment of others. He further said that the inclination to evaluate oneself with some other specific other person decreases as the differentiation between his opinion or ability and the other‟s own become more deviating. He also hypothesized that there was an upward drive towards achieving greater abilities, but that there are non-social restraints which make it nearly impossible to change them, and that this was largely absent in opinions (Festinger, 1954). The individuals who are similar were better in generating accurate evaluations of abilities and opinions.

Work stress models try to explain the consequences of short term employment by underlining certain characteristics that make short term workers more prone to suffer work related strain (see De Cuyper et al., 2008). There are three relevant variables. First, short term workers are peripheral to the organization, meaning that they are not the main concern of the employers regarding certain aspects such as benefits, wages, promotion or further training. This idea is advanced in theories such as the Flexible Firm model (Atkinson, 1984, cited in Valverde et al., 2000) and the Dual Labour Market model. The resulting adverse working conditions for the short term employees can cause, as a consequence, a decrease in the worker‟s well-being and deteriorate performance at the workplace (Rousseau & Libuser, 1997). Therefore, short term workers have few possibilities for deciding how to do their work, to use specific skills or to make any other kind of decisions within the workplace (De Witte & Näswall, 2003). In addition, since short term workers are new members of the organization, they have to assimilate procedures and aspects of the organization, becoming another potential source of stress (see De Cuyper et al., 2008). The lack of support from co-workers, supervisors or even the union (De Witte & Näswall, 2003) can also be a source of stress and detrimental to wellbeing. The third determinant has to do with the lack of control that short term workers might experience regarding the demands of the employer (or employers).

Theory of Work Adjustment (TWA)

The relationship between the employee and the organization is also reviewed by the Theory of Work Adjustment [TWA] (Dawis, 2004), which places emphasis on the interaction and how the workers change to fit into the workplace. This theory highlights the congruence between the requirements of the organization and the requirements of the employee. First, it is important to consider the employee‟s needs and expectations, which are supposed to be fulfilled through the organization (Dawis, 2004). Second, the employee has skills that are useful to succeed in this fulfillment. Third, most interactions between the employee and the organization are oriented towards these requirements. When there is a certain level of discrepancy between the needs of the employee and the reinforcement given by the organization, there will be a change in the employee‟s behaviour in order to reduce the dissonance. Just as it is highlighted by Thorsteinson (2003), the level of dissonance leads to employee dissatisfaction. Regarding this, there are two ways to reduce the conflict: altering the employee‟s needs or the organization‟s environment. When the strategies are unsuccessful, the employee eventually quits (Dawis, 2004).

Equity Theory: The psychological contract refers to beliefs about the terms of an exchange agreement between individuals and their organizations, and revolves around expectations suggested by that agreement, either explicitly or implicitly. While some individual temporary workers prefer the transitory environment offered by short term work, many enter the short term labor market specifically intent on securing a permanent position. Adams‟ (1963) equity theory proposed, in general terms, that when individuals perceive a difference between their own input/outcome ratio and that of a referent other, a negative state of distress results that motivates those individuals to take action to restore equity to the situation. Because firms primarily control outcomes, adjustments nearly always occur on the input side of the ratio. In addition, employees who cannot achieve an acceptable “adjustment” of the input: outcome ratio, either in reality or by altering their perception of the ratio, naturally resolves the situation by withdrawing from the organization (Cascio, 1991). Equity theory would predict that short term workers who perform comparable tasks equally as well as their referent coworkers (in this case, permanent employees), but receive lower pay than the coworkers, may respond by seeking to increase outputs or by reducing input efforts in order to restore equity. The potential for such a scenario is high, because short term workers are typically paid less than permanent employees, even for equivalent work (Parker, 1994).

2.3 EMPIRICAL REVIEW

The growth in short term employment (i.e. dependent employment of limited duration, as in the case of fixed-term contract workers or short term agency workers, OECD, 2008) from the mid 1980s up to now has attracted a great deal of scholarly attention. The dominant position is that the evolution towards increasing numbers of short term employment is driven by the employer‟s demand for more flexibility and innovation, and by their wish to reduce labour costs (Burgess & Connell, 2006). This seems to hint at overall favorable effects for the organization, particularly on the short-term and assessed with indicators of economic success. Seemingly missing in this debate is a combination of a Human Resource Management and psychological approach; namely the effects of short term versus permanent employment in terms of workers‟ productive and/or contra-productive behaviours that are important for both organizations and employees in the short and long-term (Connelly & Gallagher, 2004).

Regarding the unfavorable consequences that can be associated with short term employment, Millward and Hopkins (1998) found that the inexperience of temporary employees added to the lack of induction and investment in their skills, might have a negative influence over the attitudes they have concerning security and the best way to perform their duties. Regarding commitment Felfe, Schmook, Schyns, and Six (2008) noticed that short term employees who chose this type of contract show less commitment compared to those who did not. It was likely to find higher levels of commitment among workers with a relational psychological contract (permanent workers) as compared to those with a transactional psychological contract (temporary employees), Millward and Hopkins, 1998. This was also noted by McInnis, Meyer, and Feldman (2009). Kalleberg and Rognes (2000) observed that lack of trust, perceived unfairness, and lower affective attachment can also be related to transactional contracts. These results are similar to those found by McDonald and Makin (2000) when comparing permanent and non-permanent staff.

However, not every study has found negative consequences associated with short term employment. Regarding job commitment, Martin and Hafer (1995) and De Witte and Näswall (2003) found no significant difference between short term and permanent employees. The last authors found similar results about job satisfaction. Engellandt and Riphahn (2005) observed even a higher level of employee effort in short term workers compared to permanent ones. These authors argue that short term workers are more likely to work harder, although this performance level is more commonly found among employees that have a possibility of going upwards in the organization. Feldman (2005) found similar results, pointing out that contingent workers with expectations of future permanent employment are more likely to perform at higher levels and show more commitment to work compared to those who do not have these expectations. As pointed out by the author, the short time employees respond to three characteristics: they have no permanent relationship with an employer, they work less than 35 hours with any employer and the contract is of limited duration.

Rousseau (1990) noticed that temporary employees seeking a long-term relationship with their organizations, even when maintaining a transactional psychological contract, showed a more “relational” interaction with their employers, resulting in more commitment to the organization. Engellandt and Riphahn (2005) examined why employers use short term agency and contract company workers and the implications of these practices for the wages, benefits, and working conditions of workers in low-skilled labor markets. Through intensive case studies in manufacturing (automotive supply), services (hospitals), and public sector (primary and secondary schools) industries, they defined the circumstances under which these workers are likely to be adversely affected, minimally affected, or even benefitted by such outsourcing. Adverse effects on compensation are clearest when companies substitute agency temporaries or contract company workers for regular employees on a long-term basis because low-skilled workers within the organization receive relatively high compensation and employment and labor law or workers and their unions do not block companies from such substitution.