Few managers would argue with the idea that you need to develop people in order to grow the organisation--especially given looming skills shortages and the knowledge economy's need to harness top talent. At the same time, an increasing number of companies are using talent that is with them only for the short haul.
Outsourcing, short-term contracting and executive leasing are on the rise worldwide. There is now an expanding pool of talent in constant transit from one company to another, their loyalty aligned to specific projects rather than the organisation's longer-term directions.
Add to that another trend becoming evident offshore--more companies opting to farm out their entire human resource administration to specialised professional employment agencies (PEOs)--and the vital link between companies and their "greatest asset" starts looking a little tenuous.
That is something business should be worried about, according to American management guru Peter Drucker. Writing about the dual impact of these changes in a recent Harvard Business Review, he issues a warning. "The attenuation of the relationship between people and the organisations they work for represents a grave danger to business." Taking advantage of freelance talent or outsourcing some of the more tedious aspects of HR management is one thing, he says. "It's quite another to forget, in the process, that developing talent is business' most important task--the sine qua non of competition in a knowledge economy."
While Drucker is talking about a business environment where such changes are more advanced than they are in New Zealand, there is no doubt that the short-term leasing of talent is an increasingly popular practice here.
Determining the exact size of the local contract workforce isn't easy because it operates as a kind of virtual talent pool. Hired for a specific project or period of time, contract workers tend not to show up in corporate headcounts or on regular payrolls.
Payment for their input is often buried under budget headings ranging from IT to stationery, advertising or even office furniture. That contract workers can be kept off annual budgets is perhaps one of the least openly expressed advantages they offer employers.
The short-term nature of their employment also means contract staff are less likely to go through the sorts of induction processes that help permanent workers get to grips with company values, goals and their own place in the scheme of things.
They are also less likely to be included in regular planning or strategy meetings and probably won't top the list of employees earmarked for training or career development opportunities.
So is there any concern that growth in the use of such transitory talent runs contrary to goodly corporate intentions of nurturing, expanding and making best use of the in-house knowledge pool?
Apparently not. Recruiters who regularly handle contract placements say the sorts of problems Drucker envisages are unlikely to occur under local business conditions.
For starters, the New Zealand market is too small to accommodate specialist PEOs. Outsourcing HR does happen to some extent at lower levels of staffing and has been trialled in the banking sector but there just isn't the sort of scale here to support US-style agencies, says Kevin Chappell, managing director of Executive Taskforce.
"Our size precludes it as a mainstream situation here." And while the contract workforce is growing, its role has more to do with enhancing human resource capacity for a specified time or purpose, says OCG chief executive officer George Brooks. He read the Drucker article and disagreed with its thesis--particularly with regard to the local market. "It doesn't really hold up here because one of the main reasons for bringing in contractors is to introduce a skill set the employing organisation doesn't have on tap. …