HRM and Alternative Work Arrangements

Alternative work arrangements now play a significant role in filling staffing needs for companies. More and more organizations hire independent contractors, and this approach provides advantages to employers in a highly competitive economic environment, but it also has its risks. Read the mini-case about the costs that could potentially be incurred.

From an organization's perspective, the key to survival in a fast-changing environment is flexibility. Organizations must be able to change as fast as customer needs and economic conditions change. Flexibility in human resource management can sometimes include alternative work arrangements.

Read the case and answer the questions that follow.

Anne Gray is a small business owner whose company makes desserts and other sweet treats that customers buy via an online website. Anne currently has 8 employees and would like to hire a few more. However, because her business is cylical (steady business three-quarters of the year but high volume during the holiday season) she runs into difficulty filling orders because she doesn't alway have enough workers to fill the volume of orders the company receives in its busy season. A business colleague has suggested to Anne that she consider alternative work arrangements during the last quarter of the calendar year as a way of keeping her costs down while having additional workers to help with holiday orders.

To have flexibility in response to changing business needs, more and more companies are exploringalternative work arrangements by using independent contractors, on-call workers, temporary workers, and contract workers rather than hiring full-time employees. Using such workers provides flexibility and allows the company not to pay Social Security, Medicare, unemployment insurance taxes, and minimum wages or to provide these individuals with employee benefits.

A number of large companies in recent years, including FedEx Ground and Allstate, have shifted to designating workers as independent contractors rather than employees and have possibly faced legal challenges in the process. A worker must have a considerable amount of independence to be considered an independent contractor.