Future Focus

For Now, Avoiding Ties That Bind

By Jennifer Schramm Nov 1, 2009
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November CoverThe economy may be improving, but employment will not recover at the same pace. Job generation will be slow in the months ahead if, as expected, many employers put off adding regular full-time employees and opt instead for temporary hires.

Moreover, this strategy may continue for some time, or at least until the economy grows with sufficient strength to overcome continuing problems in the financial and credit markets and reductions in consumer spending.

For HR executives, an emphasis on temporary and contingent workers could have various implications. First, it could mean HR professionals ramping up hiring in their organizations may have to manage more temporary employees. Second, they may have to build up networks and partnerships with staffing providers to tap into temporary talent at all skill levels.

Third, some out-of-work HR professionals may find it easier to obtain temporary consulting jobs than full-time HR positions, at least in the early months of a recovery.

Many forecasters say that even when demand rises, employers will hold down headcounts to boost worker productivity and profits. Although employers may begin to restore benefits that were frozen or discontinued as the recession dragged on, they may still be reluctant to bring on additional employees with full benefits packages.

Although Federal Reserve Board Chairman Ben Bernanke declared in September that "from a technical perspective, the recession is very likely over at this point," he qualified that statement by adding that "it’s still going to feel like a very weak economy for some time." In fact, many economists have maintained since the very beginning of the recession that the job market will remain anemic well after other indicators of economic health pick up.

There were signs that employers were adding workers by bringing in temps as far back as August, when the U.S. Labor Department reported that temporary payrolls fell that month by 6,500—far below the average monthly drop of 51,000 during the first half of this year. And, some large manufacturers have announced plans to hire temporary workers to meet production increases.

The length of the recession and its accompanying high rates of unemployment may mean that finding well-educated workers willing to work on a temporary basis will be easier than it has been for a long time. Recruiting difficulty remains down, and the unemployment rate among new college graduates is very high.

For the first time since such records have been kept, the U.S. unemployment rate for those with four-year degrees or higher has passed the 4 percent mark. And according to a survey released in May by the National Association of Colleges and Employers, only 19.7 percent of 2009 college graduates had secured work by graduation day, down from 26 percent of 2008 graduates and 51 percent of 2007 graduates.

Many of the unemployed will also be willing to work in temporary employment to gain entry in the labor market.

The challenge for HR leaders will be how to integrate temporary workers into their organizations successfully so they are able to work effectively. HR professionals will also need to make sure that they maintain the institutional knowledge of their core full-time employees to keep productivity levels high.

The author is manager of the Workplace Trends and Forecasting program at SHRM.

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