Utilization of Contingent Workers and Firm Performance

Abstract

The nature of the employment relationship between employers and employees is undergoing transformation in the new economy. Approximately 30 percent of the civilian workforce works in “nonstandard” work arrangements, including agency temporary workers, direct-hire temporary workers, on-call workers, leased employees, contract company workers, independent contractors, self-employed workers, and regular part-time workers.1 Workers employed in these non-standard work arrangements are referred to as contingent workers. Employers have various reasons for utilizing contingent workers, ranging from cost control and flexibiltiy in staffing to screening for qualified direct hires or finding specialized talent.2 This phenomenon is the focus of a number of studies, and conditions under which externalization of employment occurs have been identified3 The question arises whether the utilization of contingent workers affects firm performance.