The Effects of Part-Time Workers on Establishment Financial Performance

Abstract

Using a sample of 1,468 private sector establishments, this article addresses the relationship among part-time workers, commitment-based human resource (HR) systems, and establishment financial performance. Building on theoretic perspectives about equity perceptions and reciprocal exchanges, we find that the proportion of part-time workers in an establishment workforce is nonlinearly related to establishment financial performance in an inverted U-shaped relationship. In addition, the interaction between part-time workers and commitment-based HR systemsis negatively related to establishment performance. The analysis suggests that those deciding about how to structure establishments' workforces should consider how interactions between different types of workers within workforces can influence establishment performance.

An ill-informed choice: empirical evidence of the link between employers’ part-time or temporary employment strategies and workplace performance in Canada

“…Our results are contrary to the policy recommendations and practice in organizations that labour flexibility through part-time and temporary employment and related reduced labour costs will lead to improved workplace performance that organizations and policy-makers have adhered to for a few decades and still continue as desirable employment practices (Golden, 2012;OECD, 2006OECD, , 2010Torres, 2012). Some recent research supports this conventional wisdom (Kunn-Nelen et al, 2013); however, similar to other recent empirical studies from the USA and the EU (Cappelli & Keller, 2013;Chadwick & Flinchbaugh, 2013;Cox et al, 2011), we show that cost minimization strategy of employers does not affect workplace performance, and an increase in part-time/temporary employment in the workplace contributes to decreased profitability and productivity in Canadian private-sector workplaces. Research has shown that part-time and temporary workers receive less formal training than their full-time counterparts (Cooke, Chowhan, & Brown, 2011), and receive less informal, such as on-the-job training, because they spend less hours in the workplace or are intermittent workers Zeytinoglu, Cooke, & Jiao, 2005).…”

“…Empirical studies testing the cost minimization strategy of employers by using part-time or temporary workers and workplace performance relationship show conflicting results. In the USA, Cappelli and Keller (2013) do not find support for the cost minimization argument in hiring part-time or (direct-hire) temporary workers, while Chadwick and Flinchbaugh (2013) show that part-time workers are positively related to an organization's financial performance when they comprise low proportions of an establishment's workforce, but this is not the case when part-time workers comprise high proportions of an establishment's workforce. Using Cranet-E International Survey of Human Resource Management, Valverde, Tregaskis and Brewster (2000) show that employing temporary workers increase organizational performance but hiring part-time workers have no effect on organizational performance.…”

“…However, our study addresses a relationship that has not yet been tested, specifically, the relationship between the use of labour flexibility strategies on firm performance. There are emerging studies on the use of part-time or temporary employment and the workplace performance relationship (Chadwick & Flinchbaugh, 2013;Cox et al, 2011;Kunn-Nelen et al, 2013) but concerns lie with the fact that most studies are cross-sectional research (Batt & Banerjee, 2012;Gerhart, Wright, Mahan, & Snell, 2000;Guest, 2011;Jiang et al, 2012), making it difficult to follow the paths of strategic choice decisions to workplace performance. In using longitudinal data, we address this concern.…”

“…Chung & Tijdens, 2013;Cox, Higgins, & Speckesser, 2011;Kunn-Nelen, de Grip, & Fouarge, 2013;Richbell, Brookes, Brewster, & Wood, 2011) or US data (e.g. Chadwick & Flinchbaugh, 2013). Findings are inconclusive and studies on the topic in other regions are recommended to improve our understanding of the phenomenon (Richbell et al, 2011).…”

Toward Mature Talent Management: Beyond Shareholder Value

“…Similarly, while high levels of pay dispersion between the highest and lowest earners in organizations (reflecting low wage rates for the least valued employees and high rewards for leaders) have been shown to yield short‐term benefits, the long‐term repercussions in terms of performance are negative (Connelly, Haynes, Tihanyi, Gamache, & Devers, ). In a similar vein, Chadwick and Flinchbaugh () found that a high proportion of part‐time workers in an organization, often seen as a means of generating employment flexibility and cost containment by organizations, is negatively related to firm performance. These studies point to the potential failure of employment practices driven by short‐term efforts to maximize shareholder value to deliver on the very value they set out to generate.…”