Contractual Culture

I bumped into an old colleague for lunch today. The last time I saw him was over five years ago, when we were just hired by our respective companies back then.

We shared a table to catch up on a few things and he said that he was still with the same company after all this time. The position was the same and so was the salary. The only thing that changed was that his workload was double what it was years ago.

I asked him if he considered transferring to another company and he told me that the choices of a 40-year old man in a culture of contractual employees are very limited. No one wants to hire him because companies feel they can get four or five people to do his job at bargain basement costs. The sad thing is that the salary he is paid is nowhere near the average wage of a regular employee of other companies.

So the dilemma he faces is that he gets paid low while facing the threat of being replaced by five other employees at any time.

Contractual Age

Back in the 1990s, there were hardly any contractual employees who did mission critical work. In those days, contractual workers only covered janitors, waiters, and security guards.

Today, everything from programmers to nurses to paralegals to teachers is farmed out. In fact, the only people in a company who are not contractual are the owners.

Companies have saved a ton of money and are able to get skilled labor at a pittance. They don’t need to deal with thirteenth month pay, social security, healthcare, pay raises, office space, overtime pay, and retirement benefits, among other things.

In addition to this, companies don’t have to deal with labor strikes or with firing employees. All of this is left of the agencies who hire people, also on a contractual basis.

Everything benefits companies with workers getting the short end of the stick.

Costs of Contracting

But everything has a cost. It may not be in clear cut in terms of dollars and cents, but there is a price to pay for hiring people on a contractual basis.

Company Loyalty

If one does a quick check with employees working under agencies, there is hardly any loyalty there. As far as these employees are concerned, loyalty is a two-way street. And since agencies hire them on a contractual basis, making it easy to lay off people with the stroke of a pen, employee loyalty is just as fleeting.

The problem is that without loyal employees, companies don’t have the people who will go that extra mile for them. The most they can expect is that contractual employees come in and do the tasks they were assigned to do, nothing more.

Knowledge Transfer

Having employees on the payroll meant that any knowledge they have was shared with other members of the company.

But since the contractual mentality has promoted the every-man-for-himself attitude, much of the information is kept by individuals.

Their point is they don’t want to share everything they know anymore because if they do, companies will view them as dry wells in time. And once the company milks them of everything they know, they become useless because someone else can be found to do the job at a much cheaper rate.

Destruction of Work Ethic

Once upon a time, employees would choose careers instead of just jobs, going so far as to treat them as a calling. But from what I’ve seen today, employees just look at companies as bank accounts.

One person asked me, “How have employees gotten so bad as to treat companies like feeding bottles?”

I answered, “They became that way because companies taught them to be that way.”

If companies had treated their employees more like people instead of expenses, employees wouldn’t treat companies as just sources of income. And if companies made even a small effort to care about their employees, employees would care for their companies.

Final Thoughts

I think it is already too late to turn back the clock and bring back the old work ethics. This generation of workers has grown up with the contractual mentality and they don’t know anything else.

It’s too bad because people are the best and most important resource a company has. The contractual mentality, while a great option for cutting costs in a short time, may actually hurt companies for the long haul.

Hopefully as the economy improves, companies will see that hiring regular employees will be better for everyone, not just the employees.