We are a food and beverage manufacturer with 300 workers including 250 from three manpower agencies that compete to give us the most qualified workers. The proportion of temporary workers is higher than regular job holders to make it easy for us to discipline individuals, which is done by their employer-agencies and subcontractors. Is there a problem with that kind of set-up? — Water Lily.
To better understand your question we need to go back through history. People management started with the “cabo” system or the master-slave relationship during the period of Spanish colonization. “Cabos” acted as suppliers of cheap labor to small employers. Today, such an arrangement is known as the illegal practice of labor-only contracting, which facilitates the abuse of employees.
That’s the reason why trade union organizations are up in arms against labor-only contracting arrangements, which in some cases are done with the help of manpower agencies. For employers, such an arrangement is an important business strategy not only to fast-track worker discipline but to prevent the entry of unions.
Central to this issue is whether or not the jobs you’re assigning to the employees of manpower agencies are “necessary and desirable” to the conduct of your business. My point is that, I can’t simply tell you whether you have a problem or not in the absence of more information.
Corollary to this, we must understand that the existence of an employment relationship is subject to a four-point test — the points being the selection and engagement of employees, direct payment of wages, the power of dismissal, and the power to control employee conduct.
There are many questions that we must answer in your situation. And if we were to narrow down the issues, employee retention can’t possibly be done under the circumstances. One way of determining whether you have a problem is the attrition rate — if yours is in the double digits then you have a potential issue. Do you know the turnover rate for both your temporary and your regular workers.
After all, what kind of employer would want to shoulder the cost of repeated hiring and firing? While you’re in the process of sourcing and onboarding employees, you’ll be wasting a lot of time, money and effort in training them. In most cases, in the first few months, your new hires (be they direct hires or supplied by manpower agencies) could be unproductive or turning out poor quality work.
Not to mention, some agency employees are prone to habitual absenteeism and tardiness. I’ve interacted with many employers, big and small, that focus on retaining workers for the long term. They’re the real winners because they have well-planned comprehensive employment strategies that treat their employees (regular or not) as customers.
To help you understand what I’m talking about, I have come up with some basic steps to help the human resource (HR) department create and maintain a highly productive and motivated workforce:
One, employee retention is based on an HR planning process. In this case, HR analyzes the environmental factors to approximate demand for regular workers. They don’t guess as to the number of their employees for a certain period. They do their forecast by answering questions like, how are employees distributed, what are their demographics, what is the skills requirement, and so on. You can’t do this with manpower agencies that supply low-skilled workers.
Two, employee retention is based on motivating regular workers. Highly competitive employers don’t rely heavily on casual and temporary workers. In your case, this is clearly a red flag as temporary workers outnumber the regular ones. Such companies nurture and motivate regular workers to become potent forces in achieving business goals, rather than hiring temps with a “temporary” mindset.
Three, employee retention is managed by HR professionals. They have well-rounded, strategic experience in managing people, mainly in championing labor rights, balanced with business interests. They’re not your typical bureaucrats who blindly follow the business owner’s instructions to hire only “endo” workers. What separates good HR people from bad is their strict adherence to the rule of law, to the point where the appearance of labor inspectors does not faze them.
Last, employee retention is based on proactive communication. The questions to be resolved are: Is management giving the right amount of information about the company’s plans and programs? Is it interested in knowing the employees’ difficulties in performing their job? Why or why not? If there’s no routine communication, a grapevine dominated by rabble rousers and potential union agitators will fill the void with twisted information to meet their own ends.
Employee retention starts with selecting, hiring and onboarding the right people. Unfortunately, per my experience, you can’t do this with manpower agencies and cooperatives, as they tend to provide low-skilled individuals. Of course, there are a few exceptions. Ninety-five percent of the time, agency workers will have a mindset that they are staying only for few years, and are looking for better employment elsewhere.
Agency employees see the world differently. People managers play a critical coaching role to bring out the performance expected. A critical element here is giving workers due respect, regardless of their employment status.