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U.S. Department of Labor Futurework
  Trends and Challenges for Work in the 21st Century
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Flexible Staffing Arrangements

A Report on Temporary Help, On-Call, Direct-Hire Temporary, Leased, Contract Company, and Independent Contractor Employment in the United States

Susan N. Houseman
August 1999

8.1 Fluctuations in Staffing Needs

Traditionally, firms have used flexible staffing arrangements to accommodate fluctuations in their workload or to fill in for absences or vacancies in their regular staff. In the Upjohn Institute survey, employers were asked which among a series of factors were important in their organizations' use of agency temporaries, on-call workers, and direct-hire temporaries. The percent of employers responding that a particular factor was important in their use of each arrangement is reported in Table 7.17 These traditional reasons were the most frequently cited for using each type of flexible staffing arrangement in the survey. For instance, the three most common reasons employers gave for using agency temporaries were 1) providing needed assistance at times of unexpected increases in business, cited by 52 percent; 2) filling a vacancy until a regular employee is hired, cited by 47 percent; and 3) filling in for an absent regular employee who is sick, on vacation, or on family medical leave, cited by 47 percent. Seasonal needs, cited by 55 percent of employers using direct-hire temporaries, appear particularly important in the use of that type of staffing arrangement. Among employers using on-call workers, 69 percent use them to cover for absent regular employees and 51 percent use them to provide needed assistance at times of unexpected increases in business.

Statistical analysis on the data from the Upjohn survey confirms the importance of firms' use of flexible staffing arrangements to accommodate fluctuations in product demand. The degree of seasonal fluctuation was an important determinant of whether an organization used agency temporaries, direct-hire temporaries, and on-call workers and the extent of their use of these arrangements. Similarly, the degree of cyclical fluctuation in their industry is an important determinant of an organization's use of agency temporaries.18

The importance of the use of various types of flexible staffing arrangements in order to accommodate staff absences or vacancies and fluctuations in product demand has been a finding in virtually all other employer surveys. (See Abraham 1988, The Conference Board 1995, Christensen 1995, and Kalleberg, Reynolds, and Marsden 1999.) Moreover, some believe that these factors have been important for the growth in flexible staffing arrangements. Here the argument is that firms have come under greater competitive pressure to reduce labor costs and, in response, have increasingly adopted a "just-in-time" workforce staffing strategy. Instead of overstaffing to accommodate employee absences or fluctuations in product demand, firms use agency temporaries, direct-hire temporaries, on-call workers, contract company workers, and independent contractors to meets changes in their day-to-day staffing needs. In fact, it was precisely this phenomenon that Audrey Freedman was referring to when she coined the term "contingent workers". Although hard data on the importance of this phenomenon in the growth of temporary help and other types of flexible staffing arrangements is scarce, available evidence provides support for the contention that this has been one factor driving the increase in firms' use of flexible staffing arrangements. The Conference Board (1995) found that "eight out of ten council members surveyed say that a just-in-time work force gives them the ability to add and subtract workers with little notice, a strategy that has become more urgent because of unpredictable conditions in the global marketplace."

Table 7. Reasons for Using Flexible Work Arrangements.(a) [Text Version]


Agency Temporaries

Direct-hire Temporaries

On-call Workers

Reasons Concerning Staffing Levels


Fill vacancy until regular employee is hired




Fill in for absent regular employee who is sick, on vacation, or on family medical leave




Seasonal needs




Provide needed assistance during peak- time hours of the day or week




Provide needed assistance at time of unexpected increases in business




Special projects




Other Reasons

Screen job candidates for regular jobs




Save on wage and/or benefit costs




Provide needed assistance during company restructuring or merger




Fill positions with temporary agency workers for more than one year




Save on training costs




Special expertise possessed by this type of worker




Sample size




(a) Percent responding a particular factor important.

Source: Upjohn Institute survey on Flexible Staffing Arrangements.

In the Upjohn Institute survey, employers who stated that they had increased their use of a particular flexible staffing arrangement relative to their regular workforce since 1990 were asked why. One of the most frequently given responses was a "need to increase workforce flexibility to better accommodate fluctuations in workload." This answer was cited by 37 percent of business increasing their relative use of agency temporaries, 40 percent of businesses increasing their relative use of direct-hire temporaries, and 58 percent of businesses increasing their relative use of on-call workers.

(17) Employers were also asked why they used regular part-time workers, but these responses are not reported here. Employers indicating they used contract workers were not asked why they used this type of arrangement.

(18) These results are unpublished and are available from the author.

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