Strategic use of temporary employment contracts as real options
Brady, MalcolmORCID: 0000-0002-4276-3976 and Briody, Anthony
(2016)
Strategic use of temporary employment contracts as real options.
Journal of General Management, 42
(2).
pp. 31-55.
ISSN 0306-3070
Managers operate in an environment characterised by volatility, uncertainty, complexity and ambiguity. This paper focuses on uncertainty and demonstrates how managers are mitigating supply-side uncertainty through the use of temporary employment contracts. These temporary employment contracts are being used as real options where uncertainty is reduced by reducing irreversibility and by increasing flexibility. The empirical work comprised in-depth interviews with employees and employers in the academic sector, a sector that has a tradition of employing people on temporary contracts. The key findings are: temporary employment contracts provide the organization with a low-risk mechanism for reducing uncertainty in supply; temporary employment contracts increase flexibility and reduce irreversibility for the organization and shift risk from the institution to the employee. However, there is a cost to the organization in the form of demotivation, holding back and early exit of desirable employees. It can also lead to an organizational division between staff employed on temporary contracts and those on permanent contracts. The paper has relevance to managers and decision makers who operate in sectors or levels where human resource abilities are initially opaque but are revealed over time.
Metadata
Item Type:
Article (Published)
Refereed:
Yes
Uncontrolled Keywords:
real options; temporary employment contracts; uncertainty; flexibility; irreversibility, risk