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Strategic use of temporary employment contracts as real options

Brady, Malcolm orcid logoORCID: 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.
Item Type:Article (Published)
Uncontrolled Keywords:real options; temporary employment contracts; uncertainty; flexibility; irreversibility, risk
Subjects:Social Sciences > Education
Business > Management
DCU Faculties and Centres:DCU Faculties and Schools > DCU Business School
Official URL:https://doi.org/10.1177/030630701704200204
Copyright Information:© 2017 Sage
Use License:This item is licensed under a Creative Commons Attribution-NonCommercial-Share Alike 3.0 License. View License
ID Code:22138
Deposited On:18 Dec 2017 11:40 by Malcolm Brady . Last Modified 25 Nov 2020 13:40

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