Saturday, July 29, 2006

Contingent Workers as Agents of Innovation

Almost all organizations employ contingent workers. These employees are hired to supplement the workforce of the organization. In most cases, these workers have specialized skills that are needed by the organization. In other cases, contingent workers are hired to manage the variable workload that might arise during peak operational times. In the past, most organizations viewed their contingent workers through an operational lens. Seldom were these workers looked upon as sources of innovation. The exception to this was when organizations hired academicians or management consultants for strategic briefing and consulting engagements.

Today, organizations have realized that they must look at contingent workers as sources of innovation (Desouza and Awazu, 2005a, 2005b). Contingent workers bring in fresh ideas, novel thoughts, new processes, and new mental models into the organization. Their creativeness and domain knowledge are almost impossible for organizations to build internally with limited amount of time and resources. Matusik and Hill (1998) studied the impact of contingent works on the competitive advantage via dissemination and creation of various types of knowledge. Nesheim (2003) extended the work of Matusik and Hill (1998). Nesheim (2003) conducted a survey of 26 Norwegian firms in computer services and found that firms operating in dynamic environments are utilizing external work arrangements on purpose for enhancing innovation activities.

Here are some of points that organizations need to consider when utilizing contingent workers.

1. Hire contingent workers to take advantage of their unique knowledge and skill sets. In order to do this, have a sense of where would you like to employ them in the innovation process (e.g. are they going to help in the generation of ideas or may be commercialization aspects?).

2. Balance between established sources of contingent workers to the newly emerging sources. Too often, organizations restrict themselves to consultants from the brand-name firms, this thinking is dangerous. Newer firms can be as good, if not better, sources for cutting-edge ideas. These firms may not have the track record, but this should not be used as an indicator of the quality of ideas.

3. Contingent workers, in many cases, especially when it comes to high-end knowledge work, serve multiple clients at a given time. The organization must be certain that adequate knowledge protection capabilities are in place to prevent knowledge from leaving the organization and being used elsewhere. Often, preventive measures call for excellent legal contracts and work assignment documents being prepared that demand adherence to tight security policies. As a rule, it may be best that contingent workers not be used in highly sensitive areas. In cases where an organization sees a need for contingent workers in these areas, it may want to think about hiring employees of the required caliber into the mainstream of the organization.

4. Knowledge hostility issues between contingent workers and the traditional workforce of the organization should not be ignored. The internal employees may demonstrate hostility towards the contingent workers due to the fear of job loss and envy of higher pay for the same work. These issues need to be managed, especially when the contingent workers are actually doing work for less. It is interesting to note that, in our experience, workers are less likely to get agitated when contingent workers are paid more than they are, than when they are paid less. The reason is economic threat –– paying external workers less indicates that their salary could be proportionately lowered or they could be out of a job, while paying more indicates that the organization is paying a premium for the external knowledge. Workers feel this works to their advantage –– they have an opportunity to pick up such knowledge and improve their position in the organization.

Desouza, K.C., Awazu, Y., and Jasimuddin, S. (2005a) “Utilizing External Sources of Knowledge,” KM Review, 8 (1), 16-19.
Desouza, K.C., and Awazu, Y. (2005b). Engaged Knowledge Management: Engagement with New Realities, Hampshire, United Kingdom: Palgrave Macmillan.
Matusik, S.F. and Hill, C.W.L. (1998). “The Utilization of Contingent Work, Knowledge Creation and Competitive Advantage,” Academy of Management Review, 23 (1), 680–697.
Nesheim, T. (2003). “Using External Work Arrangement in Core Value-creation Areas,” European Management Journal, 21 (4), 528-537.

[Summary Posted by: Yukika and Kevin]

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