Review on Labor Flexibility

Three strands of research on labor flexibility have been developed during previous years.

The first strand focuses on mechanisms enhancing an organization's functional flexibility by providing permanent and mainly core employees with multiple skills, through continual training, so that they can be re-deployed quickly enough from one task to another (Appelbaum & Batt, 1994; Wood, 1999). These mechanisms result in a type of work organization that empowers workers to participate in decision making, enables them to work in teams, and enhances their commitment to the firm by linking their compensation to the firm's performance (Kalleberg, 2001). They are generally assumed to result in mutual gains for both firms, by improving business performance and facilitating innovation, and workers (especially 'core' workers) by broadening their skills, improving their work-autonomy and self-management, and finally securing their benefits of stable functionally flexible employment. Restricting the analysis primarily to regular, full-time employees, the model of the flexible so-called "high performance organizations" (Appelbaum, Bailey, Berg, & Kalleberg, 2000; Osterman, 2000) has generally neglected numerically flexible staffing strategies. Some attempts, however, have been made to evaluate the role of numerically flexible workers to the firm's functional flexibility (Smith, 2001).

The second strand of research on organizational flexibility focuses on numerical flexibility, studying employers' attempts to match workers to workload fluctuations, by reducing their costs. A growing literature has sought to document and explain the use of flexible staffing arrangements. The term "flexible employment" (Christensen, 1989; Houseman, 2001) often labeled "market-mediated" (Abraham, 1990) or "contingent" (Belous, 1989; Polivka & Nardone, 1989), includes all contracts other than the "typical contract," which relates an employee to an organization for a not determined duration and a normal working schedule. Flexible employment comprises: a) the short-term employment, b) the part-time employment, as well as c) the "quasi-employment" governed by commercial contracts such as the subcontracting and the use of self-employed independent contractors. Numerous previous studies are descriptive (Mayer, Andersen, & Muller, 2001; Mangum, Mayall, & Nelson, 1985). Other empirical studies are predicting the use of flexible work (Gramm & Schnell, 2001; Davis-Blake & Uzzi, 1993; Gonzalez-Diaz, Arrunada, & Fernandez, 2000). Generally, studies on numerical flexibility have considered benefits, leaving us with an incomplete view of the potential disadvantages associated with its use.

The third strand of research on organizational flexibility has considered the interrelations between functional and numerical flexibility, and has sought to explain how firms may obtain these seemingly contradictory forms of flexibility (Kalleberg, 2001).

The most popular model, combining the two kinds of flexibility, is Atkinson's (1984, 1987) 'core-periphery' model. This model suggests that employers should seek to establish long-term employment relations with their protected core workforce, whose member are highly trained and skilled, at the same time as they externalize other peripheral activities by means of transactional contracts. Several empirical studies have examined the core-periphery model, trying to investigate if organizations use both functional and numerical flexibility simultaneously and strategically. Some of them have found a negative relationship or no relationship between the use of flexible 'high performance organization' practices and the use of external employees (Osterman, 1999; Davis-Blake & Uzzi, 1993; Penn, Liija, & Scattergood, 1992). By contrast other studies have found evidence of coexistence and positive relationship between functional flexibility and several types of flexible employment (Morishima, 1995; Lautsch, 1996). Moreover, studies trying to investigate the assumption that employers' use of labor systems that combine the two forms of flexibility are deliberate and strategic, had both supporting (Harrison, 1994) and rejecting results (Procter, Rowlinson, McArdle, Hassard, & Forrester, 1994).

Although the 'core-periphery' model remains perhaps the most influential, providing a useful starting point for studying the interplay between the two forms of flexibility, it might be evaluated as over-simplifying the dynamics of the real economy. The most pronounced constraint associated with this model is derived from the assumption of homogeneous, separate, and distinct 'core' and 'periphery' corresponding to functional and numerical flexibility. In today's Information Economy, functional and numerical flexibility can exist in the same organization, along a continuum in which permanent workers often work side by side with flexible workers, rather than being isolated from each other in separate dual sectors (Smith, 1994). It is often the case for an employer to obtain numerical flexibility from core workers (by adjusting their working time) and functional flexibility from subcontractors or self-employed independent contractors. Moreover, the 'core-periphery' model is too 'firm-centered' (Kalleberg, 2001). It does not consider the possibility that firms may obtain both functional and numerical flexibility by developing relations via networks.

Two emerging perspectives have gone beyond the 'core-periphery' model. The first focuses on how organizations may internally utilize various combinations of human resource portfolios or mixes of labor utilization systems (Way, 1992) in various circumstances for the accomplishment of both core and peripheral jobs (Sherer, 1996). The second perspective sees organizations as combining functional and numerical flexibility by forming external relations with other organizations rather than by adopting internally different types of labor utilization strategies. The so-called network organizations (Powel, 1990) are the result of employers' attempts to reduce, among others, their resource dependencies and skills shortages. These two theoretical perspectives are not mutually exclusive. Firms seeking to adopt a mix of human resource portfolios by using, for example, temporaries or subcontractors will most likely obtain these workers from organizations with whom they establish network relationships.

Although these perspectives offer an appropriate base to understand human resources strategies, much remains to be done in order to refine them into a systematic theory.

This chapter is not an attempt in this direction. It is however an effort to contribute to previous research in two ways. First, it examines the relationship between the level of training and upskilling, by which we proxy functional flexibility and the use of temporaries, independent contractors and subcontractors, which are measures of numerical flexibility, in regard to the level of ICT adoption. Second, it identifies that the firm may not be an appropriate unit of analysis, as the rise of networks is potentially driving people's careers to span individual organization. Therefore, it measures the two types of flexibility, not at the firm's level, but at the job group level.

Research Questions

The Impact on Training of Flexible Workers

Training is considered as an investment in employees' competencies. Firms can recoup training costs by amortizing them over the time of employees' work, therefore having ensured employment stability creates an incentive for firms to invest in workers' training. Workers on flexible employment contracts are significantly less likely to be involved in any work-related training to improve or increase their skills (Davis-Blake & Uzzi, 1993; Wiji & Booth 1998), even though these workers are performing difficult tasks that entail relatively high risks of accidents (Kochan, Smith, Wells, & Rebitzer, 1994).

On the other hand, many flexible workers are highly skilled individuals mostly used to accomplish specialized or non-frequent high-level tasks. Firms obtain this type of worker often through networks to reduce their resource dependencies and skills shortages. It may be postulated that firms resorting to this kind of numerical flexibility are willing to invest in their work-related training in order to integrate them and thus maximize the benefits associated with their use.

Which of these opposite forces dominates, for which type of flexible workers, remains a challenging research question. However, taking into consideration the Greek context, we could make some general assumptions. There are indications that Greek firms tend to resort to low-skilled, low-cost temporaries in order to increase volume flexibility, whereas they rely to commercial contracts to increase their capacity to adapt to unanticipated conditions implying new sets of competencies (Tarondeau & Voudouris, 2001). Increasing the cost of using temporaries by training them would be contradictory to the policy concerning them. On the contrary, work-related training seems to be necessary for independent contractors and subcontractors in order to integrate them, adjust their competencies to an organization's needs, and maximize benefits.

Based on the above brief discussion, the following research questions will be examined:

Research Question 1a: Is the use of independent contractors in a job group related to a higher level of training offered by the organization to enhance upskilling of this job group?

Research Question 1b: Is the use of temporaries in a job group related to a lower level of training offered by the organization to enhance upskilling of this job group?

Research Question 1c: Is the use of subcontractors in a job group related to a higher level of training offered by the organization to enhance upskilling of this job group?

The Impact on Training of ICT

The transformations in ICT and consequent organizational structures have generated abundant literature on the impact of ICT on workforce skills, and therefore education and training. There are optimistic and pessimistic scenarios suggesting both upskilling and downskilling (Rubery & Grimshaw, 2001). The first scenario supports the idea that ICTs downgrade skills and competence of individuals to single-task machine tending, creating 'dead-end' jobs. This refers mainly to individuals with limited basic, or outdated or inadequate skills whose demand will gradually fall. Most training and retraining is not organized for people accomplishing traditional tasks. These people will be excluded from training programs and will be led to falling wage rates and finally to social exclusion (Autor, Katz, & Krueger, 1998). The second scenario supports that ICTs upgrade skills and competence, and facilitate multi-tasking of employees, expanding their career opportunities. The high speed of the transformation of enterprises and the much slower pace on the supply side of new broadened skills leads to redundancy of old skills and bottlenecks for new skills. It seems that the solution to this mismatch lies mainly in the re-adaptation of those who are already in the labor force to the requirements of the Information Society. Therefore pressures for accelerated skill development drives firms to change their employment policies and practices (Grimshaw, Beynon, Rubery, & Ward, 1999). Employers introducing ICT will be most likely to adopt costly training programs to achieve multi-skilling and a genuine effort to enhance workers' skills. ICT integrated with training and with organizational transformation offers great potential to improve productivity, thus ameliorating business performance while enhancing the creation of good jobs leading to increased worker security. The research question resulting from the above discussion, is:

Research Question 2: Is the level of ICT use in an organization related to the level of training offered by the organization to enhance upskilling?