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Temporary Workers

Companies generally pay temporary employees lower wages and offer fewer benefits than they extend to their core counterparts. What are some of the possible drawbacks for companies that employ temporary workers?

Executive compensation practices in U.S. companies have received substantial attention in the press. As we will see in this module, executive pay practices have raised concerns that many executives receive lucrative compensation and benefits even when company performance falls below shareholder expectations. Many critics have questioned whether such practices may interfere with some executives’ motivation to achieve excellent performance. Moreover, applying such practices to executives contradicts the main assumptions of performance-based pay that successful performance triggers merit and incentive awards and the degree of success determines the amount of award. After all, pay-for-performance applies to most non-executive employees in U.S. companies. In some instances that we will discuss, executives are rewarded after they have not performed well with multimillion dollar awards contingent on their leaving the company. It is not surprising that those instances are often referred to as pay-for-nonperformance, or, more harshly, pay-for-failure, and these events have become increasingly common in the world of executive compensation.

Changing business conditions and personal preferences for flexibility to accommodate non-work demands have led to an increase in contingent workers and the use of flexible work schedules in the United States. Companies employed as many as 5.7 million contingent workers in February 2005, representing about 4 percent of total employment. Likewise, the complexities of employees’ personal lives (e.g., dependent children and elderly relatives, dual career couples, and disabilities) make working standard eight-hour days for five consecutive days every week difficult. About 27 million employees worked flexible work schedules during May 2004. Altogether, contingent and flexible-schedule employees represent about 27.5 percent of the U.S. civilian labor force. (These statistics represent the most recently available comprehensive data at the time of publication; data on contingent workers and workers on flexible schedules are collected infrequently.) (U.S. Bureau of Labor Statistics, 2012a).

Human resource (HR) and compensation professionals encounter tremendous challenges in managing both the core and contingent workforces. Many companies employ both types of workers, often in the same jobs. To the casual observer, including coworkers, there are no visible differences between these workers; however, HR and compensation professionals must take many factors into consideration (U.S. Bureau of Labor Statistics, 2012b).

Martocchio, J. L. (2015). Strategic compensation: A human resource management approach (8th ed.). Upper Saddle River, NJ: Prentice Hall.

U.S. Bureau of Labor Statistics. (2005a). Contingent and alternative work arrangements, February 2005. USDL: 05-1433. Retrieved from

U.S. Bureau of Labor Statistics. (2005b). Workers on flexible and shift schedules, May 2004. USDL: 05-1198. Retrieved from

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