Temporary and Permanent Employees Performance in Organizations

RESEARCH PAPER
Temporary and Permanent Employees Performance in Organizations

Research Fellows:
CMS # 10539 - Mr. IrfanFazal-e-Qadeer ([e-mail])
CMS # 9826 - Mr. Muhammad Usman Iqbal ([e-mail])
CMS # 10888 - Mr. Muhammad Rizwan ([e-mail])
CMS # 4294 - Mr. IkramulHaq ([e-mail])

Abstract The employees are the most valuable asset for any organization who meet laid out objective and performance goals. The performance of the employees depends on various factors. Due to obvious reasons, the job security, and incentives have a strong bondage with the employees and their behavior.However it has been noticed during the research that loyalty and job security are positively related to performance.In relations to the independent variables, loyalty behaves positively with job performance and knowledge and skills negatively to the job performance. Being the sole asset for an organization, it is the employee’s performance which recognizes an organization in the market. The organizations have to provide job security, take measures to improve knowledge / skills and also appreciate their work of employees with incentives in order to retain their employees and win their loyalties. (Anwar, Aslam, Tariq, 2011). Being the backbone of any organization, the employees fulfilling the requirements of skills, knowledge and motivation are the choice of all organizations.The employees work for them and meat the performance targets laid down by the organizations. The overall performance of the organization depends upon selection of the employees. In order to keep them well motivated, mentally sound and secure; the organizations provide them certain perks and privileges which can be of several types and forms.These privileges provide motivation and enhance capacity of employees to innovate and perform. Due to present era of global village, the concept of competition has geared up and the goal is divided into many facets. The product cost reduction of the product is the main requirement for any organization. It is achieved by reducing the overheads and enrolment of contractual workforce (Rogers, 1995). Although the contract employees are easy to handle and employed only when required, yet they have their own ills as far as the productivity and performance is concerned.
Introduction
The concept of contract or temporary work force immerged during 1970s when unemployment in Europe was on the rise.The concept was followed by France (80%) and Spain (90%) in the same era.The trend was widely accepted and adopted by many renowned organizations (Handy, 1995). The analysis of the temporary jobs trenddemonstrates that it has occupied a major share in total employees. Contract job practice has been increasing in a number of countries which is attention able (cf. OECD 2002, Booth ET al.2002a). Lower risk for firm is the primary cause for this high rate of temporary jobs.The effects of short term employment for the employees and the organization have not been fully established yet, because there are many variables that can affect the observed outcomes. Variables such as Skills, Knowledge, Job Security and Loyalty have a very important impact on the organizational performance. It has been observed that the temporary workers work harder than the permanent workers just to retain their employment in the organization. However their work is seldom recognized. The difference of behavior and performance of both temporary and permanent employees have been proved in various researches (Dyne&Ang, 1998; Broschak& Davis, 1999; Bishop &Goldsby, 2000). The same has also been proved by certain behavior predictors regarding the temporary employees ( Feldman, Doerpinghaus&Turnley, 1995; Ellingson, Gruys&Sackett, 1998). Knowledge and capabilities vary from person to person. The uniqueness and the strengths of employees differ in many ways depending upon the exposure and experience. Nature of contract plays a very important role in the display of output in an organization regardless of their capabilities. Inference can be drawn that the job security and employees performance are inter-related. The obvious reasons are job insecurity and related perks. This also indirectly affects the loyalty factor also (Anwar, Aslam&Tariq, 2011). As per (Anwar, Aslam&Tariq, 2011) factors of perceptions of being unjust,keeping employees away from decision-making, incentives for permanency, tenure limits, scarcity of commitment and very less motivation are the major causes of reduced performance. As the temporary and contract employees are not offered permanent posts, the loyalty is adversely affected.Job duration and loyalty are directly proportional to each other.The employees owing to their temporary status keep searching for alternate and better salaried jobs which are the main cause of decrease in loyalty. While reviewing the research literature carried out in the same field, only one side of the coin is visible. The behavior of either permanent employees or the temporary employees is discussed. This does not show the comparison of both categories in an organization which can result in a fruitful evaluation (Wandera, 2011; Anwar, Aslam&Tariq, 2011; Clark&Vinay, 2005; Dixon, 2009).The focus of this study will remain on the input from both sides to evaluate the performance of temporary and permanent employees for better human resource management. Purpose of this research paper is to find how dependent variable (job performance) of contract/temporary and permanent employees relates to independent variables (loyalty, job security and knowledge/skills).

Literature Review
Loyalty
Firm’s performance primarily thrives on the performance of its employees. Therefore it is very important that the performance information at employee level is gathered and analyzed critically. Performance does not just happen in workplaces. It is motivated by series of factors. (Preko&Adjetey, 2013).
Employee performance literature considers employee loyalty, engagement and commitment as central features of firm’s performance (Brown, 2011; Preko&Adjetey, 2013).Loyalty and commitment are the output of employee’s emotional attachment with the firm which not only convinces him stay in the firm for longer time but also enhances firm’s performance through his less opportunistic behavior(Brown,2011; Green, 2008). Employee however, does have his personal concerns in fulfilling the tasks of his firm. When his concerns are fulfilled by his employer in return, his loyalty and commitment to the firm increases. Along with personal development concerns, loyalty also depends upon leadership style, job content, creativity and human relations (Preko&Adjetey, 2013). The term loyalty is referred to employees who are committed to the success of the organization and believe that working for this organization is their best option(Preko&Adjetey,2013). Factors recognized as having an influence on affective commitmentareorganizational communication, empowerment of the employee (e.g. Stuart, 1999), employee participation and involvement (e.g. Cotton et al., 1998) and the establishment of organizational trust (Mayfield and Mayfield, 2002). Loyalty if defined in terms of employee’s commitment to put in his best in the interest of the firm, then this commitment might invariably be the same in both temporary and permanent employees. Whereas, if definition of loyalty says like“an employee remains with the same employer rather than moving on” (Bidwell, 2011) then there might be a chance that permanent employees are more loyal to their employers then temporary employees.Organizational practices that keep whole populations of workers permanently temporary could result in the creation of a generation of workers "who view companies as the enemy"(Cole&Gomolski, 1998). Inherently the difference in the nature of structural and financial bond between an employee and organization can potentially affect the loyalty and trust of an employee (Gossett, 2000). Traditional employees may question the importance of organizational loyalty and participation when they work alongside others who have not made such a commitment" (Gossett, 2001; Foote, 2004) also advocate that temporary employee has a low level of loyalty. On the part of organization, to promote loyalty in employees who have been hired for a fixed period of time becomes a challenge (Dačiulytė & Aranauskaitė, 2012). On the basis of findings of previous studies, we expect that the permanent employees may be more loyal as compared to temporary employees. Since temporary employees do not see a clear career with the organization they are working, therefore it is reasonable to expect that they may be less likely to dedicate their loyalty towards their organizations. On the other hand, permanent employees, because of their clear career paths associated with their current employer, may have elevated levels of loyalty. Therefore, based on the above, we develop the following hypothesis
Hypothesis 1.Permanent employees will be more loyal towards their organization as compared to temporary employees.
Job Security
The concept of job insecurity in temporary work is the employee’s perception and associated worries about potential involuntary job loss (Sverke et al. 2002). Perception of job insecurity is more positively related to temporary employees and less positively related to permanent employees according to the findings of Kirves, Cuyper, Kinnunen and Nätti (2011) These perceptions of insecurity may be the result of some organizational restructuring or the evolving environment around them, which puts them under stress according to Bu¨ssing (1999). De Witte (1999) and Sverke et al(2002) point towards two very important factors in restructuring of organization which become a source of the perception of job insecurity among employees. These factors involve; (1) threat of unemployment when informed about dismissal and (2) situational uncertainty that arises when lays-off are announced but not communicated to employees. The inner feeling of job insecurity becomes a continuous source of stress; hence causes strain (Sverke et al. 2002). Emotional responses in result of the stress and strain are like anxiety (Layton 1987), anger, hostility (Greenglass&Burke, 2000), resignation and sadness (Tang and Crofford1999). Job insecure workers fear the loss of income and latent needs like social contacts, structure, and personal development (Jahoda, 1982). The feeling of job insecurity maneuvers the thinking of an employee towards finding opportunities of new jobs or career opportunities in the market which can also be termed as employability (Berntson and Marklund, 2007). Perception about employability also means the easiness of grasping a new job according to Rothwell and Arnold (2007). More powerful the employability perception lesser will be the effect of job insecurity perception in terms of stress (Forrier and Sels, 2003a) because of the enhanced feeling of control over ones career (Fugate et al. 2004), The above study regarding the more vivid perception of job insecurity among temporary employees guides us to think on the lines that temporary employees are more concerned about finding out the chances of reemployment and is keen in knowing about the opportunities of career enhancement in the market. Based on the previously available studies, it can be deduced that reduced job security can reduce job performance. The job security is found more in permanent employees than temporary or contract employees. As the job security is directly proportionate to performance, therefore it can be expectedthat more job security will create better job performance. Therefore, based on the above, we develop the following hypothesis
Hypothesis 2: Permanent employees will feel more secure towards their jobs and will contribute better towards performance as compared to temporary employees.
Knowledge/Skills
Experienced employees contribute effectively to organization knowledge according to (Nonaka, 1994). Keeping this in view if there exists a perception that temporary employees don not contribute to valuable information and knowledge, organization might be hurting its own innovation. As Nye (1988) pointed out those resource managers find temporary employees more qualified than those who turn up at company’s personnel office. As temporary employees get an opportunity to work in many organizations they have a greater opportunity to garner knowledge in a variety of working situations. Those who get attached to any task in the organization temporarily have a greater chance of improving their skills set according to Albrecht (1998). Literature suggests that temporary employees are more skilled that’s why they have the ability to adjust the fluctuating demands from customers (Kochan, Smith, Wells, and Rebitzer, 1994). Temporary work offers an opportunity to improve occupational skills according to Wittwer and Münchhausen (2001). Knowledge, skills and experience are the source of occupational competence as was said by Kauffeld (2002). Temporary employees as find opportunities to work at various places tend to become socially proactive and their ability to solicit information increases due to such like versatility in connections. According to a National Bureau of Economic Research report temporary employment growth rate was 11% during1990’s and according to the findings of Estavo and Latch (1999) this rate is going to increase further. Interestingly organizations requiring highly skilled workers were employing temporary workers according to Neumark& Reed, (2002). It means that temporary employees posses greater level of expertise, knowledge and skills than permanent employees. Wages given to temporary employees are lower than which are given to permanent employees. This might involve the reason that temporary employees do not find opportunities of training with their employers. So from the study we can find in general that temporary employees are hardworking, knowledgeable and with diverse experience. The available literature illustrates that job skills and knowledge are found more in permanent employees as compared to the temporary employees which then contributes towards the performance in an organization. Organizations spend a big portion of their budget in the training of their employees. Therefore it is evident that the permanent employees have a definite edge on the temporary employees as regard to the skills and knowledge. Therefore, based on the above, we develop the following hypothesis
Hypothesis3. Permanent employees will possess more skills and knowledge as compared to the temporary employees.

Research Model

Research Methodology The behavioral aspectsof temporary and permanent employees depending upon the variables like loyalty, performance, skills experience and knowledge varies across organizations. The date was collected from public and private sector as well as financial institutions like banks and telecom companies.The data was collected with the help of onsite administration of a questionnaire with self-report style. No such questionnaire on the subject was developed in previous work by any author. Therefore the questionnaire was developed keeping in view the possible questions encompassing the variables defined in the literature review. A cover letter of the questionnaire clearly explained the objective of the study to the respondents, ensured them of the strictest secrecy of feed-back and also pointed out that contribution was voluntary. Response comprised of items relevant to the variables mentioned earlier. We have received 195 completed self-report responses out of the 225 distributed questionnaires. 75 surveys were carried out from each government organization, telecom industry and a commercial bank branches.The response rate of the respondents was government offices, telecomindustry and commercial bank were 70%, 75% and 83% respectively. The majority of respondents (78%) were male with an average age of 30 years.
Measures
All constructs were measured using self-reported instruments. Responses for all variables were assessed using a 5 -point Likert scale with the anchors 1 = Strongly Disagree, 2 = Disagree, 3 = Neutral, 4 = Agreeand 5 = Strongly Agree.
Results
Reliability
A study was conducted to check the reliability of the questionnaire and it was measured through reliability coefficient Cronbach’s Alpha that measures the precision and accuracy of the instrument. For 5 items of Loyalty, 5 items of Job Security, 3 items of Job Performance and 5 items of Knowledge and Skills, values of Cronbach’s Alpha are 0.847, 0.841, 0.815 and 0.891, which are shown in Table 1. (Nunnally, 1978) suggested that if value of cronbach’s Alpha will be 0.70 or more, then instruments used in the research are reliable. So, all values are more than 0.70 which shows that items of the questionnaire are reliable. After checking reliability, finally we distributed all questionnaires among different permanent and temporary employees of Commercial Banks, Communication Industry and Government Sector.

Table-1
Internal Reliability of the Study

Variable
Cronbach’s Alpha
Items
Loyalty
0.847
5
Job Security
0.841
5
Knowledge and Skills
0.891
5
Job Performance
0.815
3

Results and Discussions
For this study the targeted population was the temporary and permanent employees working in the Commercial Banks, Communication Industry and Government Sector. We have used SPSS (Statistical Package for Social Sciences) to investigate the results. The techniques used were regression and correlation. In demographic data we have Age, Gender, nature of job and Experience. Job performance was treated as a dependent variable whereas loyalty (Loyalty), job security (JS), Knowledge and skills(KNS) were treated as Independent variables.

Descriptive Analysis

Table-2
Descriptive Statistics

Mean
Std. Deviation
N
Job_Nature
1.3795
.48651
195
Age
2.85
.802
195
Experience
1.38
.487
195
Loyalty
3.7824
1.00700
195
Job Security
3.9518
.95862
195
Job Performance
3.9566
1.03407
195
Knowledge and Skills
3.5401
1.15007
195

Table-2 provides Descriptive statistics of the studied variables. It shows three different types of values i.e. N (Total number of responses), mean and standard deviation.As we measured our instrument on 5-point likert scale from “Strongly Disagree” to “Strongly Agree”. Mean value for all variables are close to 4 which show that most of the values have degree of agreement in our data set and deviation is also very low.

Correlation Analysis:
Table – 3
Pearson Correlation of variables
Table-3
Correlations

JobNature
Age
Experience
Loyalty
Job Security
Job Performance
Knowledge and Skills
Job_Nature
Pearson
Correlation

Sig. (2-tailed)

Age
Pearson Correlation
-.053

Sig. (2-tailed)
.464

Experience
Pearson Correlation
1.000**
-.053

Sig. (2-tailed)
.000
.464

Loyalty
Pearson Correlation
-.096
.033
-.096

Sig. (2-tailed)
.181
.651
.181

Job Security
Pearson Correlation
-.087
.070
-.087
.810**

Sig. (2-tailed)
.229
.331
.229
.000

Job Performance
Pearson Correlation
-.101
.022
-.101
.931**
.751**

Sig. (2-tailed)
.160
.762
.160
.000
.000

Knowledge and Skills
Pearson Correlation
-.055
.087
-.055
.799**
.708**
.610**

Sig. (2-tailed)
.445
.225
.445
.000
.000
.000

**. Correlation is significant at the 0.01 level (2-tailed).
No of Samples N=195

When we want to check association between two variables then we will use Pearson’s correlation test. Its value varies from -1 to +1. -1 shows perfect negative correlation between the variables, 0 shows no correlation between the variables, whereas +1 shows perfect positive correlation between the variables.

Table -3 shows Pearson correlation between our dependent variable (job performance) and independent variables (loyalty, job security, Knowledge and skills) and it is tested on 0.01 level of significance. Correlation between Job Performance and Loyalty is significance as (P < 0.01), whereas value of R is 0.931 which shows that there is positive correlation between both variables, means if we will improve Loyalty, the Job Performance will increase. Correlation between Job Performance and Job Security is significance as (P