The way the motives for hiring temporary agency workers mirrors the changing role of externals within organizations
THESIS STUDY
Executive Programme in Management Studies Amsterdam Business School
Floor Bouwman (5735424) University of Amsterdam
Faculty of Economics and Business Department: Strategy
Master thesis MSc Business Studies Academic Year 2015-2016
Supervisor: dhr. prof. dr. J. Strikwerda Amsterdam, December 2015
Abstract
Knowledge gradually has become the most critical organizational asset to sustain competitive advantage. The hiring of external workers in the organization is a way to access specialized
knowledge, bring in new ideas and find the right competence mix of employees within the firm. This development represents a shift from a ‘transactional role of the external’ to a ‘transformational role of the external’ in the firm.
This study investigates whether this shift is noticeable. Firstly, the study analyses if organizations tend to use externals within value-creating areas of the organization. Further, it investigates what the most important reasons for the hiring of temporary agency workers from a temporary work agency are and if the ‘knowledge and expertise providing motive’ for hiring externals from a temporary work agency affects the integration of externals in the hiring firm. Lastly, there will be investigated if the size of the firm may affect the integration of the externals within the firm.
The results of this study have important theoretical and practical implications for further research concerning the management of temporary agency workers. Further, the transformations of the role of temporary work agencies ask for more research in how this industry does, can, and should contribute to the societal organization of employment flexibility and labor market challenges.
Key words: External employment arrangements, temporary agency workers, knowledge economy, strategic management
Table of content
ABSTRACT ... 1
TABLE OF CONTENT ... 2
LIST OF TABLES AND FIGURES ... 4
1. INTRODUCTION ... 5
1.1 Background ... 5
1.2 Research Question ... 5
1.3 Scope and Structure ... 6
2. LITERATURE REVIEW ... 7
2.1 Post-WWII corporate landscape ... 7
2.2 Growth of flexible labor ... 7
2.3 The Conventional Wisdom on External Employment Arrangements ... 7
2.3.1 Different employment modes ... 8
2.3.2 Transaction costs theory ... 8
2.3.3 Resource Based Theory ... 9
2.4 Increasing importance of knowledge ... 10
2.4.1 Knowledge Based View of the Firm ... 11
2.5. Concept of knowledge integration within the firm ... 11
2.6 Factors that influence the integration of externals within the firm ... 12
2.6.1 Knowledge and expertise most important reason for hiring from TAW ... 12
2.6.2 Size of the firm ... 12
2.7 Research Model ... 13
3. METHODOLOGY ... 15
3.1 Research Design ... 15
3.2 Data Collection ... 15
3.2.1 Population and Sample Selection ... 15
3.2.2 Survey Design ... 16
3.3 Reliability and Validity ... 17
3.3.1 Response Rate ... 17 3.4 Data Analysis ... 18 3.4.1 Statistical Techniques ... 20 4. RESULTS ... 21 4.1 Descriptive Statistics ... 21 4.2 Factor Analysis ... 32 4.3 Correlation analysis ... 34
4.4 Fisher’s exact test ... 36
4.5 Regression analysis ... 38
4.6 Summary of the Main Findings ... 41
5. CONCLUDING DISCUSSION ... 43
5.1 Conclusion ... 43
5.2 Theoretical and practical implications of this study ... 46
5.3 Limitations and suggestions for further research ... 49
6. REFERENCES ... 50
List of tables and figures
TABLE 1: SECTOR ORGANIZATIONS 21
TABLE 2: SIZE ORGANIZATIONS 21
TABLE 3: OPERATIONAL AREA 22
TABLE 4: THE RESPONSIBILITY FOR HIRING 22
TABLE 5: TOP 5 FUNCTIONS 22
TABLE 6: EXPECTED AMOUNT OF EXTERNALS 25
TABLE 7: INTEGRATION OF EXTERNALS 26
TABLE 8: PRIORITY 30
TABLE 9: FACTOR ANALYSIS 33
TABLE 10: DESCRIPTIVE STATISTICS AND CORRELATION 35
TABLE 11: FISHER'S EXACT TEST 36
TABLE 12: FISHER’S EXACT TEST WITH FACTOR 3 AND ITEM 3 OF QUESTION 11 36 TABLE 13: FISHER’S EXACT TEST WITH FACTOR 3 AND ITEM 4 OF QUESTION 11 37 TABLE 14: REGRESSION ANALYSIS: INDEPENDENT VARIABLES AND ITEM 3 38 TABLE 15: REGRESSION ANALYSIS: INDEPENDENT VARIABLES AND ITEM 4 39 TABLE 16: REGRESSION ANALYSIS: INDEPENDENT VARIABLES AND ITEM 1 40 TABLE 17: REGRESSION ANALYSIS: INDEPENDENT VARIABLES AND ITEM 2 40
FIGURE 1: CHANNELS USED FOR HIRING EXTERNALS 23
FIGURE 2: AMOUNT OF EXTERNALS 24
FIGURE 3: EXPECTED AMOUNT OF EXTERNALS 24
FIGURE 4: MOTIVES FOR HIRING TAW FROM A TWA 28
FIGURE 5: LABOR SOURCING POLICY 29
FIGURE 6: EXPECTED LABOR SOURCING POLICY 30
1. Introduction
This chapter introduces the background and the problem statement of this study. Furthermore, the scope and structure of the study will be presented.
1.1 Background
Organizations increasingly have been challenged to address a new competitive landscape
characterized by fluid trade boundaries and new technologies. This new competitive landscape places great demands on the firm: the firm must lower its cost structure and respond with greater flexibility to changing market conditions. The increasing use of flexible employment arrangements represents one way in which firms have responded to these demands (Miles, 2002).
The use of flexible employment relations has increased in most developed countries. In the Netherlands, organizations make extensive use of flexible staffing arrangements such as work at irregular hours, part-time work, overtime, fixed-term contracts, the hiring of self-employed contractors and temporary agency work. During the 1990’s temporary work agencies were legalized and regulated in many European countries and this reflected the sociocultural readiness for temporary employment and its further evolution in Europe (Koene, 2014). Although critics were concerned about the
undermining of work conditions and changing workplace dynamics at this time, the growth of agency work saw a steep growth in Europe from 2,605 million to 3,924 million full-time agency workers between 2002 and 2007 (Ciett, 2011).
The Netherlands is Europe’s second largest temporary employee market after the United Kingdom and operates in a relatively mature and liberalized market. Although the use of temporary agency work is still a small component of the total amount of flexible staffing arrangements in the Netherlands (penetration rate of 2.5% in 2009), it reflects a structural acceptance of temporary work and it has changed our conception of what is seen as ‘regular’ work (Goudswaard, 2014).
During the last half of this century, temporary employment was mostly understood as an instrument to deal with ad hoc labor shortages and labor market imperfections such as a temporary solution to fleeting employment problems. However, this century is characterized by the fact that knowledge gradually has become the most critical organizational asset to sustain competitive advantage.
Therefore, organizations do not only want quickly deployable and qualitatively flexible personnel but also attach value to specialized knowledge. Hiring temporary agency workers may therefore offer a firm a way to access specialized skills.
This shift from a ‘transactional role of the external’ to a ‘transformational role of the external’ implies that organizations do not necessarily control technical knowledge and its sources in the organization. Further, it implies that organizations obtain expertise through externals in the who are operating in value creating areas of the hiring firm. Lastly, it implies that temporary work agencies are playing a key role in providing for externals with the right expertise and knowledge. The aim of this study is to investigate whether this shift is noticeable.
1.2 Research Question
In this study the following research question will therefore be investigated:
Do the motives and purposes for hiring temporary agency workers of organizations operating in today’s knowledge economy reflect a shift from a purely transactional and quantitative need to a more transformational need?
1.3 Scope and Structure
There are various forms of flexible employment arrangements such as part-time work, independent contracting, leasing of personnel, temporary workers and temporary agency workers hired via a temporary work agency. The focus of this study is the hiring of externals within organizations with a special focus on the hiring of temporary agency workers. This decision was based upon the empirical context of this study: hiring firms of a Dutch temporary work agency were approached that hire temporary agency workers from this firm but also make use of other external employment arrangements.
This thesis is organized as follows: in chapter 2, the conventional wisdom on external employment arrangements is outlined. The traditional bureaucratic mode of organization is described and the related strategic management theories are explained. Subsequently, the new perspective on the repositioning of temporary labor and the related strategic management theories within organizations are presented. In chapter 3 of this thesis the research method is described followed by the results that are presented in chapter 4. In chapter 5 the conclusion is presented followed by a discussion on the theoretical and practical implications of this study. Lastly, the limitations of this study and suggestions for further research will be outlined.
2. Literature Review
In seeking to determine if the motives for hiring temporary agency workers is showing a shift from a purely transactional and quantitative need to a more transformational need, it is necessary to fully comprehend some well-established and widely empirically supported theories about external employment arrangements.
From the beginning of the 1990s onwards, the increasing importance of externals within organizations has attracted academic attention. However, research on the organization of temporary agency work has only partially kept up with the rapid growth of external employment arrangements and the growing importance of specialized knowledge in the firm. Most of the research done on external employment arrangements is labeled as a-typical or nonstandard. As a consequence, most research has compared it to ‘regular’ forms of employment, rather than new ways in which we should understand, structure and organize flexible employment in today’s knowledge economy (Koene, 2014).
This chapter begins with describing the post-WWII corporate landscape and the growth of flexible labor. After this the conventional wisdom of strategic management theories related to these developments are described. Then, the growing importance of knowledge concerning the hiring of externals is outlined and the related strategic management theories are explained. Lastly, the research model of this thesis will be outlined.
2.1 Post-WWII corporate landscape
The post-WWII American corporate landscape had a munificent environment, set trade boundaries and low levels of technology. Within this environment the standard worker would be described as a person who works a fixed number of hours at a firm’s location with the expectation that the employee commits for a long-term to the firm (Ashford, 2007). As a consequence, most influential theories regarding external employment arrangements were developed with a reference to this situation (Scott, 2004).
2.2 Growth of flexible labor
In the mid-1970s, economic change, increased competition, uncertainty among firms and greater pressure to increase profits created conditions that led organizations and workers search for more flexibility in employment. Technological change facilitated this development: communication and information systems made is easier for organizations to specialize their production, rely more on outside suppliers and assemble temporary workers for short-term projects. Further, the growth of flexible work arrangements was fueled by employers trying to avoid the mandates and costs associated with the protection of permanent employees facilitated in labor law (Cappelli, 1999). Consequently, the standard employment relationship in the post-WWII corporate landscape began to change from this moment on.
2.3 The Conventional Wisdom on External Employment Arrangements
The changing employment relations also began to attract academic attention. The studies on the growth of external employment arrangements mainly put the emphasis on being a way to lower the firm’s costs and increase the firm’s ability to quickly and easily increase or decrease headcount in response to changing market conditions and intensified competition. Further, it frequently was
flexibility: functional flexibility and numerical flexibility. Functional flexibility is needed so that employees can be redeployed quickly and smoothly between activities and tasks. Numerical flexibility is needed so that headcount can be quickly and easily increased or decreased in line with changes in level of demand for labor (Atkinson, 1984).
According to Atkinson, a firm consists of two parts: a core consisting of employees being most vital to the firm and a periphery consisting of those employees that are of less importance. Atkinson argues that in the core functional flexibility is vital because in the core long-term relations with highly skilled and committed employees are desirable. In the periphery, numerical flexibility is vital. The peripheral workforce consists of market-mediated work arrangements and external employment relations such as self-employment, temporary employment, temporary agency workers and outsourcing of activities and services (Miles, 2002).
Lots of research elaborated on the core-periphery model of Atkinson where the above described two distinct strategies on external employment arrangements are emphasized. These two strategies have been referred to in various models: functional vs. numerical flexibility (Atkinson, 1984; Smith, 1997), internal vs. external flexibility (Cappelli, 2001) and clan vs. market (Ouchi, 1980). One of the main conclusions from this literature on strategies of flexible labor utilization is that firms should buffer those capabilities that are most important to its competitiveness.
2.3.1 Different employment modes
Lepak and Snell’s strategic human resources architecture reinforced the basic distinction between a stable core and a flexible periphery, as introduced by Atkinson in 1984. Lepak and Snell (1999) developed a HR architecture model explaining how strategic considerations influence the employment forms in a firm. Using the dimensions of value and uniqueness of human capital, Lepak and Snell identify four different employment modes: internal development, acquisition, contracting and forming an alliance. In other words, firms both make and buy their human capital. Resources are valuable to the firm when they improve efficiency and effectiveness, exploit market opportunities and/or
neutralize potential threats. Resources are unique to the firm when they are idiosyncratic resources and frequently occurring.
Lepak and Snell conclude that when human capital is both valuable and unique, firms are more likely to develop these unique skills internally. When human capital is valuable but not unique, firms are more likely to acquire this human capital, because managers may be hesitant to invest in internal development. When human capital is generic and of limited value, the knowledge can be purchased easily on the open labor market. When human capital is unique but does not directly create customer value, minimal benefit may be gained from outright ownership of these types of skills. Therefore, some form of alliance can provide a hybrid employment mode that’s blends the internalization and externalization of human capital (Nesheim, 2003).
2.3.2 Transaction costs theory
Influential theories in strategic management have copied the view that external employment
arrangements should be used in the peripheral areas of the firm (Matusik & Hill, 2003). For instance, over the past 25 years, Transaction Costs Economics (TCE) has appeared to be a predominant theoretical explanation on external employment arrangements. The decision to make use of internal employees or to externalize employment in this theory is broken down into ‘make-or-buy’ decisions (Miles & Snow, 1984). Using this theory, the employment relationship is seen as more transactional, task oriented, opportunistic and relying on market governance because the work relationship between
an agency worker and the user organization can be terminated at any time with no costs (Koene, 2004).
TCE (Williamson, 1975) has provided a theoretical foundation for addressing external employment arrangements from the cost perspective and is developed to match specific transactions with specific government structures. It provides for theoretical relevance concerning employment practices related to internalization and externalization. It explains which governance structure fits best: market contracts or the internal market based on three characteristics of a given transaction (likelihood of repetition, the extent to which the position involved requires firm-specific skills and the extent to which managers can assess the performance) (Miles, 2002). TCE seems to suggest that managers may consider a shift from internal to external procurement if it does not require investments in specific assets, if the activity is not subject to high uncertainty and when it concerns activities on which the firm does not frequently rely on (Mahnke, 2001).
For example Master and Miles (2002) used TCE to explain what jobs firms would fill through external arrangements rather than through traditional employment relations. They found that firms protect their investment in training by externalizing positions that do not require firm specific skills and firms protect themselves from opportunism by externalizing those workers whose performance is the easiest to measure. The work of Koene, Pauwe and Groenewegen (2004) used both the TCE to explain the growth and development of temporary agency work as a variety of sociocultural dynamics. In this research, TCE helped to explain the growth of temporary agency workers and found that agency labor is appropriate for jobs that cannot be guaranteed for long periods and agency workers will primarily be employed in jobs with low levels of job-idiosyncrasy.
Using the TCE to explain the factors behind externalization also has been criticized throughout the years because it only focuses on the costs associated with externalization in general. The TCE would imply that companies externalize commodity services that involve low degree of asset specificity. However, the TCE does not explain why companies often externalize activities that are frequently used, exhibit substantial uncertainty and involve asset specific investments (for example HR functions or professional services). Neither does it explain why activities that have low asset specificity often are kept in-house.
2.3.3 Resource Based Theory
In order to cope with the shortcomings of the TCE, the academic literature of the last 10 years started to analyze the externalization of labor from other perspectives as well, using extensions of the resource-based theory of the firm (Barney, 1996). The resource-based approach examines the
relationship between the internal characteristics of the firm and its positioning. The competitiveness of the firm is determined by an internal analysis of the firm’s idiosyncratic characteristics, approaching the firm as a set of resources.
The RBV considers a firm as a collection of productive resources and firms compete based on having or controlling resources that are unique, valuable and inimitable (Barney, 1991). Resource immobility, that is, the difficulty for other firms to copy, acquire, or develop those resources, determines if the competitive advantage is going to be sustainable (Rumelt, 1984). Addressing the decision to
Relevant empirical evidence related to research on externalization of labor explained by the RBV is for example the research of Leiblein and Miller (2003). They conclude that externalization activities are less probable in situations wherein specific assets are involved and when there is uncertain demand. The research of Murray (1995) found a negative relationship between outsourcing and organizational performance as the asset specificity and innovations in products and processes increase. The work of Gilley and Rasheed (2000) also focuses on analyzing the impact of outsourcing on organizational performance and conclude that the impact is positive when the firm is following a cost leadership strategy and negative when the firm is following a differentiation strategy.
Although the RBV considers knowledge of employees as an asset important to the production capacity of the company, it places particular emphasis on the aspect of competitive advantage: to what extent can the specific combination of input of a company be distinctive, relative to other companies. The fact that knowledge can be an integral part of labor is not taken into account in the considerations of the RBV, which undermines the increasingly importance of knowledge as a source of labor in today’s knowledge economy.
2.4 Increasing importance of knowledge
In today’s economy, knowledge is an increasingly important source of labor as opposed to what it was the 19th and the first half of the 20th century when labor was to a lesser extent based on personal knowledge and was generally related to physical exertion. Because of the increasing autonomy of workers, non-codified, person-related specialized knowledge is becoming increasingly important for organizations as a way to sustain competitive advantage.
Knowledge has been defined in literature many times, however for the purpose of this study the the definition of Wand & Noe (2010) will be used. Wang & Noe have defined knowledge as ‘information processed by individuals including ideas, facts, expertise, and judgments relevant for individual, team, and organizational performance.’
The growing importance of knowledge reflects a broader trend of specialization, individualization and rationalization that is moving beyond the old bureaucratic mode of how organizations should
strategically organize different employment forms in the twentieth century (Anand and Daft 2007). Specialization has led organizations to actively manage their use of specialized labor, where organizations do not necessarily control technical knowledge and its sources in the organization (Koene, 2014).
This development coincides with a growing individualization in Western labor markets, in which there is a growing independent labor force of self-employed contractors. In the Netherlands, the number of self-employed contractors has grown by 38 per cent over the past decade and so new classes of professionals possessing person-related specialized knowledge have emerged (Koene, 2014). Besides specialization and individualization, one other important development is affecting the way organizations make decisions about externalizing their employment arrangements. The ongoing rationalization of businesses has touched human resources management (HRM) processes in organizations and the decision to hire externals in the firm. Organizations are more carefully considering their labor-sourcing strategies, creating a “breathing workforce,” which helps
organizations more easily adapt to changing market demands. For instance, organizations increasingly outsource operational management of related HR practices to other organizations that are more
specialized in finding the right knowledge workers and matching and managing labor capacity (Koene, 2014).
The importance of specialized knowledge and expertise used within organizations has repositioned temporary labor as being regular and has blurred the lines between the described core and periphery in the conventional theories about external employment arrangements (Nesheim, 2014). Recent studies therefore challenge the view that firms should insulate core areas and outsource in noncore functions and increasingly look into the role of externals in knowledge-creating processes (Nesheim, 2003). 2.4.1 Knowledge Based View of the Firm
While the TCE and RBV helped us to explain what resources should be judged as strategically critical for organizations, it underplays the role played by knowledge, new ideas and innovation. In recent years, scholars have focused on developing a theory of the firm in which knowledge is the most strategically important resource of the firm. This represents a significant addition to the external employment arrangement perspective from the one based on TCE or RBV. The knowledge based view of the firm (KBV) tries to look beyond the strategic value of a particular activity but looks into the strategic value of knowledge and learning in developing a competitive advantage.
According to the KBV, firms exist because they are superior to markets for creating, transferring and integrating knowledge (Conner and Prahalad, 1996). On the other hand, markets exist because economies use a diversity of knowledge but firms are not able to gain all knowledge, especially because knowledge increasingly is non-codified, person-related and specialized. According to the KBV, firm’s insource activities or labor associated with the most strategic knowledge and continue to insource until learning, transfer and protection costs are too high and outweigh the strategic value of internalizing it.
Matusik and Hill (1998) emphasized the possible role of temporary technical specialists in high technology firms to strengthen core processes. According to Matusik and Hill, this development contributes to, besides lowering the cost structure and increase flexibility within firms, the firms stock of knowledge. Externalizing labor gives the possibility to bring public knowledge into the firm, such as industry best practices. Moreover, it can have a positive effect on the knowledge-creation process, helping to create new private knowledge in the firm.
Based on the study of Matusik and Hill (1998), in a study of Norwegian organizations, Nesheim (2003) reported that firms in dynamic environments often use external work arrangements deliberately in core value-creation areas with the goal to access knowledge, bring in new ideas and stimulate innovation by having the right competence mix within the firm. External workers are a source of public, non-codified, person-related specialized knowledge which the organization should integrate in order to stimulate the creation of new firm specific knowledge.
2.5. Concept of knowledge integration within the firm
The integration of the externals is vital for the exchange of information and knowledge and the cooperation with the permanent employees in the organization (Nesheim, 2003). The integration of externals depends upon if externals are used in value creating areas of the hiring firm. Whether organizations use externals in value creating areas depends on whether the externals work together with the permanent staff on assignments that are vital for our organization, the externals contribute with their specific knowledge and expertise to core areas of the firm and if the externals receive (just
2.6 Factors that influence the integration of externals within the firm
In seeking to determine what enhances the integration of the external in the organization the following section explains different factors that can be expected to influence this integration. First, the
independent variable ‘knowledge and expertise is the most important motive for hiring temporary agency workers’ is explained and the main hypothesis of this study introduced.
2.6.1 Knowledge and expertise most important reason for hiring from TAW
Although costs and flexibility were traditionally the most important reasons for hiring externals, due to the in the above described developments the external workers are a source of public knowledge and non-codified, person-related specialized knowledge which the organization should be integrated in order to stimulate the creation of new firm specific knowledge.
As a consequence of these developments, a greater diversity of services is occurring in the offerings of temporary employment agencies to companies that not only want quickly deployable and qualitatively flexible personnel anymore, but also attach value to a temporary work agency that provides for specialized knowledge and expertise.
Thus, the main hypothesis of this study:
H1: Organizations that consider knowledge and expertise as the most important driver for the hiring of temporary agency workers (TAW) from a temporary work agency (TWA), are more likely to integrate the externals in the firm
2.6.2 Size of the firm
Besides external staff is fulfilling a more significant role within the organization, a control variable is being used in the research model. It could be plausible that the size of the firm of externals implies that there is a higher level of the integration of externals within the organization, for instance because bigger firms are more confrontated with managing a blended workforce.
Thus, the following hypothesis will be investigated in this study:
2.7 Research Model
Knowledge and expertise most important factor hiring
TAW
Size of the firm
Integration of externals within the firm
2.8 Summary of the Hypotheses
To investigate whether there is a ‘transactional role of the external’ to a ‘transformational role of the external’ noticeable this study investigates if:
- Externals are used in value creating areas of the firm
- What the most important motives for hiring temporary agencies workers are and whether temporary work agencies play a key role in providing for externals with the right expertise and knowledge
The hypotheses that have been introduced in this chapter are summarized in the below.
H1: Organizations that consider knowledge and expertise as the most important driver for the hiring of temporary agency workers (TAW) from a temporary work agency (TWA), are more likely to integrate the externals in the firm
3. Methodology
This chapter provides an overview of the underlying reasons for the chosen research model and structure. It describes how the study was conducted and how the research hypotheses were developed and tested. It also includes a description of the methods employed to analyze the data obtained from the study.
3.1 Research Design
The main purpose of this study is to conduct an explanatory study and show whether there is a
relationship between organizations that consider knowledge and expertise as the most important driver for the hiring of temporary agency workers and the integration of externals within the organization. Therefore, a deductive approach was taken where hypothesis were developed based on existing literature.
Based on existing literature a research model was designed. In this model the dependent variable intends to measure whether the externals are integrated within the organization. The independent variables measure the extent to which organizations consider knowledge and expertise as the most important driver for the hiring of externals and whether the size of the firm has an effect on the integration of externals within the firm.
3.2 Data Collection
The data was collected with a single technique using the web-based questionnaire Survey Monkey. This method was chosen because in this way a large group or organizations could easily be reached. Further, previous research on external employments relations already made use of in-depth interviews. 3.2.1 Population and Sample Selection
The sample selection in this study was based on the problem statement and purpose of this study. The population consisted of client organizations of a Dutch temporary work agency mainly operating in the ICT sector.
The organizations were emailed with a web based link of Survey Monkey and asked if someone from the organization that is responsible for the hiring of externals (mostly the hiring of temporary agency workers from this specific employment agency) could fill in the questionnaire. It was important that the respondents were organizations that hire externals and in specific hire temporary agency workers from a temporary work agency. All kinds of organizations were contacted, differing in size, sector (mostly ICT) and amount of externals within the organization
The survey was conducted in September and October 2015. The sample frame was provided by the employment agency and consisted of approximately 140 firms. A total of 100 organizations were contacted by email requesting them to participate in the survey. Most of the organizations have chosen to stay anonymous. All participants were sent an email concerning the anonymity and confidentiality of the data and they could also find this information in the short introduction of the survey.
The survey was designed in Dutch, this made it easier for the respondents to fill in the survey. The complete survey can be found in the appendix of this thesis.
Temporary work agency
The survey was sent out to a 100 clients of a Dutch temporary work agency that has a total of approximately 140 clients differing in size, sector and amount of externals they hire. The temporary work agency employs personnel with mostly a mid-level applied ICT education and to a lesser extent personnel with higher-level education. Most of the external consultants are deployed within the organization at support functions (service desk specialists) but regularly the temporary work agency also employs other functions such as for instance system engineers, network administrators, project leaders and testers.
The temporary work agency employs workers and send them out to clients to work on a project basis at the client’s premises and direction. The temporary work agency recruits and screens the employees, provides for needed training, is responsible for hiring and firing, issuing paychecks, withholding payroll taxes and making required employer contributions to unemployment insurance and Social Security.
Most of the organizations that were approached have all kinds of external employment arrangements such as temporary agency workers, contract company employment, contingent work and independent contracting. This study surveys what kind of external employment arrangements these organizations have and what the amount of externals is within the firm. The motives for hiring externals in the firm eliminates other types of work arrangements but focusses specifically on the hiring of temporary agency workers, in order to simplify the model for the purposes of this study.
3.2.2 Survey Design
The survey was designed using Survey Monkey. The survey consisted of a total of 21 questions, of which 5 were designed as matrix questions. Two of these questions represents the dependent variable ‘the integration of externals in the firm’ and the independent variable ‘organizations that consider knowledge and expertise as the most important driver for the hiring of temporary agency workers’ consisting of different statements that rated the interval scale. The independent variable and dependent variable in the research model are measured using a 5-point scale. The questions use the Likert-style rating scale in order to indicate the level of applicability of the statements and the level of importance of the statements. The other independent variable ‘the size of the firm’ consisted of a nominal variable that determined the size of the firm.
Different response types were used depending on the type of question: Level of Applicability (Dependent variable: Integration of externals) Applicable = 1
Somewhat applicable = 2 Neutral = 3
Hardly applicable = 4 Not applicable = 5
Level of importance (Independent variable: knowledge and expertise reasons for hiring externals)
Very important = 1 Important = 2
Not important / not unimportant = 3 Unimportant = 4
Very unimportant = 5
Size of the firm (Independent variable: size of the firm) 0-100 = 1
100-200 = 2 200-500 = 3 > 500 = 4
The constructs in these questions are more thoroughly explained in the section 3.4. ‘Data Analysis’. 3.3 Reliability and Validity
The construct measuring the dependent variable ‘integration of external within the firm’ was created based on theory and literature review of previous research in this area (Nesheim, 2003). The construct measuring the independent variable knowledge and expertise reasons for hiring externals had to be developed. Both constructs were not validiated in previous research. Prior to sending out the survey a pilot test was taken with the aim of refining the questions and correcting any mistakes or ambiguities in the questions. The feedback that came from the pilot testing was valuable for ensuring the survey’s validity.
Besides validity, reliability is also essential for a survey. In order to assess the reliability of the survey, the internal consistency of the questions were measured using Cronbach’s alpha. Cronbach’s alpha measures how well the items in a group can predict the underlying concept. A reliability coefficient of above 0.7 is considered as an acceptable value.
3.3.1 Response Rate
The empirical study was conducted among Dutch firms, mainly operating in the ICT industry, in September and October 2015. Most of the organizations have chosen to stay anonymous 83
respondents were registered of the 100 respondents that were contacted to fill in the survey. This is a response rate of 83% of the selected population.
3.4 Data Analysis
A quantitative data analysis was conducted using the software program STATA version 13 (Stata-Corp., College Station, Texas, USA).
The concepts that were used in this study are self-developed constructs. Dependent variable
The dependent variable in this research model is the level of integration of externals within the firm. The integration construct had to be developed, based on literature review done in earlier research (Nesheim, 2003). The dependent variable was measured by the following question:
What level of applicability would you give to the following statements? (Applicable = 1 , Not applicable = 5):
- The externals are primarily occupied with tasks outside the main activities of the firm - The externals work together with the permanent staff on assignments that are vital for our
organization
- The externals contribute with their specific knowledge and expertise to core areas of the firm - The externals receive (just like the permanent employees) training and education to develop
their specific knowledge Independent Variables
The independent variables in this research model are:
1. The most important motive for hiring temporary agency workers is that the temporary work agency supplies for externals with the right expertise and knowledge. This variable was tested in a matrix question asking the respondents what are the most important motives for hiring temporary agency workers via a temporary work agency (1 = most important to 5 = not important)
What level of importance would you give to the following statements?
- The temporary employment agency delivers personnel with expertise and knowledge that we don’t have ourselves
- The future is too insecure to hire permanent staff
- Externals function as a way to deal with ad hoc labor shortages - Hiring externals is cheaper than hiring permanent staff
- The temporary employment agency relieves us from the complexity of labor law - Externals absorb risk depopulation personnel
- The temporary employment agency helps us to reach optimal staffing levels and therefore continuance
- The temporary employment agency helps us to match and manage the labor capacity - The permanent staff cannot cope with shortfalls as the result of peak load/sickness
leave/holidays
- The temporary employment agency is better in the recruitment and education of personnel - Externals are only temporary until the right permanent staff is found
2. The size of the firm. Respondents were asked to indicate the size of the organization they for. They could choose from the following categories:
0-100 = 1 100-200 = 2 200-500 = 3 > 500 = 4
3.4.1 Statistical Techniques
The following statistical techniques were used in order to answer the research question and test the hypothesis:
Step one: The descriptive statistics provides an overview of the respondent’s answers regarding the motives behind the hiring of externals and frequencies of answers. On the basis of the answers of the respondents, general comparisons are made and general results were detected.
Step two: The Kaiser–Meyer–Olkin (KMO) test and Bartlett’s test of sphericity were conducted with the purpose of confirming the adequacy of the sample for this analysis. Items with a factor loading ≥0.4 were included in scales. Reliability of the scales was assessed using Crohnbach’s alpha. Missing values, which were mostly related to respondents who did not completed the questionnaire, were left out. After the factor analysis, scales are created as measurements of the defined constructs. This is part of the data preparation, in order to perform the statistical tests.
Step three: since the factor analysis indicated that one item stood as an independent item, and seems like a relatively important item for answering the research question, a correlation analysis was conducted. Also, because of the small sample size, a Fisher’s exact test was conducted to test
whether significant relationships exist between this item and the different items of the question related to the integration of the externals.
Step four: Linear regression analysis was used to test the hypotheses of the study. The regression analysis was conducted between the dependent variable and the independent variables.
4. Results
This chapter provides an overview of the results from the statistical analyses using Stata.
Characteristics of the dataset are first described using descriptive statistics. Next, the results of the factor analysis are presented. After the factor analysis scales were created to measures the variables in the research model and then correlation, the Fisher’s exact and linear regression tests were performed. Lastly, a summary of the main findings from these tests are outlined at the end of this chapter.
4.1 Descriptive Statistics
Descriptive statistics are used to describe the characteristics of the sample. Frequencies provide an overview of how many respondents gave a particular answer.
Table 1 shows the proportions of the different sectors the respondents operate in. The majority of the respondents are working in the ICT sector as was expected because the majority of the clients of the temporary work agency operate in the ICT sector and the temporary work agency mainly has ICT educated personnel under contract.
Table 1: Sector organizations
In what sector does your organization operate in? (More than one answer possible)
Answer Options Response
Percent
Response Count
Government & Education 20,0% 15
Health & Care 4,0% 3
Energy 5,3% 4 Telecom 5,3% 4 Transport 5,3% 4 Industry 9,3% 7 Retail 5,3% 4 Financial Services 9,3% 7 ICT 66,7% 50 Other 16,0% 12 answered question 75 skipped question 8
Table 2 shows the size of the organizations the respondents work for. The majority (48,2%) of the respondents work in an organization that is bigger than 500 persons.
Table 2: Size organizations
What is the size of your organization? (amount of permanent staff)
Answer Options Response
Percent
Response Count
0-100 30,1% 25
Table 3 shows that there is an even distribution between national and international organizations in the sample. A slightly bigger percentage of the organizations operates on a national level.
Table 3: Operational area Our organization works:
Answer Options Response
Percent Response Count National 51,9% 42 International 48,1% 39 answered question 81 skipped question 2
Table 4 shows that 27,7% of the respondents indicated the responsibility for the hiring of externals within the organization is carried by the HR department. 27,7% of the respondents indicated that the hiring of externals is the responsibility of the primary management process. 33,7% of the respondents indicated that the responsibility for hiring externals lays in a different department than they could choose from (33,3%). Most of the respondents registered this to lay in the management support department of which is the respondents indicated it to be partly outsourced.
Table 4: The responsibility for hiring
The responsibility for the hiring of externals is assigned to:
Answer Options Response
Percent Response Count HR 27,7% 23 Procurement 10,8% 9 Primary process 27,7% 23 Different 33,7% 28 answered question 83 skipped question 0
Table 5 shows that most of the respondents indicated that the function Service desk specialists were the functions that are most filled in through an external employment arrangement. Also ICT engineers, IT project leaders, network specialists and testers are common functions that are filled in with
externals.
Table 5: Top 5 functions
1 Service desk specialists 2 ICT Engineers 3 Project leaders IT projects 4 Network specialists 5 Testers
Figure 1 shows that of the 74 respondents the organizations have different ways for hiring external personnel in the firm. They could choose from more than one answer. Most of the organizations (68,92%) hire their externals via a temporary employment agency. 63,51% of the respondents hires self-employed personnel, 52,70% hire externals using their own recruitment instrument and 24,32% of the respondents use externals with the help of a pay-roll organization.
Figure 2 shows that of the 28,77% of the respondents indicated that they hire an amount of less than 10% externals as a percentage of the total amount of permanent employees. 20,55% of the respondents indicated to be more than 30%, 21,92% indicated it to be between 20-30%, 19,18% indicated it to be between 10-20%. 9,59% indicated it to be some other amount, of which the respondents mainly indicated it to be more than 30%.
Figure 2: Amount of externals
Figure 3 shows that 25,35% of the respondents expect the amount of externals to stay <10% of the total amount within two years. 23,94% expect it to grow to 10-20% of the total amount within two years and 23,94% expect it to grow to >30% of the total amount within two years. 7,04% of the respondents indicated to be some other amount, of which the respondents mainly indicated it to be more than 30%.
Table 6 confirms this question by showing that 43,8% of the respondents of the organizations expect the amount of externals within the firm to stay the same in the following years to come. 26% of the respondents expects the amount to increase slightly, 13,7% of the respondents expects it to decrease slightly and 8,2% of the respondents expect the amount to decrease strongly or increase strongly. Table 6: Expected amount of externals
The hiring of externals in the following years to come will
Answer Options Response
Percent
Response Count
Will decrease strongly (more than 25%) 8,2% 6
Decrease slightly 13,7% 10
Stay the same 43,8% 32
Will increase slightly 26,0% 19
Will increase strongly (more than 25%) 8,2% 6
answered question 73
skipped question 10
Table 7 is related to the dependent variable in the research model: the level of integration of the externals within the firm. The table shows that to the statement if externals are primarily occupied with tasks outside the main activities of the firm, 41,67% of the respondents indicated it to be not applicable and 23,61% indicated it to be hardly applicable. To the statement if the externals work together with the permanent staff on assignments that are vital for the organization 58,90% indicated it to be applicable and 27,40% indicated it to be somewhat applicable. To the statement if the externals contribute to the core areas of the firm 45,21% of the respondents indicated it to be applicable and 35,62% of the respondents indicated it to be somewhat applicable. To the statement of the externals do receive the same training and education as the permanent employees from the organization 28,77% of the respondents indicated this to be not applicable and 23,29% hardly applicable.
Looking at the rating averages the statement ‘the externals work together with the permanent staff on assignments that are vital for our organization’ was considered most applicable by the respondents, followed by the statement regarding ‘the externals contribute with their specific knowledge and expertise to core areas of the firm’. Reasons regarding ‘the externals are primarily occupied with tasks outside the main activities of the firm’ were considered to be the least applicable.
Table 7: Integration of externals
What level of applicability would you give to the following statements? Answer Options Applicable Somewhat applicable Neutral Hardly applicable Not applica ble Rating Average Response Count S.d. The externals are primarily occupied with tasks outside the main activities of the firm 11,11% 18,06% 5,56% 23,61% 41,67% 3,67 72 1.44 The externals work together with the permanent staff on assignments that are vital for our organization 58,90% 27,40% 6,85% 6,85% 0% 1,62 73 0.89 The externals contribute with their specific knowledge and expertise to core areas of the firm 45,21% 35,62% 6,85% 6,85% 5,48% 1,92 73 1.13 The externals receive (just like the permanent employees) training and education from us to develop their specific knowledge 17,81% 20,55% 9,59% 23,29% 28,77% 3,25 73 1.50 answered question 73 73 skipped question 10 10
Figure 4 is related to the independent variable in the research model: the most important motive for hiring temporary agency workers from a temporary work agency is supplying externals with the right knowledge and expertise. Figure 4 shows that there are a variety of factors that motivates
organizations to hire temporary agency workers. It appears that a major drive is the offering of the right expertise and knowledge by the temporary work agency: 50,70% of the respondents indicated that this is an important motive for the hiring of temporary agency workers.
Further, it appears that drivers related to finding the right staffing level also are important factors. 35,71% of the respondents indicated dealing with ad hoc labor shortages to be important, 40,85% of the respondents indicated the depopulation of personnel to be important, 49,30% indicated that reaching optimal staffing levels is an important reason, 43,66% indicated that the matching and managing labor supply is important, 33,80% of the respondents indicated the temporary work agency absorbs fluctuations to be important and 32,86% indicated temporary placement to be important. Factors related to transferring the risk for hiring personnel to the temporary work agency are of less importance. 41,43% of the respondents said that an insecure future is an important motive for the hiring of externals via a temporary work agency. However, the factor lowering costs because temporary agency workers are cheaper, seems not an important motive for the hiring of temporary agency workers, 38,57% of the respondents indicated that they do not find this important. To the factor the absorption of the complexity of labor law by the temporary work agency the respondents indicated to be neutral (37,68%). Lastly, to the factor that the temporary work agency is better in the recruitment and education of externals respondents 26,76% and 25,35% indicated it to be not important or unimportant.
Figure 4: Motives for hiring TAW from a TWA
Figure 5 is related to the question whether the organizations have some kind of labor sourcing strategy within the firm. The respondents were asked what statements are applicable to their organization (they could choose more than one answer):
1. The hiring of externals takes place on a decentral level, there is no central sourcing policy 2. There is coordination between different departments regarding the hiring of externals 3. There is a central policy within the organization
4. There is a strategic sourcing strategy within the firm
Figure 5 shows that most organizations have some form of a labor sourcing policy. 55,71% of the respondents indicated that they have a central labor sourcing policy within their organization. 20% indicated that they have a strategic sourcing strategy within the firm and 31,43% of the respondents indicated that there labor sourcing strategy is part of a broader HR policy in the organization. Figure 5: Labor sourcing policy
The respondents were also asked whether the sourcing strategy is going to change within the next two years. Most of the respondents indicated that that the central policy is still remaining the most
applicable (52,86%). Also, more respondents indicated that they expect the labor sourcing strategy to become part of a strategy sourcing strategy or even of a broader HR policy in the organization. Figure 6: Expected labor sourcing policy
Table 8 shows what the respondents indicated to be the most important priority in the organization related to the hiring of externals. 75% of the respondents indicated that the maintaining of knowledge and expertise in the organization is either an essential or a high priority.
Table 8: Priority
What subjects have the highest priority within your organization?
Answer Options Essential High
priority Medium priority Low priority No priority Control of costs 13,24% 38,24% 30,88% 11,76% 5,88%
Maintain knowledge within
organization 20,59% 54,41% 16,18% 5,88% 2,94%
Predictability staffing levels
(planning and control) 27,94% 36,76% 26,47% 7,35% 1,47%
Control risks compliance labor law 17,65% 19,12% 38,24% 22,06% 2,94% Come to optimal ratio
internals/externals 17,65% 38,24% 17,65% 19,12% 7,35%
answered question 68
Lastly, the respondents were asked to indicate what their biggest concerns are related to the hiring of externals in the organization within the next two years. 57,58% of the respondents indicated that finding and maintaining the right knowledge and expertise within the organization is their biggest concern.
4.2 Factor Analysis
Factor analysis were conducted on the independent variable (Organizations that find knowledge the most important motive for hiring temporary agency workers from a temporary work agency) and on the dependent variable (the integration of externals in the firm). The KMO test of sampling adequacy and Bartlett’s test of sphericity were used for confirming the adequacy of the sample for the analysis. The obtained values for the independent variable were 0.767 and 0.000, respectively. The obtained values for the dependent variable were 0.437 and 0.00 which unfortunately is not an acceptable rate for factor analysis. However, using the main findings from the descriptive analysis as a starting point, it seems to be clear that the organizations integrate the externals in the firm (table 6).
Table 8 shows that the factor analysis related to the independent variable produced three meaningful scales, clearly distinguishing between reasons for hiring temporary agency workers:
1. The first scale relates to 6 items in the question (externals are used as an instrument to deal with ad hoc labor shortages, externals absorbs the risk of depopulation personnel, temporary agency workers contributes to reaching optimal staffing levels, temporary work agency helps us to match and manage labor capacity, the permanent staff cannot cope with shortfalls as the result of peak load/sickness leave/holidays and externals are only temporary until the right permanent staff is found). These items all relate to the objective of finding the right staffing level within the hiring organizations (6 items, a = 0.8097, explained variance 81%).
2. The second scale is related to the 4 items in the question (the future is too insecure to hire permanent staff, hiring externals is cheaper than hiring permanent staff, the temporary
employment agency relieves us from complexity labor law, the temporary employment agency is better in the recruitment and education of personnel). These items all relate to the objective of transferring risks for the hiring organization to the temporary work agency (4 items, a = 0.7437, explained variance 12%).
3. The third scale is related to only one item in the question and refers to the temporary work agency supplying for externals with the right expertise and knowledge. Since this scale consists of only 1 factor, no explained variance or Cronbach’s alpha could be calculated.
Table 9 also shows average scores of importance according the answers of the respondents and the three scales developed.
Table 9: Factor analysis Mean
(N = 69-71)
SD What level of
importance would you give to the following statements:
Factor 1 Factor 2 Factor 3
2.828 1.18 Externals function as a way to deal with ad hoc labor shortages
0.6248 0.1544 0.0290
2.986 1.10 Externals absorb risk depopulation personnel
0.4832 0.1693 0.3967
2.591 1.08 The temporary
employment agency helps us to reach optimal staffing and thereby continuance
0.6697 0.3214 0.1901
2.662 1.17 The temporary
employment agency helps us to match and manage the labor capacity
0.6631 0.1749 0.2364
2.873 1.21 The permanent staff cannot cope with shortfalls as the result of peak load/sickness leave/holidays
0.5468 0.4057 0.1383
3.2 1.16 Externals are only temporary until the right permanent staff is found
0.4362 0.2131 0.3134
2.857 1.23 The future is too insecure to hire permanent staff
0.1707 0.5094 0.2593
3.471 1.02 Hiring externals is cheaper than hiring permanent staff
0.1421 0.6718 0.1521
3.26 1.12 The temporary
employment agency relieves us from complexity labor law
0.4257 0.5169 0.1766
3.451 1.28 The temporary
employment agency is
2.381 1.02 The temporary employment agency delivers personnel with expertise and
knowledge that we don’t have ourselves
0.1865 0.1190 0.6616
Cronbach's alpha 0.8097 0.7437 -
* Bold values represent the factor loadings of the items belonging to the specific scales
** The factor analysis is conducted related to the variables measuring the most important reasons to hire TAW and average scores of importance for the scales that were developed (1 = not important to 5 = most
important)
Reasons regarding the dimension ‘the temporary employment agency delivers personnel with expertise and knowledge that we don’t have ourselves’ were considered most important by respondents, followed by reasons regarding ‘the temporary employment agency helps us to reach optimal staffing and thereby continuance’. Reasons regarding ‘hiring externals is cheaper than hiring permanent staff’ were considered to be least important.
4.3 Correlation analysis
The factor analysis indicated that the item ‘the temporary work agency delivers personell with expertise and knowledge that we don’t have ourselves’ is an independent item (factor 3) that counts for 9% of the explained variance and was considered the most important by the respondents.
Therefore, a correlation analysis was conducted to see whether there are any significant relationships between this factor 3 and the other variables (independent variable: size and dependent variable: integration of the externals in the firm).
The correlation analysis shows that there is no statistical significant relationship between the variables. There is only a correlation between two items in question 11 about the integration of externals: it shows a statistically significant positive relationship between ‘The externals contribute to core areas of the firm’ and ‘the externals work together with the permanent staff on vital assignments’ (0.46, p < 0.05).
Table 10: Descriptive statistics and Correlation Variables N Mean S.d. External
s being occupie d with tasks outside the main activitie s of the firm The externals work together with the permanent staff on vital assignments The externals contribute to core areas of the firm Externals receive (just like the permanent employees) training and education Factor 3 Size Externals are being occupied with tasks outside the main activities of the firm 71 3.690141 1.45004 1.0000 The externals work together with the permanent staff on vital assignments 73 1.616438 0.8917856 -0.1134 1.0000 The externals contribute to core areas of the firm 73 1.917808 1.139608 -0.3176 0.4605* 1.0000 Externals receive (just like the permanent employees) training and education 73 3.246576 1.507212 0.0583 -0.0217 0.2545 1.0000 Factor 3 71 2.380282 1.01933 0.0321 -0.1110 0.2707 -0.2149 1.000 Size 81 2.777778 1.322876 -0.0615 -0.0340 -0.0417 -0.2531 0.1845 1.0000 *Significant level at 0.05 level (2-tailed)
4.4 Fisher’s exact test
The derivation of the null-hypothesis distribution of the chi-squared test relies on the counts being fairly large and more detailed work suggest all counts should be at least 5. Since this is not the case in this sample and the overall sample is relatively small, a Fisher’s exact test was conducted to test whether significant relationships exist between factor 3 ‘the temporary work agency supplying for externals with the right expertise and knowledge’ and the four different items of the question related to ‘the integration of the externals’.
Table 11: Fisher's exact test
P-Value
Externals being occupied with tasks outside the
main activities of the firm 0.828
The externals work together with the permanent
staff on vital assignments 0.775
The externals contribute to core areas of the
firm 0.038
Externals receive (just like the permanent
employees) training and education 0.040 * tested with Fisher’s exact test, significance level P<0.05
Table 12: Fisher’s exact test with factor 3 and item 3 of question 11
Item 3 of question 11
Factor 3 Applicable Somewhat
applicable Neutral Hardly applicable Not applicable Total Very important 7 63.64 3 27.27 0 0.00 1 9.09 0 0.00 11 100.00 Important 15 41.67 17 47.22 1 2.78 1 2.78 2 5.56 36 100.00 Not important/not unimportant 7 53.85 4 30.77 2 15.38 0 0.00 0 0.00 13 100.00 Unimportant 2 25.00 1 12.50 2 25.00 3 37.50 0 0.00 8 100.00 Very unimportant 1 33.33 1 33.33 0 0.00 0 0.00 1 33.33 3 100.00 Total 32 45.07 26 36.62 5 7.04 5 7.04 3 4.23 71 100.00 Pearson chi2(16) = 31.7740 Pr = 0.011 Fisher’s exact = 0.038
The Fisher’s exact test shows a p-value of 0.038 between factor 3 ‘the temporary work agency
supplies for externals with the right expertise and knowledge’ and item 3 of question 11 ‘the externals contribute with their specific knowledge and expertise to core areas of the firm’. Table 12 shows that of the respondents that indicated that they find the temporary work agency supplying for externals with the right knowledge and expertise to be important, also indicated that the externals contribute with their specific knowledge and expertise to core areas of the firm to be applicable.
Table 13: Fisher’s exact test with factor 3 and item 4 of question 11
Item 4 of question 11
Factor 3 Applicable Somewhat
applicable Neutral Hardly applicable Not applicable Total Very important 2 18.18 0 0.00 2 18.18 2 18.18 5 45.45 11 100.00 Important 2 5.56 10 27.78 3 8.33 12 33.33 9 25.00 36 100.00 Not important/not unimportant 4 30.77 3 23.08 2 15.38 3 23.08 1 7.69 13 100.00 Unimportant 2 25.00 2 25.00 0 0.00 0 0.00 4 50.00 8 100.00 Very unimportant 2 66.67 0 0.00 0 0.00 0 0.00 1 33.33 3 100.00 Total 12 16.90 15 21.13 7 9.86 17 23.94 20 28.17 71 100.00 Pearson chi2(16) = 23.8029 Pr = 0.094 Fisher’s exact = 0.040
The Fisher’s exact test also showed a p-value of 0.040 between factor 3 ‘the temporary work agency supplies for externals with the right expertise and knowledge’ and item 4 of question 11 ‘the externals receive (just like the permanent employees) training and education to develop specific knowledge.’ Table 13 shows that most of the respondents that indicated that they find the temporary work agency supplying for externals with the right knowledge and expertise not to be important, indicated the externals receive (just like the permanent employees) training and education to develop their specific knowledge to be applicable for their firm. Further it seems as if the opposite is also noticeable: the respondents that indicated that they find the temporary work agency supplying for externals with the right knowledge and expertise to be very important indicated that the externals receive (just like the permanent employees) training and education to develop their specific knowledge not to be applicable in their firm.
4.5 Regression analysis
A linear regression analysis was carried out to determine if the independent variables have any effect on the different items of the dependent variable ‘the integration of externals within the firm’. To test this hypothesis the four different items that test ‘the integration of externals’ were regressed on factor 3 ‘the temporary work agency is supplying for externals with the right expertise and knowledge’ and the variable related to the size of the firm.
The main hypothesis of this study was:
H1: Organizations that consider knowledge and expertise as the most important driver for the hiring of temporary agency workers (TAW) from a temporary work agency (TWA), integrate the externals in the firm
The regression analysis showed that factor 3 ‘the temporary work agency is supplying for externals with the right expertise and knowledge’ is a significant predictor on the item ‘the externals contribute with their specific knowledge and expertise to core areas of the firm’ (P=0.012, Coef.=0.3230507). The more the respondents indicated factor 3 to be important, the more respondents indicated that the statement ‘the externals contribute with their specific knowledge and expertise to core areas of the firm’ to be applicable. The hypothesis is therefore be supported. Organizations that consider
knowledge as the most important reason for hiring temporary agency workers from a temporary work agency are more likely to integrate externals in the firm by having the externals contributing to core areas of the firm.
Table 14: Regression analysis: independent variables and item 3
Source SS Df MS Model 8.43770116 2 4.21885058 Residual 74.6608904 68 1.09795427 Total 83.0985915 70 1.18712274 Question 11 item 3 Coef. Std. Err. T P>│t │ [95% Conf. Interval] Factor 3 0.3230507 0.1250108 2.58 0.012 0.0735956 0.5725058 Size -0.1416534 0.0968254 -1.46 0.148 -0.3348655 0.0515587 _cons 1.515401 0.3845261 3.94 0.000 0.7480909 2.282711 Numer of obs = 71 F (2,68) = 3.84 Prob > F = 0.0262 R-squared = 0.1015 Adj R-squared = 0.0751 Root MSE = 1.0478 Significance level P<0.05
H2: The size of the organization affects the integration of externals within the firm
The regression analysis also showed that the size of the firm is a significant predictor on the item ‘the externals receive (just like the permanent employees) training and education to develop their specific knowledge’ (P=0.043, Coef.=-.2733195). The bigger the respondents indicated their organization to be, the more respondents indicated that the statement ‘the externals receive (just like the permanent employees) training and education to develop their specific knowledge’ to be applicable. The
hypothesis is therefore supported. Organizations that are bigger in size are more likely to integrate the externals in the firm by investing in the training and education of the externals in order to develop their specific knowledge.
Table 15: Regression analysis: independent variables and item 4
Source SS df MS Model 15.9243473 2 7.96217366 Residual 139.512272 68 2.05165106 Total 155.43662 70 2.22052314 Question 11 item 4 Coef. Std. Err. T P>│t │ [95% Conf. Interval] Factor 3 -0.2489963 0.1708862 -1.46 0.150 -0.5899945 0.0920018 Size -0.2733195 0.1323576 -2.07 0.043 -0.5374351 -0.009204 _cons 4.612267 0.5256364 8.77 0.000 3.563376 5.661158 Numer of obs = 71 F (2,68) = 3.88 Prob > F = 0.0254 R-squared = 0.1024 Adj R-squared = 0.0761 Root MSE = 1.4324 Significance level P<0.05
