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Just-in-Time Workforce: Principal-Agent Problems Experienced by Small Businesses

Chapter 5: Conclusion

5.1. Conclusion

Objective 1 was to compare the benefits of just-in-time freelance workforce and part-time working arrangements for SMEs. It was identified that the first approach provided for greater flexibility and cost advantages according to Lehdonvirta (2018). The employers could use the services of temporary employees only during the periods of increased demand. Since these ‘demand spikes’ could not be predicted, this approach provided for substantial cost benefits for SMEs in comparison with part-time working arrangements due to the lack of ‘standstill periods’ for additional labour resources. At the same time, the capability to realise these advantages depended on the availability of just-in-time offerings in the workforce market. In the worst-case scenario, companies faced the risks of non-fulfilment due to the absence of sufficient personnel for addressing these demand fluctuations (Keegan and Meijerink, 2019). These findings suggest that the use of just-in-time freelance workforce may be beneficial in the situations where the employer maintained a high degree of control over the labour supply availability and could predict future workforce needs to a certain degree.

 

Objective 2 was to examine how the multiple principal problem affects the implementation of the just-in-time concept. It was revealed that the competitive nature of the ‘gig economy’ intensified the severity of these issues since many contractors were more inclined to sell their labour to the highest bidder (Burke and Cowling, 2019). Hence, the employers had limited capabilities to reserve the availability of top performers or win their long-term loyalty. In the case of information technology projects, this could lead to delays in delivery or quality issues since agents sought more work than they could reasonably complete or demonstrated sub-par performance due to the lack of ongoing monitoring from project leaders (De Stefano, 2015). The respondents further noted that their capability to control the contractors was limited due to the remote nature of their work and the inability to reveal ‘order overload’ issues. Additionally, just-in-time recruitment lacked intangible motivators characteristic of traditional part-time or full-time employment options such as social benefits, premium health insurance options or career development opportunities. This further shifted the remuneration perspective towards purely monetary incentives and stimulated the competition between individual ‘bidders’.

 

Objective 3 was to analyse how principal-agent problems influence the performance of just-in-time workers in UK IT organisations. The interviewees noted that the key problems in this sphere were related to the inability to use the services of the same professionals every time due to their busy schedules. This resulted in the haphazard performance since some of the newly recruited freelancers had insufficient skills for the advanced-level objectives of the realised IT projects. The companies addressed this challenge by introducing various digital control measures such as in-depth screening of applicant accounts and testimonials as well as intermediary submissions allowing team leaders to identify potential inefficiencies. At the same time, most interviewees noted that it was not possible to fully exclude all possible risks in the case of just-in-time recruitment due to the lack of control over the remote workers and the inability to motivate them with non-monetary incentives.

 

Objective 4 was to develop recommendations to small business owners on how to optimise just-in-time workforce. This objective is addressed in the following section.

 

5.2. Recommendations

5.2.1. Recommendations for Practitioners

  • Introduce additional incentives for top performers to secure their availability during potentially busy periods;
  • Implement thorough pre-recruitment screening to verify contractor credentials and testimonials;
  • Perform intermediary skill checks and performance appraisals for all new contractors in order to prevent quality problems and delays;
  • Conduct regular self-appraisals to predict future demand patterns and recruit top-performing contractors in advance;
  • Consider the possibility of full-time or part-time employment for top performers in the case of strategic expansions;
  • Introduce other intangible motivators to achieve higher loyalty of temporary employees and greater intention to cooperate in the future;
  • Contract small businesses and freelancer teams rather than individual contractors in order to minimise the workflow disruptions caused by personal force majeure circumstances;
  • Use personal recommendations from top performers regarding future just-in-time recruitment candidates in order to reduce screening costs (Graham et al., 2017; Keegan and Meijerink, 2019).

 

5.2.2. Recommendations for Future Researchers

  • Future research projects in this sphere may be focused on other service industries such as consulting services or customer support services.
  • A larger study sample may contribute to higher generalisability of the findings.
  • Further parallels may be drawn with specific motivational patterns utilised in just-in-time recruitment contexts.
  • Comparisons between small, medium, and large organisations may reveal interesting differences in the utilisation of just-in-time workforce arrangements and performance and motivation patterns.
  • Future studies may consider the mechanisms of digital control utilised by popular freelance platforms and develop practical recommendations on improving their effectiveness.
  • New research projects may explore the role of language and cultural barriers in just-in-time recruitment relationships to identify whether this factor could moderate performance outcomes.
  • Future studies may consider the legislative barriers hindering the adoption of the just-in-time approach to recruitment in different global contexts besides the UK (Burke and Cowling, 2019; Lehdonvirta, 2018).

 

5.3. Limitations

All research projects including this dissertation have inherent limitations caused by methodological choices, available time or acceptable cost levels (Saunders et al., 2016). First, the qualitative study design could be seen as a compromise since the addition of quantitative data could increase the validity and reliability of the findings. Second, the thematic analysis was exclusively focused on the perspective of UK managers of IT projects. It is possible that the inclusion of interviews or surveys with several freelance specialists could balance the research perspective and allow the researcher to identify additional causes of principal-agent issues (Keegan and Meijerink, 2019). Finally, the appraisal included the recorded experiences of cooperation with freelance contractors from all platforms and geographic regions. While this relatively broad appraisal was substantiated by accessibility limitations, projects with a greater time span and financial resources can overcome this barrier by focusing on just-in-time recruitment from specific websites or countries.

 

References

Burke, A. and Cowling, M. (2019) “The relationship between freelance workforce intensity, business performance and job creation”, Small Business Economics, 1 (1), pp. 1-15.

De Stefano, V. (2015) “The rise of the just-in-time workforce: On-demand work, crowdwork, and labor protection in the gig-economy”, Comparative Labor Law & Policy Journal, 37 (1), pp. 1-43.

Graham, M., Hjorth, I. and Lehdonvirta, V. (2017) “Digital labour and development: impacts of global digital labour platforms and the gig economy on worker livelihoods”, Transfer: European Review of Labour and Research, 23 (2), pp. 135-162.

Keegan, A. and Meijerink, J. (2019) “Conceptualizing human resource management in the gig economy: Toward a platform ecosystem perspective”, Journal of Managerial Psychology, 1 (1), pp. 1-40.

Lehdonvirta, V. (2018) “Flexibility in the gig economy: managing time on three online piecework platforms”, New Technology, Work and Employment, 33 (1), pp. 13-29.

Saunders, M., Lewis, P. and Thornhill, A. (2016) Research Methods for Business Students, 5th ed., Harlow: Pearson Education.