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Non–Entrepreneurial Firm Motives

Non–entrepreneurial firms, in contrast to entrepreneurial firms, have two distinct sets of motives for contingent resource use:  the conscious, intended strategic motives and the emergent motives.  The conscious motives are the province of top management and human resource managers.  The emergent motives represent how managers below the executive level may use contingent resources in contradiction to or ignorance of top management objectives.  Intended and emergent strategies on contingent work use may be decoupled in non–entrepreneurial firms.

Conscious motives for technical contingent resource use focus primarily around flexibility.  Firms build contingent resource use into their human resource strategy to staff cyclical areas such as testing and customer support after product release and to staff new areas of business.  The use in cyclical areas resembles that found in entrepreneurial firms.  Non–entrepreneurial firms, however, are very explicit in noting that contingent positions are not an entree to traditional employment arrangements.  The use in new areas occurs for different reasons than in entrepreneurial firms, though.  Entrepreneurial firms use contingent resources because they need the knowledge they possess.  While non–entrepreneurial firms also need knowledge in new areas, they are motivated to use contingent resources to staff new areas until they better understand whether this area will become something viable long–term.  They use contingent resources to reduce uncertainty with regard to new endeavors.  When the endeavor proves itself worthy, contingent resources are replaced by traditional work arrangements.

When we have a new area of business, like entertainment or media or something that we have NO experience in, we won’t know if the business will be around for a long time or if it will work out.  The ratio of contingents to regular will be much higher in those areas.    And some projects just have periods when you need a lot of people.  For example, we just had a bunch of testers in and now they’re all gone.
Director of Contingent Staffing, large software firm (LR)
 In addition to intended strategies for contingent resource use, non–entrepreneurial firms also have emergent practices with regard to contingent resource use.  (In entrepreneurial firms, there is no decoupling of the intended and the emergent.)  Emergent patterns of contingent resource use focus on circumventing constraints.  While it is common for intended strategies to try to build walls around core areas of the firm to block the view of contingent resources, emergent practices expose the holes in these walls. Bureaucratic constraints, in particular, motivate contingent resource use.  To circumvent administrative constraints, middle level managers may play an accounting shell game by bringing in contingent resources in order to meet project deadlines without alerting top management that more people are needed to complete a project.  Because the funding for contingent resources customarily comes out of an area without strict budgets, the cost of these additional resources raises few eyebrows.

Budget and head count are the big things that executives are worried about.  So managers don’t want HR or the execs to know they’re bringing people in, so they bring in contractors....then they try to sneak the cost around by classifying it as some mysterious expense.  Executives are driven by head count.
HR Director, Mid sized software firm (WD)

We use them even in core competency areas, which we really shouldn’t...They’re in intellectual property areas.  Like the group that does all of the support for our internal systems.  That group is something like 60% contingent and they’re in really sensitive areas.  But the problem is that we (the entire company) need to budget how much support we will need for the next year, and nobody really knows.  So then, because nobody budgets for them, they have no people around. So we end up bringing in contractors.  That worries me.  We have maybe 200 people that work as contractors in really core architecture areas at any time.
Director of Contingent Staffing, large software firm (LR)

Of 653 people in IS, only 250 were full time employees... At (this company), it took an act of God to hire a full–time person.  (This company) bypassed the bureaucracy of going through HR this way.  There was no budget for contractors.  But to bring in a full–time person, you needed a signature of the President.  Literally.  So everyone went contract—it was just easier...
HR Recruiter, Mid size software firm (LD–MC)

In addition to bureaucratic constraints, technical constraints may also motivate emergent practices for contingent resource use.  Project managers, in the process of making certain that customer preferences are well attended to as a project develops, may request that certain features be added to a program or project.  Technical personnel, faced with tight deadlines and an ever increasing list of "bells and whistles" requested by multiple constituencies, may resist.  To circumvent this resistance, the manager may bring in contingent resources to code the addition.  Once it is completed, technical personnel have few arguments to justify not adding the feature. Also, in the process of completing a complex program or project, unrecognized capabilities gaps may surface.  Technical staff or project managers may bring in a contingent resource to fill a gap that bridges several areas of established in–house capabilities.  Alternatively, contingent resources may be brought in to code up certain features because of tightening time constraints on the technical staff that may accompany a project as it falls behind schedule.

A note here, too, on cost motives is warranted.  As with the entrepreneurial firms, cost is not a guiding motive.  Even larger companies with very rich benefit packages perceived the wage difference paid of contingent resources and saved benefit costs to, on average, balance each other out.
 

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