Organizational citizenship behavior and workplace deviant behavior

Research in the area of contingent workers primarily focuses on how they are different from permanent employees in terms of their work-related attitudes and behaviors. Also, most research focuses on low-skilled workers. There has not been much research on how employment of contingent workers impacts the behavior of permanent employees and the factors that may moderate this relationship. In this paper, I address these gaps. The purpose of this paper is to explore how contingent workers influence organizational citizenship behavior and workplace deviant behavior of permanent employees. I propose a model that explores this relationship and also suggest four factors that may moderate it, namely: nature of association of contingent workers, permanent worker’s perception regarding the prevalence of contracting, adequate explanation regarding the rationale of employing contingent workers, and conducive organizational context. In the light of growing contingent workforce, the model has practical and research implications.

Keywords: organizational citizenship behavior, workplace deviant behavior, contingent workers

Exploring the Impact of Contingent Workers on Permanent Employees’ Citizenship and Deviant Behaviour

Over the years there has been a remarkable growth in the employment of contingent workers. The factors responsible for their growth are global competition leading to fluctuations in the labor demand, increased pressures to cut costs, increased downsizing and restructuring in order to have a lean and flexible organization, rapid advances in technology that have changed the nature of work, and increased workforce diversity (Nollen & Axel, 1996). Along with the growth in the number, there has also been a change in the occupations of contingent workers. While the proportion of clerical, office and medical staff has declined, that of technical, professional and managerial occupations has increased (Kunda, Barley, & Evans, 2002). In other words, contingent workforce now consists of not just clerical or unskilled workers but also a wide variety of professionals (Gallagher & McLean Parks, 2001). For instance, Manpower Professional, United States’ largest temporary employment agency reports that engineers constitute 40% of their personnel (Cohen, 2000).

Employing contingent workers confers many benefits upon a firm such as cost control (e.g. decrease in administrative and training costs), flexibility of adjusting staffing to business needs, and avoiding restrictions (such as labor unions and budgeting constraints) (Von Hippel, Mangum, Greenberger, Heneman, & Skoglind, 1997). Another advantage of having contingent workers in the company is that they can “stimulate the accumulation and creation of valuable knowledge within firms” (Matusik & Hill, 1998, p.686). This is a significant plus given the growth of highly skilled contingent workers. However, employment of contingent workers also poses challenges to the employing firm. These include increased vulnerability due to excessive reliance on market availability of skills, loss of firm-specific knowledge, and decrease in trust of regular workers which may impact their work-related attitudes and behaviors (Cardon, 2003). There has also been an increased attention on the negative impact of contingent on permanent workers (Conelley & Gallagher, 2003). Some aspects that have been studied include impact on their promotion opportunities (Barnet & Miner, 1992), workload and structure of duties (Pearce, 2003), relations between managers and employees (Davis-Blake, Broschak, & George, 2003), and lower trust and morale of permanent worker (Chattopadhyay & George, 2001).

I extend the existing research by exploring the impact of employment of contingent workers on organizational citizenship behavior (OCB) and workplace deviant behavior (WDB) of permanent workers. I believe that it is important to understand this relationship due to the following reasons. First, contingent workers are increasingly becoming an integral part of the workforce, and it is essential to understand how they can be managed so as to increase the overall effectiveness of the organization. Second, it has been argued that employee’s work behavior cannot be restricted to his contribution to the technical core. The domain of job performance encompasses three types of behaviors, namely: task performance, OCB, and counterproductive work behavior (Rotundo & Sackett, 2002). While, job performance has traditionally been regarded as the most important criterion in industrial-organizational (I/O) psychology (Dalal, 2005), this view takes a somewhat narrow view of performance and includes only activities that contribute to the organization’s “technical core” (Borman & Motowidlo, 1997, p. 99). Citizenship behavior and counterproductive or deviant behavior are important aspects of an individual’s job performance and should be paid attention on. So far, research on how the use of contingent workers impacts behavior of permanent workers has been rather limited (for exception, see Broschak & Davis-blake, 2006). I address this gap in this paper.

More specifically, the questions that I address are: How does employment of contingent workers impact the organizational citizenship behavior (OCB) and workplace deviant behavior (WDB) of permanent employees? What are the factors that moderate this relationship? I will begin by reviewing the current literature on contingent workers, OCB, and WDB. I then develop a model with testable propositions that address their relationship. While most research on contingent workers has focused on low-skilled occupations traditionally associated with temporary jobs (Kunda, Barley, & Evans, 2002), this model applies to highly skilled workers such as those in the Silicon Valley in the US or IT firms in Bangalore. Finally, I conclude with practical and theoretical implications of the paper.

Theoretical Background

Contingent workers

Contingent work is “any job in which an individual does not have an explicit or implicit contract for long-term employment” (Polivka, 1996, p.4). Contingent workers encompass a wide range of non-traditional workers including independent contractors, on-call or day labor; workers from contract firms that provide service in specific areas such as outsourced information technology workers (Matusik & Hill, 1998), part-time workers, self-employed, and home-based workers (Kunda et al, 2002). In this paper, I use the terms contingent workers, contract workers, and temporary workers interchangeably.

Connelly and Gallagher (2004) have classified the contingent workers into four main categories, namely: agency hired contract workers, direct-hired contractors, independent contractors/consultants, and seasonal contract workers. They can be hired either for a limited duration for a specific project or can be employed for a relatively longer period of time. For instance, independent contractors/consultants are self-employed workers who sell their services for a project or fixed time duration (Connelly & Gallagher, 2004). They may contract their services to multiple clients simultaneously (Gallagher & McLean Parks, 2001). The organizations employ them for specialized skills that are required for a short duration. On the other hand, direct hire temporary workers may have some understanding of an ongoing employment with the firm, such as future assignments (Connelly & Gallagher, 2004). In some situations, these workers may also have an expectation that good performance would ultimately lead to a permanent job with the company (McLean Parks, Kidder, & Gallagher, 1998). Instead of hiring contingent workers directly, firms can also hire them through temporary help service firms or temporary staffing agencies (e.g. Manpower Inc., Olsten Corporation, Kelly Services Inc., etc. in the US), which recruit workers and send them to the client organization (Connelly & Gallagher, 2004). These can be hired for either a limited or a longer duration. Agency hired contingent workers are the fastest growing segment out of the four categories of contract workers. According to the U.S. Department of Labor’s Bureau of Labor Statistics, the personnel supply services industry (which includes staffing) will be the fifth fastest-growing industry through 2010.

The growing importance of the contingent workforce in the economy is also accompanied by an increased attention from researchers as well as practitioners (Chattopadhyay & George, 2001). According to Connelly and Gallagher (2004), some areas that have attracted interest include worker commitment (Ang & Slaughter, 2001; Van Dyne & Ang, 1998), job satisfaction (Feldman, Doerpinghaus, & Turnley, 1994), role conflict and ambiguity (Parker, Griffin, Sprigg, & Wall, 2002), volition (Ellingson, Gruys, & Sackett, 1998), perceived organizational support (Liden, Wayne, Kraimer, & Sparrowe, 2003), justice / unfair treatment (Feldman et al., 1994), OCB (Pearce, 1993), well-being, work-family conflict (Gallagher & McLean Parks, 2001), performance (Ang & Slaughter, 2001), psychological contract (McDonald & Makin, 2000; Van Dyne & Ang, 1998), integration / trust (Davis-Blake et al., 2003; Pearce, 1993), and knowledge sharing (Galup, Saunders, Nelson, & Cerveny, 1997; Sias & Kramer, 1997). Substantial amount of research on contingent workforce focus on their differences from permanent employees in terms of job attitudes and behaviors on issues such as the level of commitment (McDonald & Makin, 1999; Pearce, 2003) and their foci of commitment, (i.e. employment, organization, job or career) (Gallagher & McLean Parks, 2001), job satisfaction (Galup, Saunders, Nelson, & Cerveny, 1997), job motivation (Allan & Sienko, 1998), and OCB (Van Dyne & Ang, 1998).

While there has been an increasing interest in understanding the attitudes and behavior of contract workers, there have been only a few studies that focus on the impact of contingent workers on permanent employees (David, 2005). The predominant trend observed here is that the permanent employees are negatively affected by the presence of contingent workers (Connelly & Gallagher, 2004). In another study, it was found that presence of contract workers in the organization resulted in lower levels of trust in regular employees (Pearce, 1993). A reason cited for the same was that presence of contract workers makes permanent employees question the firm’s fairness (Pearce, 1993). Since both sets of workers receive different compensations (permanent workers get higher benefits and contractor get higher cash salary), permanent workers could find either of the two better off and hence may feel that the firm is being unjust (Pearce, 1993). Similarly, Chattopadhyay and George (2001) also found that dissimilarity in status between temporary and permanent workers has a negative impact on perceived trust and morale of permanent employees.

Contingent workers also have an impact on the work load and duties of core employees. Managers tend to delegate the task of supervision of contract workers to permanent workers. Also, managers spend a lot of time in sorting conflict between the two sets of employees; as a result permanent workers get lesser informal feedback which affects their chances of promotion (Geary, 1992). Another consequence of the existence of non-standard workers in the organization is worsening of relations between managers and core employees (Davis-Blake et al., 2003). Likewise, in their study of the impact of hiring contingent workers in a large organization, Barnett and Miner (1992) found that contract workers have a negative impact on the promotion opportunities of permanent employees at the lower ranks whereas have a positive impact on the mobility of workers at higher ranks.

Hence, from the extant literature, it is evident that the presence of contingent workers leads to lower morale and perceived trust in permanent employees. It also has a negative impact on their feeling of equity and perceived organizational fairness. These factors have a bearing on OCB and workplace deviant behavior of employees (Organ 1988; Sackett & DeVore, 2001). There have been a few studies that focus on some forms of behavior exhibited by permanent workers, such as the behavior of permanent employees specifically towards contingent workers. There is evidence that they are not treated well by the permanent employees. For instance, Galup et al. (1997) conducted a study on temporary workers in government settings and found that the permanent workers behave differently with temporary managers. They resist the temporary managers due to bitterness, which arise as the management hires people from outside instead of promoting from within. Some permanent employees also feel that temporary workers are an impediment to a raise in salary and overtime pay and that they receive better pay rates, which leads to resentment towards contingent workers in the firm (Melchionno, 1999). Similarly, Feldman et al. (1994) contend that generally temporary workers are made to feel like commodities by permanent workers. It has also been found that the presence of contingent workers result in lower levels of loyalty among permanent employees and an increase in their interest in leaving the organization and in exercising voice through unionization (Davis-Blake et al., 2003). In one of the studies, Broschak and Davis-Blake (2006) studied how contingent workers affect the relationship of people towards each other and their supervisors as well as their willingness to assist each other.

While these studies highlight that regular workers perceive contract workers as a threat, which affects their behavior towards them, this only captures a partial picture. First of all, OCB and CWB are multidimensional constructs that include employee behavior towards organization as well as individuals. While Davis-Blake et al. (2003) and Broschak and Davis-Blake (2006) have made an initial foray in studying the impact on permanent employees’ loyalty and willingness to assist others, permanent employees may exhibit other forms of OCB as well. The same can be argued about CWB. Second, there are many factors that would have a bearing on the impact of use of contingent workers on OCB and CWB of permanent workers. Given the increasing use of contingent workers, it is important to understand what factors would moderate their impact on the behavior of permanent workers.

In this study, I propose a model that depicts the relationship between the employment of contingent workers in the organization and OCB and WDB of permanent workers. The outcome variables OCB and WDB encompass all forms of voluntary behaviors shown by regular workers towards the organization as well as individuals affiliated with the organization. I also propose factors that moderate the relationship between employment of contract workers and the OCB and CWB of permanent employees.

Organizational Citizenship Behavior

Organizational citizenship behavior (OCB) has been defined as “individual behavior that is discretionary, not directly or explicitly recognized by the formal reward system, and that in the aggregate promotes the effective functioning of the organization” (Organ, 1988, p.4). According to Organ (1988) in OCB an individual’s behavior is discretionary. This behavior is not directly or explicitly recognized by the formal reward system and it in the aggregate promotes the effective functioning of the organization.

The crucial part here is that this behavior is voluntary in nature and although it is not critical to the job, it aids organizational operations (Lee & Allen, 2002). The rewards that may accrue as a result of displaying OCB are largely uncertain and indirect, as against those associated with outcomes such as productivity (Organ, 1997). Most organizations do not “directly or formally” reward such a behavior (Organ, 1988, p.5). OCBs are discretionary behaviors on the part of the worker, which are neither expected nor required, and therefore cannot be formally rewarded or punished for the presence or lack of it by the organization (Organ, 1988).

Researchers have looked at employee behavior from different angles, each with its own definition and related theory. A few of these include extra-role behavior (Van Dyne, Cummings, & Parks, 1995), prosocial organizational behavior (Brief & Motowidlo, 1986; George, 1991), contextual performance (Borman & Motowidlo, 1993) and boundary-spanning behavior (Aldrich & Herker, 1977). While there are some differences among these concepts, they essential refer to an employee’s behavior which is over and beyond his task performance.

OCB includes a wide variety of behaviors that can be targeted towards organization as well as individuals (Coleman & Borman, 2000; Williams & Anderson, 1991). Organ (1988) discussed five such behaviors, namely: altruism, conscientiousness, sportsmanship, courtesy, and civic virtue. Research in this area has proliferated ever since the concept was first introduced and many additional dimensions and behaviors have been described as OCB. In a recent review of literature, Organ, Podsakoff, & MacKenzie (2006) summarized the behaviors associated with OCB into seven main themes, namely: helping behavior (includes altruism, courtesy, interpersonal facilitation), sportsmanship, organizational loyalty (encompasses spreading goodwill and endorsing organizational objectives), organizational compliance (includes generalized compliance, organizational obedience, and dedication.), individual initiative (e.g. conscientiousness, personal industry, and volunteering for activities), civic virtue, and self-development (such as steps to improve one’s knowledge, skills and abilities for the benefit of the organization).

Organ and Ryan (1995) conducted a meta-analysis of predictors of OCB. One of the important factors that emerged was the “morale factor” which included employee satisfaction, organizational commitment, perception of fairness, and perception of leader supportiveness. All these variables have comparable and significant effects on OCB and thus morale factor is an important determinant of citizenship behaviors (Podsakoff et al., 2000). The positive impact of employees’ perception of justice on OCB has been found in many other studies. For instance, Moorman (1991) found that interactive justice was significantly related to OCB. Employees who sensed that supervisors personally treated them fairly exhibited OCB to a larger degree. Another category of factor that predicts OCB is dispositional factors such as agreeableness, conscientiousness, positive affectivity and negative affectivity (Borman & Motowidlo, 1997; Organ & Ryan, 1995). However, the dispositional variables are not found to demonstrate the same level of association with OCB, as the morale factor. They are important to the extent that they contribute to differences in the morale factor (Organ & Ryan, 1995)

One of the issues explored by Organ and Ryan (1995) was whether characteristics of subjects and work settings moderate the relationship between work attitudes and OCB. The moderator that appear important in the analysis is the use of self-reports versus other-ratings of OCB rather than age, tenure, gender, rank, or type of work. However, they also suggest that none of these moderators really has a prior theoretical basis and further studies should look at moderators that have a sound theoretical position.

Organizational Deviant Behavior

Organizations are increasingly getting more concerned about the counterproductive behavior of employees. Over the years, researchers also have paid a lot of attention on such behavior. It has been studied under various names. For instance, Hogan & Hogan (1989) described such undesirable behavior as workplace delinquency. O’Leary-Kelly, Griffin, & Grew (1999) coined the term organization motivated aggression and defined it as “attempted injurious or destructive behavior initiated by either an organizational insider or outsider that is instigated by some factor in the organizational context” (O’Leary-Kelly et al., 1999, p.229). Skarlicki and Folger (1997) examined organizational retaliation behavior, which is the adverse reaction of employees as a result of perceived unfairness. Similarly, Neuman and Baron (1998) called it work place aggression which refers to the efforts by individuals to harm people they work with. Finally, workplace deviance is defined as “voluntary behavior that violates significant organizational norms and in doing so threatens the well-being of the organization, its members or both” (Robinson & Bennett, 1995, p. 556). This behavior is intentional and is meant to harm the organization or the people (Dalal, 2005). In this paper, I will follow Robinson and Bennett’s (1995) definition of deviance and will henceforth call such behavior as workplace deviant behavior (WDB).

WDB can take many forms. Gruys and Sackett (2003) analyzed 11 categories of such behaviors, namely: (i) theft and related behavior, (ii) destruction of property, (iii) misuse of information, (iv) misuse of time and resources, (v) unsafe behavior, (vi) poor attendance, (vii) poor quality work, (viii) alcohol use, (ix) drug use, (x) inappropriate verbal actions, and (xi) inappropriate physical actions. The different forms of WDB have been found to be positively correlated (Gruys & Sackett, 2003; Marcus & Schuler, 2004; Sackett & DeVore, 2001). In other words, as the chances that an employee will engage in one kind of WDB increase, the possibility of her performing other types of WDB also rises (Gruys & Sackett, 2003). These behaviors can be grouped into four categories, namely: (i) property deviance (serious and organizationally harmful behavior, such as stealing from the company), (ii) production deviance (minor and organizationally harmful behavior, e.g. leaving early from work), (iii) political deviance (minor and interpersonally targeted deviant behavior, such as gossiping and blaming co-workers), and (iv) personal aggression (serious and interpersonally targeted behavior, such as verbal abuse) (Robinson & Bennett, 1995).

As in the case of OCB, many reviews and meta-analyses, which delve into antecedents of WDB, have been conducted (e.g. Hough, 1992; Lau, Au, & Ho, 2003; Sackett & DeVore, 2001; Salgado, 2002). The antecedents of WDB can be categorized into personal and situation related factors. Some of the personal characteristics that are associated with WDB are agreeableness, conscientiousness (Lee, Ashton, & Shin, 2005), emotional stability (Salgado, 2001), job satisfaction and related symptoms such as job stress, demographic characteristics, and perceptions about job such as inequity (Lau et al., 2003). Similarly job characteristics such as skill variety, task identity, and autonomy (Rentsch & Steel, 1998) and organizational factors such as organizational culture, control systems (Sackett & DeVore, 2001) are associated with deviant behavior in organizations. An important antecedent for many forms of deviant behavior at workplace is the perception of employees regarding organizational fairness and inequity of input and output (Ambrose, Seabright, & Schminke, 2002; Greenberg, 1990; Sackett & DeVore, 2001). When employees perceive that their organization is being unfair or they feel that they have been under-rewarded, deviant behavior tends to increase.

Organizational Citizenship Behavior-Workers Deviant Behavior

Increasingly, there has been research to examine the relationship between OCB and WDB (Bennett & Stamper, 2001; Dunlop & Lee, 2004; Organ & Paine, 1999; Skarlicki & Folger, 1997). The results of these studies have been somewhat mixed. For instance, Bennett and Stamper’s (2001) analyzed positive and negative discretionary behaviors of employees and found that OCB and WDB represented extreme poles of one dimension. They argued that interpersonal OCB is intended to benefit or help other individuals and interpersonal WDB is intended to harm them. Hence, there is a negative relationship between the two. The same can be said about organizational OCB and organizational WDB. Similarly, Heckert and Heckert (2002) studied deviance and suggested that while negative deviance refers to under-conformity or failure to follow the set norms, positive deviance implies surpassing the norms of the organization. On the contrary, Kelloway, Loughlin, Barling, and Nault (2002) found that although OCB and WDB are negatively correlated, they represent separate constructs. A meta-analytic study regarding relationships between OCB and WDB also indicated that while it may seem that OCB and WDB represent opposite behaviors – OCB is beneficial to the organization and WDB is harmful – their relationship is rather weakly negative. Although they share a few common antecedents, the magnitude and pattern of antecedent relationship is different (Dalal, 2005).

Relationship Between Contingent Workers and OCB/WDB of Permanent Employees

I now propose a model that depicts the relationship between employment of contingent workers and OCB and WDB of permanent employees. As depicted in figure 1, employment of contingent workers is negatively related with OCB and positively related with WDB of permanent employees. I propose four factors that moderate this relationship. These are nature of association of contingent worker, permanent worker’s perception regarding the prevalence of contracting, adequate explanation regarding the rationale of employing contingent workers, and conducive organizational context.

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Insert Figure 1 about here

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Research on contingent workers indicates that their use decreases the perceived organizational fairness and increases the job insecurity among permanent employees. It violates the psychological contract that permanent employees have with their organization (Rousseau, 1995). The differential between their compensations may also instill a sense of inequity in permanent workers (Gregory, 2001, as cited in David, 2005). There is evidence that when permanent and temporary workers coexist, the responsibilities of permanent workers increase without an increase in rewards, which results in an inequity in their input and output. For instance, Geary (1992) found that managers delegated the training and supervision of temporary workers to permanent workers. Similarly, Pearce (1993) found that as a result of presence of contingent workers, the task of permanent employees became more interdependent. It also led to decrease in their trust as they question organization’s fairness.

These feelings of inequity and decrease in trust and perceived organizational fairness have a positive relation with WDB and negative relation with OCB (Skarlicki & Folger, 1997; Wat & Shaffer, 2005). Hence, it can be argued that use of contingent workers will have a negative relationship with OCB and a positive association with WDB of permanent employees.

Job insecurity has been found to have a relation with many types of workplace aggression, which include verbal aggression, obstructionism i.e. passive forms of aggression such as not returning the phone calls, and workplace violence. Also, since citizenship behavior can be easily reduced without much risk, increase in job insecurity may lead to decrease in OCB (McLean Parks & Kidder, 1994). The theoretical basis regarding the impact of perceived unfairness and inequity can be drawn from Blau’s social exchange theory (1964) and Adam’s equity theory (1965). Blau’s (1964) theory of social exchange suggests that the exchange between the employee and organization is a blend of economic and social exchange. A part of this exchange relation is characterized by unspecified obligations largely based on trust and the other part is in the form of specific contract. OCB and WDB are voluntary behaviors which mainly reflect a sense of social exchange relationship with the organization. As such, decrease in employee trust and perceived fairness will have an impact on their OCB and WDB. Similarly, Adams’ (1965) equity theory states that when employees see inequity in terms of inputs and outputs, they try to resolve this tension. OCB and WDB could be considered as inputs and a way of resolving input-output inequity is either increasing or decreasing OCB and WDB.

There has been support for the negative impact of employment of contingent workers on forms of OCB of permanent employees, such as their loyalty towards organization (Davis-Blake et al., 2003) and willingness to assist others (Broschak & Davis-blake, 2006). It has also been argued that changes, such as increased use of part-time workers, which threaten the permanent status of employees in the organization, have a bearing on workplace aggression (Baron & Neuman, 1998). A research conducted in the United Kingdom, Scandinavia and Australia, also highlighted that one of the most important reason for the increase in workplace bullying (which includes verbal and physical abuse) is job insecurity due to increased contracting (Office of the Employee Ombudsman, 2000). On the basis of the above, I propose,

Proposition 1a: Employment of contingent workers will be negatively associated with OCB of permanent employees.

Proposition 1b: Employment of contingent workers will be positively associated with WDB of permanent employees.

Moderators

Nature of association of contingent worker. While the introduction of contingent workers has been found to have an effect on job insecurity of permanent workers, it is important to understand that the organizations employ contingent workers for different purposes and duration, which may impact permanent workers differentially. According to a staffing industry survey, 48% of companies use contingent workers to acquire expertise for specific tasks (Berchem, 2005). These contractors are typically used to provide knowledge that is new or complementary to that possessed by permanent workers. The reason for hiring them is that the firm has a short term need for that expertise and does not see any value in employing a person on a long term basis. Their contract lasts till the time those skills are required by the organization and they are less likely to substitute permanent workers (Davis-Blake et al., 2003). Permanent workers may perceive independent contractors, who have complementary skills and expertise and are hired for a limited duration, as less a threat to their own job security.

However, organizations also employ contingent workers on a long term basis. Temporary workers, in such cases, are hired to perform a job for indefinite periods of time and their knowledge is generally similar to that of permanent workers (Davis-Blake et al., 2003). At times, firms do that to check out their candidature for permanent employment. Von Hippel et al. (1997) discussed a case of a national bank for which temporary employees constitute a major source of permanent hires. The bank considers temporary employment as – try out arrangement and hires temporary employees for permanent position in big numbers. Presence of such temporary workers may heighten the feeling of job insecurity in permanent workers. On the basis of the above, I propose:

Proposition 2a: Employment of contingent workers will negatively impact the OCB of the permanent workers, but this effect will be moderated by the nature of association of contingent worker.

Proposition 2b: Employment of contingent workers will have a positive impact on the ODB, but this effect will be moderated by the nature of association of contingent worker.

Adequate explanation regarding the rationale of contracting. The presence of contingent workers affects the sense of equity of permanent workers and hence has a bearing on their OCB and WDB. I argue that an adequate explanation regarding why contingent workers are being brought into the organization, may moderate this relationship. The impact of explanation on the perceived fairness of employees has been demonstrated by Greenberg (1990) in his experimental study of the impact of pay cuts on employee theft in two plants. He measured reactions to pay cuts at three sites – one of them received insufficient explanation regarding the pay cut, the second received an adequate explanation, and the third site served as a control site and did not have any pay cut. He found that theft rate increased during the pay cut period for both sites but the rate of increase of theft for the site that received inadequate explanation was much higher. The study highlights that adequate explanation lessens the effect of feeling of inequity.

The importance of communication has been emphasized in case of employment of contingent workers too. According to a CIO survey, 54% of the CIOs suggested that one of their top concerns while outsourcing is the low morale of permanent workers, and communication with the staff was one of the best ways to reduce the stress that occurs in such situations (Overby, 2003). In a similar fashion, proper explanation regarding the rationale of employing contingent workers will mitigate the feeling of inequity in permanent workers and will thus have a bearing on their OCB and ODB. Hence, I propose:

Proposition 3a: Employment of contingent workers will negatively impact the OCB of the permanent workers, but this effect will be moderated by adequate explanation provided regarding the rationale of employing contingent workers.

Proposition 3b: Employment of contingent workers will have a positive association with the WDB of the permanent workers, but this effect will be moderated by adequate explanation provided regarding the rationale of employing contingent workers.

Permanent worker perception regarding prevalence of contracting. Outsourcing certain functions and engaging contract workers is on an increase. Contingent workers comprise at least 10% of the U.S. workforce and over 90% of U.S. firms use contingent labor in some form (Cardon, 2003) with contracted activities ranging from those that a firm does not find unviable to do in-house merely because they are required infrequently to the more important ones such as information systems (IS) management or financial transaction management (King & Malhotra, 2000). For instance, IS is emerging as the most common function for outsourcing and more than 50 percent of firms are expected to contract out IS/IT in 2006 (King, 2004). I argue that although the use of contract workers has an impact on the perceived organizational fairness and hence OCB and WDB of permanent employees, this will be moderated by their perception regarding the prevalence of contracting. When permanent workers perceive that the practice of contracting has become common, i.e. it is widespread in their industry or in their specific job function; they will deem the firm less unfair.

I base my argument on social information theory, which posits that information derived from the social environment affects the work related attitudes and behaviors of people. One of the functions served by the social context is that “it provides direct construction of meaning through guides to socially acceptable beliefs” (Salancik & Pfeffer, 1978, p. 237). Individuals derive information from their social environment, which provides cues to interpret events. Social information processing also affects a person’s sense of fairness or in other words, “perceptions of fairness are subject to social influence through comparison” (Lamertz, 2000, p. 20). I argue that this argument holds in the case of use of contingent workers also. When permanent workers perceive that it is common for firms to employ contract workers, their reactions (in this case OCB and WDB) will be much milder.

Proposition 4a: Employment of contingent workers will impact the OCB of the permanent workers negatively, but this effect will be moderated by their perception regarding the prevalence of contracting.

Proposition 4b: Employment of contingent workers will impact the WDB negatively of the permanent workers, but this effect will be moderated by their perception regarding the prevalence of contracting.

Conducive organizational context. There has been a rapid growth in highly skilled contingent workers, who are used by firms in dynamic and competitive environments which necessitate constant innovation (Matusik & Hill, 1998). Due to their varied experience with a wide range of companies, contract workers may be in a position to offer insights, such as more efficient ways of working to the client organization (Wheeler & Buckley, 2001). They may also be a source of innovation for the client (Sias & Kramer, 1997). Also, permanent workers can benefit from coexistence with contingent workers by observing how contingent workers approach tasks differently and questioning the ways that are being take for granted in the company (Matusik & Hill, 1998).

I contend that while employing contingent workers would affect the OCB and ODB of permanent employees, this impact will be moderated by the extent to which the organizational context motivates permanent workers to view the situation as an opportunity rather than a threat. As Matusik & Hill (1998) suggest,

“One central issue is exposing contingent workers’ knowledge to traditional employees so it can be absorbed. This may be particularly challenging, because an arduous relationship may exist between traditional and contingent workers. Encouraging the transfer of knowledge from contingent workers may serve to alleviate difficulty in the relationship–if traditional employees view contingent work as an opportunity and not a threat” (p. 693)

Organizational context factors, such as role interdependence, organizational structure, reward systems and culture have a bearing on the OCB and WDB (George & Jones, 1997; Sackett & DeVore, 2001). In this case, initiatives such as – rewards for attaining information and for cooperation, teams composed of both contingent and traditional employees, and a formal strategy valuing knowledge acquisitionâ€- can help in integrating the two sets of workers (Masutik & Hill, 1998).

Another way to position contingent workers as an opportunity is to encourage permanent workers to develop new skills, for instance, when Electronic Arts began contracting its development work to Indian companies, it positioned this as an opportunity by encouraging its developers in the US office to gain strategic skills for managing the distributed development environment (Overby, 2003). As such, the key is to create an environment where contingent workers are looked at as an opportunity and not as a threat.

On the basis of the above, I propose:

Proposition 5a: Employment of contingent workers will impact the OCB of the permanent workers negatively, but this effect will be moderated by conducive organizational context that positions them as an opportunity rather than threat.

Proposition 5b: Employment of contingent workers will impact the WDB negatively of the permanent workers, but this effect will be moderated by conducive organizational context that positions them as an opportunity rather than threat.

Discussion

The objective of this paper is to explore the impact of employment of contingent workers on OCB and ODB of permanent employees. It contributes in the following ways: Firstly, it explores a crucial issue, i.e. coexistence of contingent workers and permanent employees, which is a significant topic given the increasing trend towards contracting. Secondly, it extends the previous research, to include the impact of contingent workers on OCB and WDB of permanent employees. Thirdly, this paper also suggests moderating factors that would have a bearing on this relationship. These include the nature of association of contingent worker, permanent worker’s perception regarding the prevalence of contracting, adequate explanation regarding the rationale of outsourcing, and conducive organizational context. Lastly, while most previous research on contingent workers focuses on low-skilled occupations (Kunda et al., 2002), I put forward a model that is applicable in case of highly skilled contingent workers. Also, instead of treating contingent workers as a homogenous category, I draw a distinction between temporary workers engaged for a longer duration and contractors/consultant hired for a shorter term to fulfill specific needs.

Implications for research

As suggested earlier, much of research on contingent workers focuses on drawing out differences between them and their permanent counterparts. A small body of research delves into the impact of contingent workers on permanent employees. Most of these studies focus on either the impact on task performance or aspects such as trust and morale of permanent employees. This paper explores the impact on the OCB and WDB of permanent employees, which are composite constructs that include all sorts of positive and negative voluntary behaviors exhibited by permanent employees. The propositions regarding the relationship between the employment of contingent workers and OCB and WDB of permanent employees can be empirically tested in future research. Many of the variables included in the model, including the dependent variables OCB and WDB, can be operationalized by adapting the existing scales.

The paper takes into cognizance that contingent workers have variety of association with the firm. In other words, they can either be employed for a short term need or can have a longer and ongoing association with the company. This difference in association has a bearing on the impact that they will have on permanent workers. Not many studies have accounted for these differences and future studies on blending, i.e. use of both contingent workers and permanent employees, will benefit from looking at the differential impact of the nature of association of contingent workers with the employing firm.

Implications for practice

Study of workforce blending or use of both contingent workers and permanent workers and its impact on permanent workers is of practical importance to organizations that are either using or planning to employ contract workers. It is imperative to understand how they might influence the existing permanent workers. It is evident that employment of contingent workers is considered as a threat by employees and affects their sense of fairness about the firm. As a result, employing contingent workers will be accompanied by decrease in OCB and increase in WDB of permanent employees.

Through the framework presented in the paper, I propose certain moderating factors that have a bearing on the relation between employing contingent workers and behavior of permanent workers. Some of the practical implications that follow include: (i) employing contract workers results in the employee perception that the firm is unfair. If the rationale of employing contract workers is explained to the permanent employees in an honest manner, they will not regard the firm as that unfair as they would when they are not provided with any adequate explanation. (ii). More and more firms are now employing highly skilled contract workers. Apart from providing flexibility, they also facilitate innovation. To take full advantage of such workers, it is important that the firm context (which includes culture, structure, policies, etc.) is such that permanent workers are motivated to take advantage of their association and they look at contingent workers as an opportunity rather than threat. (iii) Employees often process information based on clues and feeders that they get from the outside environment. In case, contracting is common in their industry or function, their reaction, i.e. impact on OCB and WDB, will be much milder. This also means that firms that are contracting functions that have not been traditionally outsourced should be extra cautious of employee reaction. In case of functions/industries where such arrangements are more prevalent, the company should ensure that the employees have a sense of this pervasiveness, as their reaction to contracting may depend on this perception. (iv) The nature of association of contract workers will play a role in how permanent employees react to their use. As such, a firm should be prepared for a stronger reaction from them in case it is employing contract workers for a longer duration for jobs that are somewhat similar to those held by permanent employees.

Limitations

The model proposed in the paper has certain limitations and boundary conditions. It is an exploratory model that suggests association between employment of contingent workers and OCB and WDB of permanent employees. While it proposes certain factors organizational and context related factors that would moderate this relationship, it does not focus on individual characteristics of the permanent employees that may have a bearing on the same. Research suggests that personality characteristics such as agreeableness and conscientiousness have a relation with OCB and WDB (Lee et al., 2005; Organ & Lingl, 1995). These may also moderate the relationship proposed in the model. However, the paper does not draw attention towards such individual related factors. Future research should include individual-related factors also.

The model proposed in the paper applies mainly to highly skilled knowledge workers. For instance, the moderating factor – conducive organizational context – assumes that contract workers are a source of innovation and learning. While this may be true for knowledge workers with varied experiences with different organizations, it may not apply for other kinds of workers, such as seasonal contingent workers. The model holds in situations where companies employ both contingent workers and permanent workers in a department/function. However, firms also contract out the entire function or department and the function is performed solely by the contracting firm. In such situation, the model will only find limited application.

Conclusion

The paper extends previous research by exploring the impact of employing contingent workers on OCB and WDB of permanent employees. I also suggest moderating factors that may have a bearing on this relationship. The propositions can be empirically tested through further research. In light of the growing contingent workforce, the framework poses research and practical implications and also offers opportunities for future research.

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