Contract Labour - Does it actually save costs?
September 16th, 2009During a recent assignment at a mine in the Northern Cape, the subject of contract labour was extensively debated. In particular, there was great concern about the quality of maintenance work done by skilled and semi-skilled contractors, which generally was not up to the standards required by the mine.So it is interesting to follow the debate going on in parliament on labour brokers. According to press reports, members of parliament and union officials call it a form of “slavery”. The Oxford Dictionary definition of a slave is “a person who is the legal property of another or others and is bound to absolute obedience”. It sounds to me like the term applies more to full-time employees than contractors.
Putting semantics aside however, labour brokers fulfil a much needed service that will continue to be needed in the future.
Of more concern to me is how companies engage their services and the labour that is supplied. In many cases, the client company gives the broker such short notice of its requirements that it results in the company being forced to take whoever the broker has available at that time. And it is often the scrapings from the bottom of the barrel that are available and not the ones who deliver the best work.
So how do we manage our use of contract labour at the moment? Some observations are:
Qualifications: Because they are not as familiar with our plant, we would expect contract labour to have better qualifications than our own people. But we use people who are less qualified than ours.
Briefing: They are not completely familiar with our plant, so we should spend more time briefing them. However, in reality we give a minimal briefing if we give one at all. We just assume that they know what to do.
Induction: As with any other employee, they should be properly inducted. But we don’t bother because they are only with us temporarily.
Supervision: With any person who is new to a situation, we should start off with closer supervision. But instead we tend to leave them to their own devices right from the start.
Quality control: We should specify clear work standards. Contractors are often given no specifications or even guidelines to work to.
Excessive use of contract labour is often symptomatic of inadequate planning in the company; the work to be done is not properly thought through and medium to long term manpower planning has not been carried out at all.
World-class companies outsource large amounts of work - but they do it differently. For example, if they outsource the maintenance of air compressors on the plant, a detailed contract is drawn up with the supplier of the service with the terms of reference and performance requirements spelled out. The contract is seldom agreed on the basis of “send an artisan when we feel that one is required”. By taking the trouble to draw up detailed contracts with the suppliers of services, it is possible to avoid having to use sub-standard temporary labour.
But there are benefits to using temporary contract workers if the work is well planned. Because of the cyclical nature of markets and production processes, it often makes good sense to use contract labour to assist with peak periods. And very few plants will manage to do all the work required during a shutdown without the extra hands. If we are well prepared, we have a better chance of getting quality labour into the plant rather than the scrapings from the bottom of the barrel. Some companies have even ended up employing selected contract labourers on a full-time basis because the quality of their work was so good.
If you find that you have a problem with contract labour, look at how you plan for the service and how it is managed, before joining in the chorus of complaints about labour brokers and contractors.
