Gary Cattermole: Do Zero-Hours Mean Zero Profit?

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The debate around zero-hour contracts rages on with the Government stating its concern and companies rushing to prove that this way of working really does make business sense. The flexibility helps them meet fluctuations in demand to ensure that their businesses survive in challenging circumstances and they can also keep their core staff in work. What could be better? This ‘on call’ arrangement between employer and employee they believe is the only way forward in these economically squeezed times.

The case for a company making more profit because it has less overheads obviously looks good. Also it is not just companies that are adopting this system, it is predominant within charities and public sector organisations too which are struggling to stay afloat due to financial cut-backs.

It stands to reason that zero-hour contracts may not be ideal for many employees. They are at the beck and call of employers, often at short-notice, and are only paid for the hours they work. Sick pay is often not included, though holiday pay should be, in line with working time regulations. Working hours are not guaranteed and families can struggle with less money coming in, when they most need it.  Even if people get ‘enough’ hours one week, they may be worried about what will happen in the foreseeable future.

Figures from the Office for National Statistics show that 250,000 UK workers are on zero-hours contracts, which represents around 1% of the UK workforce. However, a survey of employers by the Chartered Institute of Personnel and Development estimates that the real number is more than one million, with one in five employers having at least one employee on zero-hours.

No matter what the figures are one thing is for sure – there has been a steady rise in this type of contract since 2004 and this has a consequence to bear on business performance.

If a zero-hour contract system affects employee engagement this can result in poor service and less production – and there goes any profit. And if managers are spending more time dealing with staff wellbeing issues and motivational problems then things aren’t so rosy in regard to the use of their time either.

The plight of the zero-worker has been much documented. However the effect on their fellow full-time workers should also be given consideration. There is an issue that full time, highly invested-in employees may become nervous about exactly what is happening with the company. Are they as secure as they thought? They may think it is time to try to move on to a new company and be with a steady team, with people they work beside on a daily basis. Full-time employees tend to take on more tasks and responsibilities juggling work around part-time colleagues.

Then there is a management concern in regard to how customers perceive their brand. There does seem to be a negative perception of companies employing people in this manner – are they treating staff well, are the staff really capable of meeting requirements – are they trained properly, and so it goes on.

Statistics show though that the zero-hour contract is not going away, so the trick is to ensure that it is managed properly and that all a company’s staff remains effective. Some companies succeed very well with zero-hour contracts. The main elements for this are keeping full-time employees on side and ensuring that part-time workers also feel engaged.

Those who work ‘on demand’ are in danger of having very little sense of belonging or loyalty. Zero-hour contracts affect all levels of personnel, amongst them retail assistants, care managers and graduates. The important thing is to treat everyone as part of the team and to show them respect and consideration. They should be fully-aware of what is happening within the company and be shown they are appreciated in non-financial ways – perhaps with social gatherings, little treats or with their work featured in the company newsletter. They should feel that they are not wasting their time. It could be an idea to give people specific projects or to get them involved in different tasks so that they feel they are gaining experience. Enable them to learn and have work that helps enrich them – so that they feel they have something to sell-on to the next business interview – and they should work much harder for the company.

Of paramount importance is employee engagement. This is a workplace approach designed to ensure that employees are committed to their organisation’s goals and values, motivated to contribute to organisational success, and are able at the same time, to enhance their own sense of wellbeing.

The research speaks for itself. Many businesses have undertaken employee engagement studies and those that score highly also have greater rates of profitability, lower staff turnover and higher customer loyalty than businesses with average employee engagement ratings.

The million dollar question when you are looking to engage staff working on demand has a simple answer based around trust, respect and openness.

“A barrier to getting staff on board can be as simple as not talking or more importantly not listening to them” says, Jaime Johnson, Director, The Survey Initiative.  “Talking ‘with’ (not at) your staff and listening to them is paramount to a successful comms strategy. In most cases people aren’t going out of their way to be awkward, they simply don’t understand the ramifications of their actions on someone else’s work”.

Of course another key element for driving change and keeping staff on-side is leadership. Often the management board need to be seen to be more approachable, supportive, understanding to the rest of the workforce. It can be vital to undertake group activity with these key players to ensure they understand how their actions can affect the morale and enthusiasm of others.

Staff need to be led by example but messages can also be spread from key personnel at all levels within the business. By creating ‘communication champions’ you’ll be able to disseminate key strategic messages throughout the organisation from the bottom up and the top down. These staff members can also be instrumental in driving forward new ways of working by acting as ambassadors for the launch of new schemes or actions.

The main issues for a company that is operating a zero-hours policy are to ensure employees are treated with respect and that they look out for their wellbeing, giving them every opportunity they can to be happy and productive in their work.

Gary Cattermole is the co-founder and director of The Survey Initiative, a leading staff survey provider specialising in employee engagement www.surveyinitiative.co.uk

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