White-Collar Contractor Sabotage

Although the term white-collar is outdated and inaccurate, the designation it implies is current and thriving. To work in a white-collar role in the nineteenth and most of the twentieth centuries was to perform professional service, desk, managerial, or administrative work. [Lepore 2014] Today, that description of white-collar work is still apt, though many white-collar workers no longer wear white collars, or, indeed, any collars at all.

Contracting, as a business practice, doesn't trace back nearly as far as detachable white collars. But for decades, in a long-term trend, contractors have been increasing as a share of the white-collar workforce. Contracting is especially significant in technology-driven industries, where rapid change creates short-term needs for people with specialized knowledge. The short-term need can be so short in duration that hiring a direct employee (DE) to meet that need entails a financial commitment for the employer that outlasts the need. Hiring a contractor employee (CE) can meet the short-term need while avoiding the longer-term financial commitment that accompanies hiring DEs.

The long-term effects of meeting short-term needs by means of contractors

As a consequence of hiring CEs to meet short-term needs, the white-collar workforce can come to consist of a mix of workers of different kinds of Employer/Employee relationship. At Google, for example, the mix is generically called TVCs (Temps, Vendors, and Contractors). [Bergen & Eidelson 2018] No doubt other firms have different terminology. But for the present purpose I focus only on DEs and CEs.

When many employers compete for top talent, one result has been explosive growth in value and variety of benefits and "perks." Examples of what employers have been offering direct employees are:

• They pay DEs more than contractors receive (net of agency fees)
• They provide DEs a complete benefits package including health insurance, paid time off, retirement plan, on-campus fitness facility, on-campus child care, and so on; CEs receive no benefits
• They provide DEs free bus service to and from work, but charge CEs a fare to ride the same buses
• DEs wear white badges, while CEs wear red badges
• CEs are barred from some parts of company facilities; DEs have free access
• Free food and refreshments for DEs; nothing or for-a-price for CEs
• Sandwiches for DEs at the "lunch and learn" seminars; nothing for CEs
• Signing bonuses for new DEs
• Valet services for DEs
• Incentive gifts to incumbent DEs who help recruit new DEs

Some of these examples are extreme, but even the extreme examples can be common in some industries, depending on market conditions.

Over time, the firm accumulates a number of people in different categories with differing levels of access to perks. It isn't unusual to find teams composed of both DEs and CEs, or project teams of mostly DEs led by a CE project manager.

The problems of managing variety

Mixing categories of workers, by itself, might be workable. But because preferential treatment of DEs is such a widespread practice, forming workgroups of mixtures of employee categories tends to produce mixtures of compensation, perks, and benefits packages for people supposedly collaborating to achieve a shared objective. The usual result is a combination of CEs with DEs, and preferential treatment of DEs. And that's a high-risk combination, because we expect them to work together as equal partners, but preferential treatment makes some partners "more equal" than others.

Offering preferential treatment to employees of one category (usually DEs) can lead to perceptions that the people in that preferred category are better people. And implicitly, it can also lead to perceptions that people in non-preferred categories are lesser people. Preferential treatment thus creates a caste system.

Last words

Letting a caste system be visible makes for management problems because visible preferential treatment adds four combustible elements to the mix: jealousy, envy, hope, and aspiration. Those who aspire to DE positions but who currently occupy CE positions might experience jealousy or envy. When these people feel that they're qualified for DE positions, or when they feel that they are more qualified than those who currently occupy DE positions, their perception of unfairness or injustice can turn jealousy or envy to anger. In acts of passive sabotage, they might withhold contributions they might otherwise make. Some might adopt a work-to-rule stance, carrying out assigned tasks at a minimum level of performance, thinking to themselves, "If they value me at a minimal level, I'll perform at a minimal level." And so, preferential treatment of DEs creates low performance among CEs.  Top    Next Issue

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