Cleaning outsourcing: Counts, › iwplms2019 › downloads › Devetter_Valentin.pdf · Cleaning...
Transcript of Cleaning outsourcing: Counts, › iwplms2019 › downloads › Devetter_Valentin.pdf · Cleaning...
Cleaning outsourcing: Counts, trade-offs and rationalesIWPLMS – 9-10 SEPTEMBER 2019
DÜSSELDORFF R A N Ç O I S - X A V I E R D E V E T T E R ( L I L L E , C L E R S E ) E T J U L I E V A L E N T I N ( P A R I S 1 , C E S )
Key issuesIn most countries, cleaning jobs account for a sizeable share of employment and experience a strong growth. As such, it plays a significant role through two important different processes affecting employment system :
- Job Polarization [Autor and all]: the increase of the number of cleaning jobs is one important driver of the developpment of the low end of the income scale
- Employment fragmentation [David Weil]: the outsourcing process is at the route of the “fissured workplace” which undermine workers’ power inherited from Fordism
Indeed, cleaning jobs are mainly bad jobs but the problem is even more acute when outsourced.
The paper seeks to better characterised the outsourcing process in 3 different directions:
-First it proposes an attempt to assess the number of outsourced cleaners (1),
- Second, it scrutinizes the cost components in order to explicit the trade-off which is supposed to explain the outsourcing process (2)
-Third it investigates human resource’ managers motivations through the analyse of an employers’ survey (3).
1. How to count outsourced cleaners?
1.1 Problems to overcomeIt is quite easy to count the number of cleaners using the socio-professional category (SPC).
But there is no immediate measure of the number of outsourced employees
The usual strategy to split cleaners between outsourced workers and internal cleaners consists in the use of the industry index: employees who belong to the cleaning branch are the outsourced cleaners [Berlinski, 2008 ; Dube et et Kaplan, 2011, Doelgast 2018].
There remain methodological problems:◦ There are several PCS of cleaners (for hotel catering, public administration, health services…. ) ◦ Cleaners of the cleaning branch will be considered as outsourced whereas they are employees of their
company◦ Cleaning activities can be part of non cleaning job through polyvalence: internal cleaners may not be counted
when cleaning is not the main part of their job◦ Temporary workers will be considered as internal employees while they should be neither outsourced neither
internal◦ The methodology relies on nomenclatures that have changed several times
1.2 Trends in the number of cleaners
-
50 000
100 000
150 000
200 000
250 000
300 000
350 000
400 000
19
82
1983
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
1996
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
2017
Effect_externes Effectc-internes Effect_Total
Table 1. Number of cleaners :
internal and outsourced. 1982 – 2017
An expected result: Rapid growth of the number of outsourced
A surprinsing result: Relative
stability (in number) or moderate
decline (in% of employees) of
internal cleaners
2. Cost decompositionat the heart of the trade-off
2.1 The usual explanations (Abraham Taylor 1996….)A way to save labour costs (Wage and benefit)
The opportunity to buffer activity volatility
The availability of specialized skills (or human resources facility) possessed by the outside contractor
2.2 Labour costs comparisonFrom DADS survey, the cost of an hour of cleaners’ services can be computed.
Cleaning industry employees are paid slightly more than the minimum wage but less than the internal cleaners (-13%).
The gap becomes substantial compared to the median of [low skilled] employees (-30%)
Intern
cleaners
Min.
Wage
Low
skilled
median
Outsourced
cleaners
Hourly net wage
9,27 7,88 10,30 8,46
Hourly gross wage
11,22 9,53 12,46 10,24
Hourly employer
cost 13,79 10,63 16,13 11,96
2.3 « Full cost » comparison
Intern
cleaners
Min.
Wage
Workers
median
Outsourced
cleaners
Price
Paid holidays
15,17 11,69 17,74 13,15
bonuses and
other fringe
benefits
15,17 12,28 18,63 13,81
Absenteism costs
15,33 12,40 18,82 13,95
Training costs
15,48 12,53 19,00 14,09
Supervision costs
17,03 13,78 20,90 15,50
Total wage costs
17,03 13,78 20,90 15,50
Equipment
1,70 1,38 2,09 1,55
Products
1,70 1,38 2,09 1,55
Total Cost
20,43 16,53 25,08 18,60 34,5
However, the trade-off does not only deal with labor costs but must take into account the full cost of the service performed internally or outsourced.
In the first case organizational costs (paid holidays, bonuses, absenteeism, training, ...) and other production costs (products, materials, ...) must be added
In the second case, the full cost corresponds to the price paid by to the service provider. It can be estimated from the turnover and the volume of activity of service providers.
3. Why establishments outsource cleaningactivities?
3.1 Data and hypothesis« REPONSE » survey : 4300 establishments. Representative survey of plants with 10 or more employees
« Apart from your main activity, what activities or services are outsourced to a subcontractor?»
“Cleaning, housekeeping and security" activities: 57% of plants concerned in 2011 and 64% in 2017.
4 hypothesis : ◦ H1 - Outsourcing organizations are those that have the most direct expected benefit from an externalization
◦ H2 - Outsourcing organizations are those that pursue profitability or cost reduction objectives more importantly
◦ H3 – Organizations that have the least management autonomy are those that outsource more frequently
◦ H4 - Managers who have the most instrumental management rationale are those that outsource more frequently
3.2 Main results
Estimate Pr > Khi-2
H1 - Direct
expected benefits
Previsibility Yes vs No 0.2575 0.0049
Non-wage benefits Yes vs No 0.8596 <.0001
H2 - Profitability
Main objective Quality vs
profitability
-0.2136 0.0344
Wages determined by
profitability
Yes vs No 0.1825 0.0419
H3 – Management
autonomy
Autonomy on
manpower adjustment
No vs Yes -0.3868 <.0001
Wages determined by
headquarters
Yes vs No 0.0437 0.6227
H4 – Managers‘
rationale
Wage policy
Non
individualized
REF
Weakly
indivdualized
0.1895 0.1298
Strongly
individualized
0.5501 <.0001
Very strongly
individualized
0.5201 <.0001
Utilitarianist rationale
on human ressources
management
Yes vs No 0.1489 0.0670
The more costs savings opportunities, the more likely is outsourcing (H1).
The logic based on cost savings is asserted by managers: cleaning is more likely to be outsourced when activity is less previsible and when non-wage benefits are offered (H2).
Managers lack of autonomy increase the probability of cleaning outsourcing (H3).
The more utilitarianist Human Ressourcesdecisions are, the more likely outsourcing is (H4)
Conclusion This work underlines a major paradox: the main explanation of outsourcing is based on expected savings in labor costs and managers rely on this rationale (H1 and H2), but empirical costs computations show how unlikely this can happened.
But the econometric work gives research leads to overcome this paradox:
- the first concerns the organizational structure: outsourcing could be the answer to inappropriate incentive mechanisms. The calculation parameters imposed on local decision-makers by headquarters pushes them to make inefficient decisions for the company as a whole.
- the second leads us to consider the decision to outsource no longer from the point of view of an arbitration in terms of managerial efficiency but to consider it as an individual arbitration aiming (for the manager) to maximize his professional individual satisfaction. It is thus an issue of service consumption allowing to avoid the inconveniences of the management of these employees (logic of getting rid of the "dirty work").