Platt Perspective on Business and Technology

Exceptions and exception handling from the HR perspective 3: outside consultants and contract workers 2

Posted in HR and personnel by Timothy Platt on March 11, 2014

This is my third installment in a series on recognizing, understanding and thinking about exceptions, and about exception handing in a Human Resources context (see Part 1 and Part 2.)

I began a discussion of bringing in and working with outside consultants and contract workers in Part 2, and continue that here. In Part 2, my focus was on knowing and understanding how these outside-sourced employees are and are not similar to in-house employees, and both for what they do and for the conditions under which they do this work, and for their terms of employment. My goal for this series installment is to follow up on and expand upon that with a case study example, where a large proportion of the workforce actively in place consists of long-term, full time consultants and contract workers: the Microsoft Corporation.

When you go to the home office facilities and headquarters of Microsoft at Redmond, Washington, you see large numbers of full time employees and if you look a little more closely, you see that they can be divided into groups according to the color of their identification badges. Visitors who do not work there get different colored badges than employees – but those employees themselves can be divided into distinct badge color groups too, with true in-house Microsoft employees differently identified than outside-help consultants and contract workers.

Those outside staff members can and do work similar hours and on similarly important tasks, and with similarly confidential and proprietary information as in-house employees. Both groups include large numbers that work at Microsoft full time for extended periods of time, up to and including durations of many years and even for very significant portions of entire careers. They both include workers with detailed insider knowledge of Microsoft and its goals and priorities and its operations. But only the in-house employees get benefits such as stock options, plus of course Microsoft’s counterparts to more standard in-house employee benefits packages. That one special in-house only benefit: stock options has made many of this company’s in-house employees rich – millionaires. Even outside consultants and contract workers who perform to the highest standards there, and who work at that level for years, full time, are not eligible for this opportunity; that has been Microsoft’s basic approach, and with a sufficient number of outside consultants and contract workers involved that they cannot legitimately be seen as exceptions to any standard personnel model or practice in place. They are simply a large workforce demographic within the overall long-term Microsoft team that are not offered a wide range of particularly significant in-house benefits.

That, in its simplest and un-nuanced form, is how Microsoft has dealt with its outside sourced workers as their traditional approach. And that has generated resistance and pushback, and even legal action against the company that it has had to address, and whose claims it has had to at least in part accommodate. This posting, at least up to here, is about the relationship between in-house and outside sourced workers in a business and the potential for perceived discrimination that can develop depending on precisely how those two groups differ in how they are treated, and particularly where they are similar in what they do.

• Whenever a business brings in outside consultants or contract workers, and particularly whenever they bring the same individuals in long-term, this becomes a risk assessment and a risk limitation exercise, and one that can become a risk remediation exercise as well, and particularly as insider and outsider employees are treated differently while performing essentially the same work.
• This is particularly true when there is an air tight barrier limiting or even preventing cross-over between outsider and in-house status.

And this brings me to one other topic area that I noted in Part 2 that I would address here: working with stand-alone outside workers, and with outside workers who are employees of consulting or contract worker firms. For purposes of this discussion, that can mean bringing in individuals or teams from explicitly designated consulting businesses such as McKinsey & Company: the management consulting firm, or bringing in staff or management personnel through employment agencies on a more individual basis. Or alternatively, this can mean bringing is freelance outside help without going through any larger consulting or contract worker company involvement.

I will start that part of this overall discussion here and continue it in a next series installment. But to begin, I will note that when a business negotiates with a stand-alone, free agent consultant or contract worker, they do so under very different circumstances than they do when they bring in a similarly skilled and experienced worker who is an employee of a consulting or outsourcing business, or who comes in through an agency or placement service. And these workers actually work at their client businesses under very different terms, with free-lance agent outside employees in general, not working under non-compete contract terms but with outside employees coming from consulting or other firms almost always limited in what they can individually negotiate and do and with that essentially always including limitations on being allowed to go in-house as a full time regular employee.

As just stated, I will delve into some of the details of this in a next series installment and certainly insofar as they connect to and elucidate in-house personnel policy and practices, and exception handling in them. Meanwhile, you can find this posting and series, as well as other related material at HR and Personnel.


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