Internal Employees versus External Employees (Contractors): Are the ‘Outcomes’ the same?

Abstract

This paper examines the ‘outcomes’ of employing internal cleaning employees versus contract cleaning employees, employed in similar roles, in parallel organisations. In particular the focus of this research is in the areas of: the benefits/risks to the organisation; the management and control of contract workers; training and development; teamwork; job satisfaction; organisational commitment, the psychological contract; and the quality of service (tangible/intangible).

The research approach adopted for this thesis includes a case study of five University of Otago owned residential colleges – two of whom employ internal cleaning employees, and three of whom employ contract cleaning employees. Such a study is important in order to ascertain whether there is any variation in cost (particularly in the current economic climate) and furthermore to test for any differences between the two models of cleaning. The research methods consisted of a wide review of relevant literature on contract employees versus internal employees on the afore mentioned research foci, coupled with the collection and analysis of relevant empirical data including data analysis, student surveys, and interviews with college management staff and cleaning staff. The findings from this research provide evidence in relation to the research objectives and hypotheses between these two groups of employees. The findings underline that generally there is little difference in the cleaning service provided by internal cleaners and contract cleaners in terms of the quality of cleaning in the residential colleges. The main conclusions drawn from this study of cleaning employees are that both models (internal and contract) provide a very good to excellent level of cleaning. Costs comparisons were based on 2011 actual costs prorated over 44 weeks to equate to a cost per day, per student amount and also over 40 and 44 weeks respectively to calculate a cost per week, per student.

Generally it was found, based on the results from the comparative analysis, than on average contract cleaning is more cost effective than internal cleaning employees, when the number of locations and distance are factored in. There are also no HR costs associated with contract cleaners that internal employees attract. The findings underline that using contract cleaners is a more flexible arrangement, did not pose additional risk for the organisation nor was the management and control of contract cleaners an issue. Conversely these findings point to all of these factors aforementioned being a benefit of employing contract cleaners rather than internal employees. As all University Colleges have the opportunity to host functions (internal and external to the University) in their respective colleges and to operate 52 weeks of the year – this aspect needs to be considered not only in the determination of using internal cleaners versus contract cleaners but also in the decision making of where functions should be held. Although contracting out of services can expose an organisation to market forces there did not appear to be as many negative connotations as first thought when reviewing the literature in relation to contract employees for example: risk; lack of control; quality; staff turnover; teamwork, loyalty and commitment. This thesis recommends that organisations review their requirements and needs of the business and adopt the model that best serves their circumstances and the wider environment.