research-report-96-coming-clean-contractual-and-procurement-practices.doc

The nature of procurement and its effects on

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The nature of procurement and its effects on employment also differ according to the relative dominance of one or the other of the contracting organisations. A client is likely to be the dominant partner where it is able to exercise power over the rules of contracting and the form of performance monitoring and/or where the supplier is 4
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FRAGMENTING WORK over-dependent on this particular contract for its revenue or faces very strong price competition for the subcontracted service (Grimshaw et al., 2002; Swart and Kinnie, 2003). In these circumstances, workers employed by the supplier are likely to depend indirectly on the client organisation for improvements in HR practices and working conditions because better conditions at a single supplier, for example through the successful organisation by workers, will price it out of the market (Wills, 2008). This awareness has informed living wage campaigns where unions have targeted the client organisation rather than the direct employer of cleaners to make their demand for a higher basic rate of pay. The relative success of these campaigns underpins a further observation, which is that an imbalanced contractual relationship does not necessarily mean the lead partner acts opportunistically; a more powerful client organisation may, for example, seek to share its expertise in pay practices or staffing arrangements with a less sophisticated HR team in a supplier organisation. Many evaluations of the effects of trusting inter-organisational contract arrangements compare the results with those of less trusting, or transactional, contract arrangements and find relatively positive employment effects, However, even where procurement practices are characterised by strong trusting relations and a relatively balanced partnership, the implications for workers should also be compared to an arrangement where there is an integrated, internally organised workforce that is not subject to continuous market testing of performance and labour costs. The key effects here derive from the unbundling of an organisation’s activities and the fragmentation of workforce groups across multiple employing organisations, through a process of marketization. As many studies have shown, it is the generic processes of benchmarking, market testing and recurrent contracting that pose the greatest risk for the degradation of employment conditions (Doellgast, 2012; Escott and Whitfield, 1995; Flecker and Meil, 2010), albeit with some variation in the degree of downwards market pressures by nature of contracting practice. 2.2 Tailoring employment practices and conditions to the client Both the client and the supplier organisations exert influence over the degree to which the employment arrangements for subcontracted workers are tailored to the specific requirements of the client or to fit with the standard company-wide model of the supplier. The research to date suggests both strategies present possible upsides and downsides for the employers and workers. Where HR practices are designed
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