Developing a temporary workforce transaction mechanism from risk sharing perspectives

Abstract

In a low-profit environment, numerous firms no longer use traditional hiring practices and are forced to use a temporary workforce; these practices result in a more flexible workforce. Although outsourcing provides several benefits, it has a high level of risk. Therefore, implementing an enterprise risk management programme is crucial for using temporary labour. This study investigated the condition under which the multiperiod contract of a temporary work agency prohibits labour shortages. This investigation was performed to improve the effectiveness of dispatch contract designs. This study incorporated the concepts of labour demand forecasting and risk sharing and proposes two types of quantity flexibility contracts, period quantity adjustment and total quantity adjustment, to develop an optimal manpower dispatch contract model. An optimal manpower dispatch contract model must coordinate the interests of a temporary work agency and user firms to increase profits for both firms and must be flexible enough to allow for numerous order adjustments. To achieve this objective, this study used sensitivity analysis and an experimental design methodology to analyse the benefits of period quantity adjustment and total quantity adjustment and, accordingly, determine the factors that influence the total expected profit.