The Two Sides of Employee Leasing

N E W S S O U R C E

TOPIC: The Two Sides of Employee Leasing

SOURCE: Dr. Carol Harvey, Expert on Management Trends, Associate Professor of Management and Marketing at Assumption College (Worcester, MA)

CONTACT: Heidi Macora, Assumption College, 508-767-7173 ____________________________________________________________________________

From 1985 to 1996, the number of leased workers in the U.S. increased from 10,000 to more than two million, but this cost-cutting measure may not make for good human resource management, says Dr. Carol Harvey, who is an associate professor of management and marketing at Assumption College (Worcester, MA).

Employee leasing is when a company signs an agreement with a leasing company or professional employment organizations (PEO). The leasing company or PEO then becomes the employer and assumes traditional human resource functions, she says.

"For example, employee leasing functions like this: The CEO of a firm tells his workers that he's found a way to concentrate on growth, improve benefits, and reduce overhead costs. Then he fires all employees, including himself. Next, he says that he's signed a leasing agreement with a PEO that will lease these same workers back to the firm," Harvey says.

Harvey says employee leasing usually occurs within small companies (100 employees or less), where there is often a family-like relationship between the employer and employees. "A leasing agreement can change the employer-employee relationship to a strictly business one." Harvey's predictions for the future: "Employee leasing devastates employee moral and destroys trust. Employees will go after intrinsic benefits, such as more money, because they probably won't be getting extrinsic benefits, like more responsibility. Employees will take on an 'I-don't-care -about- the- company- if- the- company doesn't- care- about- me' attitude. This will create an increase in unionization, especially among white collar workers - there is no doubt in my mind."

Dr. Carol Harvey is available for interviews to speak about leasing employees and other workplace trends. You can reach her directly at (508) 767-7459 or try Heidi Macora in Assumption's public affairs office at (508) 767-7173.