WHY ARE LONG-TERM EMPLOYMENT CONTRACTS IMPORTANT?

The employment relationship has turned into a vital part of an organization, considering the rapid increase in the technology and internationalization of business. Every organization is seeking for a key that unlocks their success and satisfies their employees. That which employers need is employees who make a special effort to achieve something and do their best work while employees seek jobs that fulfill their demands and employers that are motivating them to go on.

Here come the critical questions. What is the role and importance of long-term employment contracts on employee behavior in contrast to short-term employment contracts? What is the importance of establishing long-term employment relationships through the benefits that these provide?

In the past decades, short-term employment contracts have been rapidly brought into effective action across European countries. Short-term contracts are distinguished by a precise duration upon which they come to the end of their period of validity, either by reaching a specific date or by finalizing a specific project at hand. Termination to short-term employment contracts can be given when both the employer and employee are in agreement to do so or if either the employer or employee is considered to have not honored the contract.

Long-term employment contracts are referred to as indefinite employment and employers do not anticipate that the contract will be terminated any time soon. To elaborate, an employment contract is considered long-term when a fixed termination date is not stated. Long-term employment contracts can be terminated according to provisions governing employment. These might include age limit, poor performance or severe failure to act as required by the contract terms.

Organization Morale

Short-term employment contracts have a negative relation to job satisfaction and positive relation to considerably negative employee behavior like unscheduled employee turnover and low levels of productivity. Organizations that largely employ people under short-term employment contracts come across higher rates of employee turnover. Furthermore, employees who work under short-term employment contracts undergo low morale. This significantly leverages the development of negative attitudes. Short-term employment contracts indeed have an influence on the morale in organizations when short-term and long-term employees receive different treatments even though they may be working together.

Knowledge

I believe that when employees are working for a particular organization for many years, they develop substantial knowledge of the organization’s culture as well as the organizations’ products and services. Long-term employment contract employees get to experience many changes within their workplace and for that reason, they know what works for their current organization and what doesn’t in regards to executing their job duties frequently. In addition, a sturdy knowledge base is developed, which provides valuable information and results in higher productivity due to the elimination of frequent mistakes being made. For instance, employees under long-term employment contracts in a manufacturing firm can develop a sharp understanding of procedures and manufacturing skills or abilities, which eventually generate more sales.

Support System

Every time new recruitment takes place within an organization, the new employees must receive the required training in order for them to further understand their responsibilities within their role. For new employees, long-term employment contract employees can be an extremely useful support system. To elaborate, a matter that the new employee has difficulty handling can be solved with the help of a long-term employment contract employee. Moreover, in the case of new employees becoming overwhelmed by performing their job duties, long-term employment contract employees can encourage them that in time they will adapt and learn how to cope with the job demands.

Job Security

Employees who work with an organization for a number of years might create a secure work environment that improves the confidence, enthusiasm, and discipline of employees. Moreover, a disruption of the work environment might take place whenever an employee quits or is dismissed from an organization. Long-term employment contracts suggest a safe work environment and help eliminate the uncertainty and confusion enhanced by the high rates of turnover.

Costs

Replacing and training new employees as a result of high rates of turnover associated with short-term employment contracts require a significant amount of time and resources for organizations. Costs often include layoff fees. In addition, costs might include replacement expenses which include expenses such as conducting interviews and administrative tasks related to hiring among many. By protecting and retaining employees through long-term employment contracts, separation and replacement costs are minimized.

Productivity

Through the establishment of strong employment relations with the use of long-term employment contracts, an organization can develop a delightful atmosphere that can significantly increase employee productivity and therefore lead to increases in profits for the organization. Moreover, short-term employment contract employees might be less interested in having input in organizational operations.

Loyalty

Employees under short-term contracts display lower engagement and loyalty to the organization they work for than long-term employment contract employees. Short-term in nature contracts tend to increase feelings of isolation and neglect among employees. As a result, employees are significantly less productive. A productive and delightful work environment encourages a loyal workforce and by establishing such a workforce within an organization, employee retention increases. Through my own experience, the costs of high rates of turnover outweigh the costs of the establishment of an employee relations program. Loyalty is vital for organizational success.

Overall, in opposition to short-term employment contracts, long-term employment contracts have a remarkable positive impact on employee behavior outcomes. Ideally, short-term employment contracts offer organizations lower costs and increased flexibility. The organizations’ benefits from such contracts can be proven elusive, though, if temporary employees are less trained or less engaged in their organizations in the long-term. As employers nowadays tend to prefer employing workforce under short-term employment contracts, employees’ benefits come at great risk if short-term contract employees become a wandering underclass in the labor pool.