Short-term contracts have dangers and may not even save money
Pressure to cuts headcounts is seeing more and more posts filled by temporary hires, but these pose threats, and might not even save money
What can an employer do if he wants to hire more people but cannot add more permanent staff to the payroll, because of a freeze on new hires?
One option is to hire contractors rather than full-time permanent employees, a switch that is becoming more and more popular in the Hong Kong banking world.
With the debt crisis in the euro zone and the disappointing economic recovery worldwide, shareholders have urged banks to save costs, and one quick way to do so is to cut jobs. Given that many banks have their regional head offices in Hong Kong, the city has seen its share of the impact of these cuts.
But the work still has to be done, and hiring contractors rather than full-time staff is a way to deal diplomatically with shareholders' concerns about headcounts.
Conversations with my headhunter friends have made me realise it is more and more difficult to get a permanent job offer, especially for junior and mid-ranking positions, at big banks in Hong Kong.
For example, one of the biggest American banks is looking for a marketing manager, based in Hong Kong, to be mainly responsible for its wealth management business. The length of the contract is just six months, with the possibility of renewal for another six months or more, partly depending on the company's prospects by then.
But what would happen if a bank sent someone to a rival to take up a six-month marketing manager's job just to learn about (or, you could say, spy on) what the rival focused on? Hiring contractors does not sound a safe option in terms of keeping your business secrets. It can be argued that marketing jobs only give limited access to sensitive corporate information, but what about public relations managers and human resources specialists? Such jobs are now also available in the market on a contract basis from six months to one year.
A public relations manager's job requires the person to work very closely with top bosses, often including chief executive level or above, and the PR manager also needs get a clear picture of what happens inside the bank so they can be confident when communicating with the public and media.
One of my headhunter friends joked that he might want to apply for the human resources specialist role at a big European investment bank in Hong Kong on a one-year contract. There he could learn who was who inside the bank, and perhaps how much those bosses earned. One year later, he could return to his headhunter role and pitch his by then ex-colleagues for new jobs.
In fact, hiring a contractor employee rather than a full-time permanent staffer does not necessarily mean the hirer will save money. Headhunters say the short-term cost of hiring a contractor might be even higher, because contractors are usually not eligible for year-end bonuses and other non-cash benefits, so they will focus on getting more than usual out of their monthly salaries.
So, is there too much pressure from shareholders on headcounts? Even when there is, the rush to short-term hires proves once again that in the banking world there is always another way around it.
George Chen is the Post's financial services editor. Mr. Shangkong appears every Monday in the print version of the SCMP. Like it? Visit facebook.com/mrshangkong