The Kaiser Manufacturing Company (KMC) has been in existence for over 50 years. Itsmain products are specialty implements fo

The Kaiser Manufacturing Company (KMC) has been in existence for over 50 years. Itsmain products are specialty implements for use in both the crop and dairy herd sides ofthe agricultural business. Products include special attachments for tractors, combines,discers, etc., and add-on devices for milking and feeding equipment that enhance theperformance and safety of the equipment. KMC has a small corporate office plus fourmanufacturing plants (two in the Midwest and two in the South). It has a core workforceof 725 production workers, 30 clerical workers, 32 professional and engineeringworkers, and 41 managers. All employees are full-time, and KMC has never used eitherpart-time or temporary workers. It feels very strongly that its staffing strategy of usingonly a core workforce has paid big dividends over the years in attracting and retaining acommitted and highly productive workforce. Sales have been virtually flat at $ 175million annually since 2008. At the same time, KMC has begun to experience moreerratic placement of orders for its products, making sales less predictable. This appearsto be a reflection of more turbulent weather patterns, large swings in interest rates, newentrants into the specialty markets, and general uncertainty about the future directionand growth of the agricultural industry. Increased unpredictability in sales has beenaccompanied by steadily rising labor costs. This is due to KMCs increasingly olderworkforce, as well as shortages of all types of workers (particularly production workers)in the immediate labor markets surrounding the plants.Assume you are the Human Resource Manager responsible for staffing and training atKMC. You have just been contacted by a representative of the Flexible StaffingServices (FSS) Company, Mr. Tom Jacoby. Mr. Jacoby has proposed meeting with youand the president of KMC, Mr. Herman Kaiser, to talk about FSS and how it might be ofservice to KMC. You and Mr. Kaiser agree to meet with Mr. Jacoby. At that meeting, Mr.Jacoby makes a formal presentation to you in which he describes the services,operation, and fees of FSS and highlights the advantages of using a more flexibleworkforce.During that meeting, you learn the following from Mr. Jacoby. FSS is a recent entrantinto what is called the staffing industry. Its general purpose is to furnish qualifiedemployees to companies (customers) on an as-needed basis, thus helping the customerimplement a flexible staffing strategy. It furnishes employees in four major groups:production, clerical, technical, and professional/ managerial. Both full-time and part-timeemployees are available in each of these groups. Employees may be furnished to thecustomer on a strictly temporary basis (temps) or on a temp to permanent basis inwhich the employees convert from being temporary employees of FSS to beingpermanent employees of the customer after a 90-day probationary period.For both the temp and temp to permanent arrangements, FSS offers the followingservices. In each of the four-employee groups, it will recruit, select, and hire people towork for FSS, which will, in turn, lease them to the customer. FSS performs allrecruitment, selection, and employment activities. It uses a standard selection systemfor all applicants, composed of an application blank, reference checks, drug testing, anda medical exam (given after making a job offer). It also offers customized selectionplans in which the customer chooses from among a set of special skill tests, apersonality test, an honesty test, and background investigations. Based on the standardand/ or custom assessments, FSS refers to the customer what it views as the topcandidates. FSS tries to furnish two people for every vacancy, and the customerchooses between the two. New hires at FSS receive a base wage that is similar tothe market wage, as well as close to the wage of the customers employees with whomthey will be directly working. In addition, new hires receive a paid vacation ( one weekfor every six months of employment, up to four weeks), health insurance ( with a 25%employee copay), and optional participation in a 401( k) plan. FSS performs and paysfor all payroll functions and deductions. It also pays the premiums for workerscompensation and unemployment compensation.FSS charges the customer as follows. There is a standard fee per employee furnishedof 1.55 base wage hours worked per week. The 1.55 is labeled markup; it covers all ofFSSs costs (staffing, insurance, benefits, and administration) plus a profit margin. Ontop of the standard fee is an additional fee for customized selection services. This feeranges from .50 to .90 base wage hours worked per week. Finally, there is a special one-time fee for temp to permanent employees (a one-month pay finders fee), payable afterthe employee has successfully completed the 90-day probationary period andtransferred to being an employee of the customer. Mr. Jacoby concludes hispresentation by stressing three advantages of flexible staffing as provided by FSS. First, the use of FSS employees on an as-needed basis will give KMC greater flexibility in itsstaffing to match fluctuating product demand, as well as movement from completelyfixed labor costs to more variable labor costs. Second, FSS provides considerableadministrative convenience, relieving KMC of most of the burden of recruitment,selection, and payrolling. Finally, KMC will experience considerable freedom fromlitigation (workers comp, EEO, torts) since FSS and not KMC will be the employer. 

After Mr. Jacobys presentation, Mr. Kaiser tells you he is favorably impressed, but thatthe organization clearly needs to do some more thinking before it embarks on the pathof flexible staffing and the use of FSS as its provider. He asks you to prepare apreliminary report that includes the following items with support from scholarlyresources with APA citations: 

1. Describe the possible advantages and disadvantages of flexible staffing. 

2. Describe the advantages and disadvantages of using FSS as a service provider.