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1.1 Background of the Study
When an employer and employee enter into a zero-hour contract, neither party is obligated to provide the other with a specific number of hours each week. In the United Kingdom, the term “zero-hour contract” is the most frequently used. “zero-hour contracts” were banned in the UK in 2015, preventing employees from working for two different companies at the same time. There are 2.9 per cent of the workforce in Britain who work on zero-hours contracts, according to the Office for National Statistics (ONS) (Koumenta and Williams, 2019). The issue of zero-hour contracts is hotly debated in the United Kingdom. They have been referred to by trade unions, other worker organisations, and the media as exploitative of employees’ time and resources. Companies like “Sports Direct,”“McDonald’s,” and “Boots” employ zero-hours contracts. No hours were worked by a reported 900,000 people at the end of September 2017, up from 747,000 the previous year (Ravalier et al., 2019).
In the UK, “zero-hour contracts” are divisive. They have been supported by British business leaders, who believe that they facilitate a more flexible labour market. These contracts have sparked concerns from trade unions and others about the potential for abuse and management’s use of these contracts to punish or reward employees for whatever reason—significant or little (Lopes and Dewan, 2014). In addition, they raise concerns about the ability of employees to successfully protect their rights at work and maintain appropriate working conditions.
The research being proposed will look into the challenges associated with zero-hour contracts, and also determine its negative impact on employee motivation and customer retention, with special reference to the service industry of the UK.
1.2 Research Aim and Objectives
The central aim of this research is to identify the main issues and challenges of zero-hours contract and determine the ways in which it affects employee motivation and customer retention. The primary objectives to be met through the proposed study are as follows:
1.3 Research Question
The fundamental questions to be addressed through the proposed study are as follows:
Q.1) What are the common issues which arise out of zero-hour contact in the UK service industry?
Q.2) How do zero-hour contracts affect employee motivation within the service industry of the UK?
Q.3) How does a zero-hour contract impact the customer retention levels within the companies operating in the service industry of the UK?
1.4 Justification of the chosen topic
When employed under a zero-hour contract, employees are at risk of being exploited since they can be refused labour at any moment for any reason, including refusing to work when asked to do so by their employer (Whitehead and Phippen, 2015). According to The Guardian in late July 2013, Parliament was concerned about the fast growth of zero-hour contracts in the United Kingdom. A prohibition has not been ruled out by Vince Cable, the government’s business secretary. Rather, he is contemplating stricter oversight of the contracts (Brinkley, 2014). Therefore attempting research on this topic is just because it will contribute towards the development of an understanding of the negative impacts of this form of employment contract, along with its impact on aspects such as employee motivation and customer retention.
1.5 Research Significance
Workers on zero-hours contracts are more likely to suffer from anxiety, stress, and depression because of their financial and social instability. Employees on zero-hours contracts do not receive sick pay and, as a result, work even when unwell. Customer loyalty to service-based firms is impacted when staff aren’t motivated to do their jobs, which in turn impacts their performance and ultimately their motivation (Duke and April, 2020). The proposed research work makes an attempt to make a systematic study of the negative impact of the zero-hour contract, and this document can be utilised by the service business companies of the UK, to make more informed and wiser decisions regarding their own practices in handling their own zero-hour contracts, which would eventually enable them to enhance the motivation levels of their employees and optimise their overall organizational performance in the long run. Herein, lies the significance of the proposed study.
2.1 Fundamentals of the Zero Hour Contract
A zero-hours contract is a term given to a contract under which workers are only compensated for the labour they actually perform since they are not guaranteed any work at all. Their primary function is in “piece work” and/or “on-call” labour. When an employee has a zero-hours contract, he or she is not contractually obligated to work, and neither is the employer, according to Farina, Green and McVicar (2021). The contract specifies no working hours or times of the day. In many cases, zero-hours contracts can be a viable alternative for both employers and employees. According to the Office of National Statistics Labour Market Survey, 978,000 employees, or 3% of the workforce, were on a zero-hours contract in the last quarter of 2020. In the final three months of 2016, 2.8% of the workforce was on a zero-hours contract, a level that has remained relatively stable in recent years (Rotar, 2022). Between 2005 and 2011, the number of people working under a zero-hours contract was believed to have increased. In contrast to the general workforce’s 26%, 65% of those with zero-hour contracts claimed that they were working part-time, according to ONS data (Rotar, 2022). All employed workers put in 36 hours per week on average, whereas those with zero-hour contracts put in only 25. Using data from the Labor Force Survey, it has been shown that 54 per cent of workers on a zero-hours contract are women, 33 per cent are between the ages of 16 and 24, and 18 per cent are in full-time employment, as per the findings of Gheyoh Ndzi (2021).
Some say that larger companies make more use of zero-hour contracts. Keely (2021) states that the ONS Business Survey found that 28% of businesses with 250 or more employees utilise some kind of zero-hours contracts, compared to 5% of those with less than 10 employees. Many companies utilise zero-hour contracts, such as Sports Direct, JD Wetherspoon (which has 90 per cent of its workforce on a zero-hour contract), McDonald’s, and Subway, point out Power (2021). The Palace of Windsor is also rumoured to have employed seasonal labourers on zero-hours contracts.
2.2 Arguments against Zero Hour Contracts in the UK
Many people who work on zero-hour contracts are forced to feel the need to respond quickly to job requests because of the financial obligations that come with them. Turnpenny and Hussein (2021) are of the opinion that if the employees working under this contract do not, they might be punished in the future and face extended spells of unemployment. People’s life outside of work might be disrupted by this, and families caring for dependents can be particularly affected. Furthermore, it has been suggested that the belief that employees must be available to work only for a single company prevents them from seeking alternative positions of employment. Zero-hours workers receive an average of 6.6 per cent less per hour than their peers who are not working on zero-hours contracts, according to the Resolution Foundation think tank (Dupont, 2021).
A person’s eligibility for certain state benefits, such as the single-parent working tax credit, which is connected to whether or not a person has worked 16 hours a week, may also be an issue due to these arrangements, opine K?n?ko?lu and Can (2021). Trade unions also criticise zero-hours contracts, claiming that they allow employers to abuse their employees. An employer’s power to manage how many hours their employees work and hence how much money they may earn is considered a weapon that can be used to reward or chastise workers (Strukov, 2021). According to the statement of Vadean and Allan (2021), zero-hour contracts were a frequent target of Jeremy Corbyn’s criticism when he served as Labour Party leader.
2.3 Impact of Zero Hour Contract on Employee Motivation and Customer Retention Levels
Employees who have little or no hours in their schedules may be afraid to voice their complaints to supervisors about their jobs or the firm for fear of losing those hours. Additionally, it might cause individuals to doubt their own abilities, resulting in them staying on a zero-hour contract since they lack the necessary skills and training to land a more permanent position elsewhere, as per Dolado, Lalév and Turon (2021). Contracts of this nature can have both beneficial and bad effects on employee morale.
Many businesses have seen an increase in employee turnover due to the difficulties associated with zero-hour contracts, which is terrible for the bottom line, claim Humphreys and Lorne (2021). The people a business hires are the ones its consumers deal with, not the company itself. Most of the consumers’ first impressions of a firm will be formed by the person with whom they transact business or who they contact for assistance with the product/service. Any new customer service professional, no matter how likeable, will need to earn the trust of the client or customer they are working with if an organisation has a significant turnover in customer-facing jobs, asserts McCabe (2021). One of the reasons that a 5% improvement in client retention can raise total revenues by 25% to 95% is that this solution has flooded the market (Madhani, 2020). Because of this, a decrease in customer/client retention will have a direct impact on a company’s overall financial performance.
3.1 Research Design
Research philosophy helps to uncover the underlying causes, factors, viewpoints, and motivations of a situation. This information may be used to do a study into the issue or to develop thoughts or hypotheses for quantitative research. As per the diagram of the research onion presented above, it is evident that the different philosophies include- “positivist,”“interpretive,”“pragmatic,” and “realistic” etc. (Saunders, Lewis and Thornhill, 2007). The “interpretivistic philosophy” or “interpretivism,” as it is often called, requires researchers to interpret study components (Fetters and Molina-Azorin, 2019). Hence, so-called “interpretive academics” argue that only via the use of language, awareness, shared meanings, and other social constructs can one gain access to “reality,” whether it is given or socially produced. The development of an “interpretive philosophical theory” necessitates a critique of “positivism” by social scientists (Vebrianto et al., 2020). Due to its emphasis on “human interpretation,” this approach is well-suited to business research. The suggested research will employ this method of investigation.
3.1.2 Research Approach
Research approach refers to the planned ways to do research include anything from broad hypotheses to specific techniques for gathering, analysing, and interpreting data. An inductive technique is one of the three most common methods. There are three primary approaches, namely: inductive, deductive and abductive (Saunders, Lewis and Thornhill, 2007). The researcher plans to use an inductive technique, a systematic procedure for evaluating qualitative data that is likely to be directed by assessment objectives, in his or her study (Bagur-Pons et al., 2021). This method was picked by the scholar because of its suitability for the issue under investigation. It will be used.
3.1.3 Research Strategy
The term “mixed methods” refers to the technique of combining “quantitative” and “qualitative” data in a single inquiry or long-term study (Beach and Kaas, 2020). One method’s shortcomings may be compensated for by another’s strengths. A researcher may combine approaches to better understand how context affects results and how different interpretations of data can be investigated (Sendall et al., 2018). As a result, in order to completely analyse the chosen study issue, a mixed research technique is advised.
3.1.4 Time Horizon
The temporal horizon establishes the duration of the investigation. The cross-sectional or short-term study, in which data are collected at a single moment in time; longitudinal study, in which data are collected periodically over an extended period of time in order to compare data (Jackson, 2018). The suggested research project will be cross-sectional in nature since it will not require recurrent data collection over time.
3.2 Data Collection and Analysis
3.2.1 Data Collection Methods
This proposed investigation would gather both primary and secondary data. The researcher’s “primary quantitative” data will be collected via survey. Surveys have several advantages, including huge sample size, the ability to collect massive volumes of data, and the opportunity to use verified models (Jackson, 2018). The researcher will conduct a comprehensive review of the existing literature on the chosen research topic to gather the necessary “secondary qualitative” data, and this review will be conducted by renowned scholars who have previously made significant contributions to the study of the same or at least similar areas of study (Beach and Kaas, 2020).
3.2.2 Data Analysis Technique
An in-depth statistical examination of primary quantitative data will be carried out by the researcher. Planning, design, collecting of data, analysis and interpretation are all part of statistical research. Data that would otherwise be of little use can be given new life through statistical analysis (Vebrianto et al., 2020). Additionally, secondary qualitative data will be analysed using the theme analysis approach. Thematic analysis has a number of advantages, including the fact that it is simple enough for researchers just getting started with qualitative data to understand. Consequently, these processes will be used by the researcher in order to ensure a thorough and complete evaluation of the data and the achievement of the study’s goals.
3.3 Ethical Considerations
The ethical principles which will be maintained while conducting the proposed research are as follows:
(Source: Cascio, Weiss and Racine, 2021; Stahl et al., 2019)
Chapter 4: Research Limitations
The proposed research study will focus on the service industry alone, which makes it obvious that product-based businesses will not be considered for investigation. Both of the mentioned industries have unique issues and challenges, which cannot be understood from a study focusing on only one of them. Hence, the absence of data about product-based businesses can be considered a limitation of the proposed research study.
From the above discussion it is evident that continuing the practice of providing employment on the basis of zero-hour contracts is not at all desirable for my organization, in that, it is most likely to lead to a wide array of difficulties for the employees and also affect the performance of the business, thus impacting the customer retention levels in the long run. In order to bring about this change, that is, of discontinuing the zero-hour contracts, my organization should implement the ADKAR model of change. The change management plan following the tenets of this model will include the following phases:
Increasing people’s awareness of the need for transformation
Communication about the need for change is, without a question, critical, but building awareness about the need for change goes beyond merely proclaiming it. It is necessary for employees to be fully aware of the requirement for change not just to grasp the reasons behind it, but also to come to agree with that thinking, in order for them to be completely conscious of it (Goyal and Patwardhan, 2018).
Creating a b desire to make a difference
Just because workers understand why a change should be implemented does not imply that they agree with the implementation of the change. They must have a b desire for the change in order to accept it (Moskalenko, n.d.). The team members’ desire to succeed should be encouraged by the team’s leadership and management.
Providing information on how to make changes
The knowledge phase in the ADKAR Model is largely concerned with training and educational opportunities for participants. Identifying and understanding how their duties, abilities, tools, and procedures will be affected will be necessary before the team can begin the transition process.
Making certain that staff have the capability to effect change
Even if employees are well-versed in a certain skill set, their level of confidence in their own abilities influences whether or not they can or even want to perform a particular task.
Making the change stick by reinforcing it
Employees who fall back on old patterns will not be able to reach the finish line, despite the fact that they may have gained initial momentum. Once new procedures are in place, new software is deployed, or an organisational policy change is officially implemented, the leadership team should continue to reinforce the change for a considerable period of time after it has been completed (Goyal and Patwardhan, 2018).
The most important stakeholders in this change management process are managers, corporate leaders, and employees themselves. Managers and supervisors have a responsibility to legitimize the changes that affect the teams that they supervise. Their involvement in the production of change outcomes should thus be significant, with employees turning to their managers for overt instructions and subtle clues on how the upcoming changes in the organisation may affect their job. Responsible leadership is the process of developing and sustaining change inside an organisation that will benefit all stakeholders and allow the company to have a beneficial influence on the broader social environment (Qureshi, Malik and Qureshi, 2017). Employees in firms experiencing transformation should be actively orientated and involved in the transformation. This entails sharing knowledge and acting in a way that facilitates what is good in the larger picture rather than acting just for one’s own personal benefit (Tarhini et al., 2015). In order for change to be accepted by employees, it is clear that communication, leadership, employee engagement, and staff commitment are all important factors. In order to reap the advantages of change, change managers must manage the four variables identified above (Kress et al., 2015).
Considering the above mentioned facts, it is observable that the most important stakeholder in this change management process will be the employees, who are not only the chief driver of this particular change, but also the most important group which determines much as to how successfully the change can be brought about in the organization, and also how sustainable and effective it would be in the long run.
The preceding sections of this proposal have presented a detailed background discussion to situate the topic to be investigated in the proposed project, and together with this, the central aim to be accomplished and objectives to be accomplished through the same have also been mentioned. Following this, a detailed review of the existing literature concerning the chosen topic, that is, the issues related to zero-hour contract, have been presented, making
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