Shaping the future of work: how labour market intermediaries (LMIs) use institutional work to transition to triadic, project-based employment relationships

Abstract

Purpose

This paper identifies how the operations of labour market intermediaries (LMIs) transform dyadic employment relationships into triadic ones. It reveals the change dynamics that LMIs engage in to bring about this transformation and that contribute to the projectification of work.

Design/methodology/approach

Drawing on an institutional-work lens and using interview data from both TempX, a German-based staffing service provider, and its client organizations, the analytical framework details the dynamics by which LMIs appropriate various HR tasks and different labour-market-organizing roles and thus create these triadic employment relationships.

Findings

TempX assumes a powerful position between its client organizations and workers by increasingly taking over HR tasks from its client organizations, alternating between profiting from market transactions and engaging as a buyer and seller of labour. This powerful position, gradually created through four distinct, sequential, institutional work dynamics, allows it to transform dyadic employment relationships into triadic ones and to promote project-based work.

Originality/value

By showing how LMIs capitalize on the multiple services they offer, and how they use these services to establish a powerful position in both the labour market and in their relations with client organizations, this paper contributes to research on how LMIs change their institutional environment. Second, by showing that LMIs switch between different labour-market organizing roles and HR tasks, this paper reveals how essential this switching is for LMIs to establish triadic employment relationships and to drive the projectification of work, and thus it also contributes to research on LMIs’ role in the projectification of work.

Citation

Schneider, A. (2024), "Shaping the future of work: how labour market intermediaries (LMIs) use institutional work to transition to triadic, project-based employment relationships", Employee Relations, Vol. 46 No. 9, pp. 141-160. https://doi.org/10.1108/ER-03-2023-0131

1. Introduction

Researchers generally agree that employment relationships are fragmenting into “various worlds of work” (Delbridge and Sallaz, 2015), in which employment is more short-term, project based, and contingent (Cappelli and Keller, 2013; Polivka and Nardone, 1989), leaving workers with little job security and diminishing their prospects for long-term employment. Labour market intermediaries (LMIs) such as personnel consulting firms, staffing agencies and temporary work agencies facilitate such work arrangements because they broker workers or employ them in triadic employment relationships (Ruiner et al., 2020; Tholen, 2023; Bonet et al., 2013; Kunda et al., 2002). These changes to standard employment relationships are illustrations of what Boltanski and Chiapello (2005a, b) have termed “The New Spirit of Capitalism”, in which companies use project-based work to organize themselves flexibly so they can respond to changing environmental and market conditions. Companies increasingly use triadic work arrangements for core company tasks (Nesheim, 2003; Nesheim et al., 2007), particularly highly qualified workers (e.g. technicians, engineers and IT professionals), who are the fastest-growing segment of temporary workers (Semenza and Pichault, 2019). The proliferation of project work, also termed “projectification” (Schoper et al., 2018; Lundin et al., 2015), in organizations and societies encourages and legitimizes contingent work arrangements and vice versa. Because this kind of work is increasingly common and has severe consequences for workers and societies, understanding more about how labour market intermediaries operate and how they contribute to these work arrangements is of critical interest to researchers.

Researchers have recognized that understanding more about the role of LMIs in the projectification of work is important, and their findings in this emerging field of research have provided valuable insight into how LMIs impact skilled contingent workers’ (SCWs’) careers, such as by providing these workers with training and support, negotiating their working conditions and facilitating different work arrangements (Sulbout and Pichault, 2023; Ruiner et al., 2020; Koene and Pichault, 2021; Lorquet et al., 2018). While the focus on SCWs in this research has helped us understand the effects LMIs have for them, an important question remains largely unanswered; namely, how LMIs operate and how, exactly, they bring about these shifts in employment relationships (Kunda et al., 2002). What we do know is that in addition to performing an informational role of matching employers and workers and facilitating such employment transactions (Autor, 2009), LMIs are also actively engaged as “entrepreneurial actors” (Ofstead, 1999) that establish and shape triadic employment relationships. In this role, they are thus promoters of contingent work arrangements and project-based work. An essential question for researchers is how they effect and promote such relationships. The research question this paper seeks to answer is therefore, “How does the institutional work that LMIs do contribute to transforming dyadic employment relationships into triadic ones?”

To answer this question this paper investigates the case of an Austrian subsidiary of a German-based employment service agency (henceforth called TempX) that specializes in providing employment services of and for highly skilled technical workers. Temp X is the market leader in central Europe for such services. It represents a critical case (Flyvbjerg, 2006), because the TempX subsidiary in this study succeeded during a period of pronounced skilled-labour shortage (Dornmayr and Winkler, 2018), and hence it will most likely also succeed during economic downturns when companies’ demand for flexibility through outsourcing is much higher. Because success for LMIs entails establishing triadic employment relationships, learning more about this case allows us to infer how a broader set of LMIs operate in various economic settings. This study provides a near-complete account of how this subsidiary operates because it draws on semi-structured interviews with five TempX managers who were directly involved in opening and establishing the subsidiary in a new region, along with six representatives of TempX’s client organizations, and thus this paper follows TempX’s operations from its initial entry in a new market—when client organizations were hostile to it—through to its more-established phase, in which it played a much more active role in transforming existing dyadic employment relationships into triadic ones. The organizational perspective this paper takes conceptualizes LMIs as doing institutional work (Suddaby and Viale, 2011), combining Bonet et al.’s (2013) seminal classification of LMIs in terms of the type and extent of HR tasks they perform with Ahrne et al.’s (2015) organizational perspective on (labour) markets.

The findings of this paper make two key contributions: First, by showing that LMIs establish triadic employment relationships by offering services that correspond to different market-organizing roles, thus putting LMIs in a powerful position in both the labour market and in their relationships with client organizations, this study contributes to research on how LMIs change their institutional environment (Helfen, 2015; Lorquet et al., 2018; Adamson et al., 2015). Second, it shows how LMIs alternate and dynamically progress through a sequence of different market-organizing roles and HR tasks, and how by operating in this way, LMIs drive the projectification of work (Lundin et al., 2015; Jemine et al., 2023). The second contribution of this study is therefore showing how LMIs’ operations allow them to drive this projectification. The key argument of this paper is that the institutional work that LMIs do continually reinforces the shift towards a triadic employment relationship and adds to the projectification of work.

2. Theoretical framework

2.1 LMIs in HRM research

Labour market intermediaries (LMIs) are generally defined as “stand[ing] between the individual worker and the organization that needs work done” (Bonet et al., 2013, p. 341). Research on LMIs in Human Resource Management has focused on their HR practices (Koene and Pichault, 2021; Bonet et al., 2013), their impact on workers’ careers in project work (Sulbout and Pichault, 2023; Koene and Pichault, 2021; Ruiner et al., 2020; Lorquet et al., 2018) and, recently, on their emerging role in the field of platform work (Keegan and Meijerink, 2023; Meijerink and Keegan, 2019). While client organizations tend to neglect SCWs’ career development (Sulbout et al., 2022), LMIs engage in HR practices that support it, by offering talent development (Sulbout and Pichault, 2023), career counselling – including salary/fee negotiation (Ruiner et al., 2020) – and by creating innovative ways of providing social security benefits (Koene and Pichault, 2021; Lorquet et al., 2018). Research shows that LMIs gradually take over HR practices that organizations had previously performed, from recruiting to selection and promotion and even training and performance monitoring (Bonet et al., 2013).

As for SCWs’ career development, research has shown that LMI key account managers provide critical individual-level SCW career support (Sulbout and Pichault, 2023), while research on the organizational level has comprehensively identified which forms of career support LMIs provide (Lorquet et al., 2018), including the two main ideal types of employment relationships – the quasi-employee and the quasi-self-employed: the ‘former extends internal labour markets to triangular employment relationships, […] while the latter tries to support non-standard workers on external labour markets by developing functional equivalents to traditional employment relationships’ (Lorquet et al., 2018, p. 291). Relatedly, in showing how project workers’ careers progress, Jemine et al. (2023) reveal just how important LMIs are in facilitating these workers’ employment arrangements and work status. While these findings have given us insights into LMIs’ effects on workers, we need to know more about how LMIs operate so that we can better understand how LMIs create the arrangements which ultimately affect (project) workers’ careers.

Recently, scholars have also started to focus on online labour platforms (OLPs) which meet client organizations’ demand for short-term labour and charge client organizations a fee for hiring contingent workers (Meijerink and Keegan, 2019; Meijerink and Arets, 2021). OLPs and “offline” LMIs such as temp agencies have many similarities, but OLPs use algorithms to manage the matchmaking process (Duggan et al., 2020; Meijerink and Arets, 2021) and do so for hyperflexible short-term gigs (Meijerink and Keegan, 2019; Meijerink and Arets, 2021). By contrast, offline LMIs use human matchmakers (e.g. key account managers) to fill longer-term assignments (weeks or months) or projects (Meijerink and Arets, 2021). The dimensions used in research to describe triadic employment relationships (LMI, client organization-worker, employee) apply to both OLPs and “offline” LMIs, and these dimensions distinguish these relationships from dyadic employment relationships (employee-employer)in terms of matchmaking form and processes; workers’ status; determination of workers’ pay; and responsibility for workers’ replacement, discipline, recruitment and selection and performance rating (see also Oyetunde et al., 2024; Meijerink and Arets, 2021; Ruiner et al., 2020).

In sum, a focus on the relationship between LMIs and (their) workers in prior HR research has left us with little research on LMIs themselves, including how they operate and how those operations establish and expand their business to form the triadic employment relationships that eventually affect SCWs’ development and careers (Sulbout and Pichault, 2023; Lorquet et al., 2018). In a world of work in which employment relationships are being transformed (Delbridge and Sallaz, 2015), we still have little explanation of why or how such a transformation is taking place. I argue that LMIs play a particularly important role in this transformation, yet we know little about how LMIs bring about this transformation, and to better understand this role and how such LMIs operate essentially requires an organizational perspective. This paper provides such insight into LMIs’ operations, as in adopting an organizational perspective it examines how these operations change labour market institutions (Lorquet et al., 2018; Bessy and Chauvin, 2013) such as the dyadic employment relationship. It also responds to Jemine et al.’s (2023) call for an organizational perspective by asking, “How does the institutional work that LMIs do contribute to transforming dyadic employment relationships into triadic ones?” Recognizing that the work that LMIs do is institutional work (Suddaby and Viale, 2011) makes it possible to capture the often-invisible transformative role that LMIs have on institutions; that is, in transforming dyadic employment relationships into triadic ones.

2.2 LMIs and institutional work

As “entrepreneurial actors” (Ofstead, 1999; Autor, 2009; Bessy and Chauvin, 2013), LMIs affect labour-market transformations and outcomes (Tholen, 2023), even when they act as information providers by creating job boards (Marchal et al., 2007). LMIs play a foundational role in labour markets precisely because their aim is to create a mediation market within the labour market (Bessy and Chauvin, 2013; Beaverstock et al., 2010) and to establish themselves as a third party in employment relationships. LMIs’ operations can be seen as institutional work – “the purposive action of individuals and organizations aimed at creating, maintaining and disrupting institutions” (Lawrence and Suddaby, 2006, p. 215) – in which expanding their business transforms institutionalized dyadic employment relationships. Under an institutional-work lens, the work of organizational actors is strategic and intentional, yet is situated, and recognizes that even everyday instances of agency and mundane actions potentially contribute to institutional change (Lawrence and Suddaby, 2006; Lawrence et al., 2011).

As “professionals in mediation” (Bessy and Chauvin, 2013), LMIs are one form of professional service firms (PSFs), as are executive search firms (Beaverstock et al., 2010, 2015) and executive remuneration consultancies (Adamson et al., 2015). These firms seek to gain legitimacy for their new profession in labour markets (see Beaverstock et al., 2015), a process also described as pursuing “professional projects” (Suddaby and Viale, 2011). This pursuit is closely intertwined with the institutional work that LMIs do (Adamson et al., 2015; Beaverstock et al., 2015) because such professional projects are “agents in the creation, maintenance, and disruption of institutions” (Muzio et al., 2013, p. 704).

The key mechanism through which PSFs, in this case LMIs, exert institutional change (e.g. transforming the employment relationship) is by leveraging their powerful positions within organizations (i.e. client organizations) and organizational fields (i.e. labour markets). Suddaby and Viale (2011) identify four distinct and sequential dynamics of institutional change: (1) Defining a new uncontested space, (2) populating the new space with new actors, (3) promulgating new rules that redefine the boundaries of organizational fields and (4) managing the reproduction of professional capital. In (1) PSFs seek to occupy new economic spaces that others had previously occupied, while in (2) they attempt to reconfigure the locus of control of existing organizational forms and to create new forms of organization. This process eventually results in PSFs substituting themselves for individual practitioners’ work. In (3) PSFs seek to exploit their expertise by creating rules in their new areas of practice, with PSFs often the only ones with the corresponding legitimacy to interpret and apply these rules, thus consolidating their power. Finally, in (4) PSFs capitalize on their ability to motivate others to cooperate. In sum, these dynamics allow PSFs to shift control to their preferred new contexts and vehicles, thereby engaging in institutional work (i.e. changing or altering institutions such as the employment relationship).

According to Muzio et al. (2011) these new professional projects of PSFs such as management consultancy, headhunting/executive search and project management focus on aggressive marketization strategies by highlighting their technical expertise and commercial application. Typical of this is “the process of ‘projectification’ (Boltanski and Chiapello, 2005a, b) through which project managers have legitimized their role and greatly expanded the boundaries of their own jurisdiction to colonize new domains” (Muzio et al., 2011, p. 447). LMIs apply techniques that are based on logics of networks and projects, which allow their client organizations to obtain the resources they lack so that they can flexibly organize their tasks using sub-contractors, often in the form of project work (Boltanski and Chiapello, 2005a, b; Bessy and Chauvin, 2013; Muzio et al., 2011; Jensen et al., 2016). Project work is thus collective and is made up of networks of individuals and institutions that constitute the project society (Lundin et al., 2015; Boltanski and Chiapello, 2005a).

Building on the above illustrations of how PSFs engage in institutional work, the key mechanism through which LMIs can exert institutional change can be conceptualized along two dimensions: the first is the position they assume within organizations (i.e. client organizations) in terms of the type and extent of HR work completed (Bonet et al., 2013); the second dimension is the position they assume within the organizational field (i.e. labour market) in terms of their role as market organizers (Ahrne et al., 2015). As for the HR work they perform, LMIs can be classified as Informational Providers, Matchmakers or Administrators. As Information Providers (e.g. job boards), LMIs carry out only recruiting activities, while as Matchmakers (e.g. search firms) they carry out selection and promotion tasks in addition to recruiting activities. As Administrators (e.g. staffing agencies) they perform the broadest range of HRM tasks – tasks that companies traditionally do – and very often they act as a worker’s legal employer, fulfilling regulatory requirements as well as recruiting, selecting, training, monitoring performance and managing relations with client organizations (Bonet et al., 2013). Generally, while some LMIs carry out only a few activities, others carry out a number of them.

As for LMIs’ labour-market role, Ahrne et al. (2015) distinguish between two different types of market organizers: Profiteers and Buyers and Sellers. Profiteers profit from transactions between sellers and buyers and hence organize markets in order to make a profit. This is the classical intermediary role in which an organization leverages its privileged market knowledge to create an advantageous position between sellers and buyers. Profiteers organize the market to their advantage by deciding on the rules of exchange, the modes of monitoring, the qualifications for membership and the sanctions for sellers that break the rules. Most important for profiteers is bringing sellers and buyers together while ensuring that they do not start trading on their own and thus render profiteers obsolete (Ahrne et al., 2015). An example of a profiteer is an executive search firm, an LMI which decides who is eligible and who is screened for an open position, connects companies with interested managers only after being paid a commission fee, and bans applicants from the recruitment process if they directly approach employers. OLPs like Fiverr or UpWork are also examples of profiteers, which profit from high transaction volumes by dividing jobs into small tasks or gigs (Meijerink and Keegan, 2019; Duggan et al., 2020; Meijerink and Arets, 2021). While most economic markets have many Buyers and few Sellers, the traditional labour market is an exception, with few buyers of labour (i.e. employers) and many sellers (i.e. employees). Both buyers and sellers seek to avoid competition with other respective buyers and sellers. Employers, as individual buyers of labour, are organized in employers’ associations, while workers or employees, as sellers of labour, seek to organize themselves in labour unions (Ahrne et al., 2015). A temp agency is a special case in that as an LMI it is both a buyer and a seller of labour and not just a profiteer bringing employers and workers together.

Figure 1 shows how these dimensions of HR tasks and labour-market roles interact, and illustrates the framework (described in Section 3) that was used to analyze the case of TempX. This analysis makes it possible to understand the dynamics of institutional change that LMIs engage in to transform towards triadic employment relationships.

3. Providing engineering services: the case of TempX

3.1 Empirical setting

TempX (pseudonym) is an “engineering service provider” (self-description) that provides employment solutions for and of high-skilled technicians. It has more than 100 branches and subsidiaries and more than 7,400 employees in Germany and Austria. Founded in the late 1960s in Germany, it was one of the first engineering service providers and is now the market leader in central Europe, offering employment solutions in areas such as plant construction, electrical engineering, automotive engineering and information technology (IT). TempX’s workforce includes engineers, IT consultants and technicians, and its clients are companies of all sizes, primarily working in the engineering, life sciences and IT sectors.

The four different services TempX offers correspond to different work arrangements: “Support”, defined by Cappelli and Keller (2013) as temporary help, in which TempX directly hires workers, becomes their legal employer of record and supplies the workers to a third party (i.e. client organization). In “Contract” TempX connects freelancers with client organizations, in “Competence” they develop TempX in-house project solutions, and their “Direct” service is the classical professional and executive search.

The subsidiary under study is located in Austria and was opened in 2015. At the time of the research project (2017–2018), Austria had been facing a severe skilled-labour shortage since 2015, which by 2017 was even more pronounced (see also Dornmayr and Winkler, 2018). The aim of each TempX subsidiary is to constantly generate new projects with (key) accounts (i.e. client organizations), and to expand the technical workforce TempX employs and provides to its client organizations (“Support”). Like all other TempX subsidiaries, the subsidiary under study is run by Account Managers (which includes the Branch Manager of the subsidiary). The Personnel Officer/Recruiter is responsible for recruiting employees, human resource development, personnel marketing and employee retention tasks, and has an administrative assistant to support this work. Branch Managers report to Regional Directors, who are responsible for a number of subsidiaries and for developing the overall firm strategy. Figure 2 illustrates how the subsidiary under study is organized.

3.2 Data sources and analysis

To fully account for how this subsidiary developed, the paper draws on five semi-structured interviews with TempX Account Managers and Regional Directors. Except for one Account Manager (who was on temporary leave and was not available), the interviews included all TempX subsidiary employees who had been significantly involved in setting up the subsidiary in 2015 and in growing and managing it through 2017 (and in some cases, even longer; see the blue-dotted box in Figure 2). The interviewees included Branch and Deputy Branch Managers George and Severin (who also worked as Account Managers), Paul (an Account Manager from the neighbouring region who supported the branch on a project basis) as well as Regional Directors Joe and Peter (also from the neighbouring region and who also supported the branch on a project basis). Except for Severin, all interviewees had a long TempX track record, having worked as (Key) Account Managers in several other regions before. Table 1 provides an overview of the interviews and informants (all names in this study are pseudonyms).

The data set also includes six semi-structured interviews with managers from four different TempX client organizations (Table 2). All interviewees have a leading role in their departments, and hence were directly involved in the collaboration with TempX. While the client organizations’ perspective is not the focus of this study, these client interviews were used to check the plausibility of the TempX interviews and to enhance the robustness of the findings. Furthermore, publicly available company documents, such as applicant brochures and TempX’s website, were used to complete the data set and to provide additional information on TempX’s business model, strategy and services.

All interviews were conducted in German in June and July 2017 and were recorded and transcribed verbatim. All quotes in the paper were translated by the author. The primary topics discussed during the interviews were how TempX gained access to new client organizations and how the agency deepened and retained its existing client relationships. Examples of questions include, “What are/were the main challenges of entering the regional market of western Austria?”, “Why do you think TempX’s business model is/was unknown to potential client organizations?’ and “How did you manage to get a foot in the door of client organizations?”

In qualitative organization and workplace research, the approach used to analyze data influences the number of participants needed to draw conclusions from that data as well as which interviewing modes are appropriate for generating that data (Saunders and Townsend, 2016, 2018). Using semi-structured interviews as I did in this study, with a realist standpoint as the epistemological positioning (Crouch and McKenzie, 2006), allowed me to understand the interviewees’ experiences “within a frame of a situation assumed to exist independently from experience” (Crouch and McKenzie, 2006, p. 485). Researchers achieve this understanding by combining interview data with pre-existing theoretical knowledge (Crouch and McKenzie, 2006). In this study, I combined the pre-existing theoretical knowledge on LMIs’ market organizing roles and the HR work they perform in the analytical grid in Figure 1 (above), which allowed me to systematically connect the interviewees’ accounts with the broader sociocultural circumstances (see Table 3, overview of data analysis), and thus to draw conclusions from a small sample of interviews.

The first step was coding for the HR roles (information providing/matchmaking/administrating) that TempX carried out (Bonet et al., 2013). For example, George said one of his tasks was to “ … look for job advertisements and then get into the companies through placement offers”, which I coded as matchmaking. The second step built on this initial coding: I re-analyzed the same activities coded in step one to identify whether the labour-market organizing role TempX was performing was profiteering or buying/selling (Ahrne et al., 2015), and coded them accordingly. For example, in step 2 George’s same task was coded as profiteering, since its aim was to generate profit by offering one of TempX’s pool of available workers to a client organization and collecting a transaction fee. Combining these two steps of analysis resulted in four different operational combinations TempX used: matchmaking/profiteering, matchmaking/selling, administrating/selling and administrating/profiteering.

The third step was focused on identifying the process by which these different operational combinations relate to one another. In step 3a, I re-analyzed the instances coded in the interviews through the lens of the four institutional work dynamics driving institutional change: (1) Defining a new uncontested space, (2) populating the new space with new actors, (3) promulgating new rules that redefine the boundaries of organizational fields and (4) managing the reproduction of professional capital (Suddaby and Viale, 2011). For example, Peter’s statement, “Due to our technical background, we understand the demand much better than the client organizations” in-house HR department, and can react more flexibly’ – categorized as matchmaking/profiteering in step 2 – was coded in step 3a as (1) Defining a new uncontested space because it describes TempX’s attempt to occupy a space previously occupied by client organizations’ in-house HR. In the same way, in step 3a I re-coded all combinations of matchmaking/selling, administrating/selling and administrating/profiteering from step 2 as either (1), as in the above example, (2) populating the space with new actors, (3) promulgating new rules that redefine the boundaries of organizational fields or (4) managing the reproduction of professional capital.

Since the literature suggests that these four dynamics build on each other as part of a process (Suddaby and Viale, 2011), in step 3b I re-analyzed the empirical material for accounts to identify this process. Interview statements such as the one from Severin, “Through our model of following up on job ads [posted by client organizations], we are able to get into the companies by traditional placement [and] collecting a placement fee”, reveal that TempX uses its placement services as the first step in a process of entering (“to get into”) a client organization and therefore to define a new uncontested space (see Figure 3, lower left) In other words, in step 3 b I identified when interview accounts indicated that TempX was moving from one institutional work dynamic to another. Table 3 shows additional examples of how TempX transitioned from one the institutional work dynamic to another.

Finally, because accounts in the TempX interviews, such as Severin’s (see Table 3, Step 3b), suggest that the organization of work in client organizations became increasingly project-based, in step 4 I inductively analyzed interviews with managers from those client organizations to empirically check whether their work organization in fact became increasingly project-based. Section 4 below illustrates these four sequential dynamics (Suddaby and Viale, 2011), using interview excerpts to show how TempX progresses through different HR roles, from matchmaking to administrating (Bonet et al., 2013), as well as how they alternate between the market-organizing roles of profiteering and selling (Ahrne et al., 2015).

Focussing on the case of one single TempX subsidiary and conducting a total of eleven interviews has refers to focussing its limitations; for instance, I was not able to capture a broader range of different LMI operations with such data. But since the aim of this study is to understand how LMIs transform dyadic employment relationships into triadic ones, exploring a single TempX subsidiary is an appropriate way to do so because I interviewed five of the six Account Managers responsible for successfully establishing and growing this subsidiary, most of whom have worked at this subsidiary since its opening, and many of whom have a long tenure and track record within the company. This near-complete account and perspective provides rich insight into how this subsidiary operates and transformed dyadic employment relationships into triadic ones. In addition, I was able to substantiate these accounts from TempX with six representatives from four of its client organizations. Unlike other research that “samples” interviewees from a broader “target population”, these interviewees were selected as a variant (see also Alvesson and Ashcraft, 2012) of the particular social setting of the subsidiary under study. Methodologically, the aim of this study is to indicate rather than to conclude and to create a critical opening. As discussed in more detail below, the results of this study clearly indicate that researchers need to more-systematically investigate LMIs, which are even more relevant following the COVID-19 pandemic because their influence on employment relationships since then has only grown (Spurk and Straub, 2020).In other words, the evidence this study provides indicates that studying the role of LMIs and the processes they use to transform labour markets is a necessary one for future studies, since the implications of these findings are relevant to an increasing segment of the working population.

4. How TempX transforms the dyadic employment relationship into a triadic one

4.1 TempX defines a new uncontested space

In entering the Austrian market, the biggest challenge for TempX was promoting its employment services in the high-skilled labour market segment.

I started to introduce our portfolio to a certain number of customers and nobody really knew about it. So we kind of had to make the market. (George)

Part of the challenge in entering this new market was that clients did not see a need for TempX’s additional services, such as placement services for vacant positions, since the client organizations’ in-house HR managers did these tasks. TempX’s approach for creating and defining this new uncontested space was therefore to get a “foot in the door” (George) with client organizations using the more-traditional professional and executive search service that organizations were familiar with and that TempX offered (“Direct”):

We look for job advertisements and then get into the companies through placement offers. […] We offer a pool of thousands of profiles […], and this allows TempX to position itself as an advantageous partner. We often see that client organizations are overstrained with the recruiting of specialists. (George)

These recruitment services are an example of Profiteering, since TempX “collects a placement fee” (George), and are also an example of Matchmaking, as TempX is able to cater to its clients’ needs:

Due to our technical background, we understand the demand much better than the client organizations’ in-house HR department, and can react more flexibly. […] Yet, at this stage it was most important for us to develop trust and good relationships with our clients, because at the end of the day, TempX still mostly lives on temporary employment models, and this is where we needed to get at. (Peter)

Peter’s statement reveals the way TempX operates: do a small piece of the HR work well based on clients’ needs, and then use that foundation to get to “where we needed to get at”, which is the temporary employment model that over time appropriates more of the in-house HR functions and control.

4.2 TempX populates the new space with new actors

From the trusted position that TempX develops with its client organizations, it can sell its “Competence” service, a form of in-house consulting in which TempX populates more of its newly occupied economic space. The Competence service uses TempX’s own workers to provide engineering services at the client organization’s site.

In the beginning, many clients just want to recruit through us, but do not know the option of engaging [us for] an on-site engineering service project. This is how we then get closer to our [TempX’s] core business model. Actually, it is in our best interest to keep the employees with us and not to just place them at our client organizations. But in the beginning this [offering recruiting services] was necessary, to establish the market and develop mutual trust. (Paul)

The model of the Competence service is to match the client organization’s demand by delivering and selling the service the client needs via service contracts.

When we see that client organizations have key areas where they need expertise, we offer an entire project team that works both on-site and off-site, employed and organized by our engineering service office. This [includes] small-scale services, such as assembly construction, etc. […] [all the way] up to large-scale services such as the handling of entire engineering projects. (George)

Such service contracting, in which TempX delivers technical expertise, enlarges TempX’s locus of control and lays the foundation for it to expand from its professional service model (“Competence”) to a temporary employment model (“Support”) in which it appropriates even more of its client organizations’ HR functions, as the next section illustrates.

4.3 TempX promulgates new rules

The more client organizations work with TempX, the more receptive they are to using the temporary employment model TempX offers (“Support”). This model rewrites the rules of the labour market, since TempX supplants the HR department’s recruiting and development expertise and becomes the workers’ legal employer. As George describes it, “With the temporary employment model, we can sell technical know-how in [the] form of staff”. Taking over a client organization’s primary HR tasks is thus part of TempX’s operations, in which it progresses along a spectrum of HR functions from an initial matchmaking role placing full-time employees in the client organization to administrating staff. TempX makes a parallel progression in its market-organizing role, moving from an initial profiteering role collecting transaction fees for full-time placement to a later role of selling expert labour to client organizations on a project basis. Severin describes how TempX encourages clients to shift their focus to match this progression:

I believe flexibility and know-how are the drivers for why client organizations, once they discover it, stick to the temporary employment model. In my opinion two different approaches exist: on the one hand the approach of the pure […] personnel service where one only focusses on the match between the requirements and the [applicant] profile […] and actually does not know at all which project lies behind. And this is where we surely have a different focus. Instead, we focus on the projects and try to encourage the customer to do the same because in this way we can satisfy their demand much better. (Severin)

Using its trusted position and established working history with the client organization, TempX encourages the organization to move from a model of placing full-time employees to one based around projects. As the temporary employment model takes hold in client organizations, the organizations increasingly adopt project-based thinking and work organizing (see also Table 3, Step 4), as one of the HR managers we interviewed confirmed:

Working with TempX makes more and more sense to us. We started to work more project-oriented, and relatedly, with a more project-oriented personnel planning. For example, what we have been doing with our assembly lines every winter – bringing in external staff – we now do with many projects. This way we can get experts quickly. This is a huge strategic advantage for us, and means we don’t have to engage in a long recruitment process. […] Also, often we don’t get permission for additional headcounts – this is exactly where TempX comes in to provide the additional human resources needed, on a project basis, which requires us to plan in [terms of] projects. (Eve)

Once this project orientation has taken root in client organizations, TempX seeks to reproduce this orientation and thereby maintain its own status among its client organizations, as the next section illustrates.

4.4 TempX reproduces its professional capital

By the fourth and final stage of its progression through the dynamics of institutional change, TempX has become a trusted partner with the client organization. From this foundation, it seeks to reproduce and maintain this position by offering each client a different individual mix of product portfolios, including “Contract”. TempX’s operations are therefore directed at diagnosing the client organization’s problems (i.e. technical project focus) and providing a project, solutions-based employment model rather than focussing on fulfilling a client’s traditional employment needs.

We also work with freelancers, a service option which is rather rare on the market. In this model, we engage in an independent contractor relationship with the freelancer and then collect a fee from the client organization. In these cases, we administer the social security issues, payroll as well as communication between freelancer and client organization. This allows us to take on high-level projects, requiring very particular knowledge. (Severin)

In the Contract solution, TempX administrates the freelancers and collects a fee from the client organization, profiteering as a broker in the transaction. The Contract solution is the most project-oriented model in the triadic employment relationship, since the freelancers are neither employed by TempX nor by the client organization; instead, TempX determines who gets to work in which kinds of projects, as well as when and how. The range of employment solutions TempX offers – and the way TempX progresses in offering these solutions over time to the client organizations – corresponds to the shift that it has encouraged in its clients’ thinking about employment relationships, since project-based thinking corresponds perfectly with the employment solutions TempX offers. In other words, TempX both changes the labour market and at the same time provides the solutions that fit with that new market. Along with this shift in thinking, TempX guides its clients to the solution it sees as the best fit, as Severin summarizes:

I do think that we change the way the labour market used to work, because our clients start to think and operate differently. Now they think much more about whether they need permanent posts or not, because they first think about the project that lies behind the need. And we, TempX, are central to this process, because we engage in the project development with them and then define [for them] whether this is a permanent post, a project-related staff demand, a short-term demand or an expert demand who works on his or her own account. (Severin)

Severin’s account of this change is mirrored in the accounts from client organizations:

TempX was committed and helped us a lot with setting up our new internal project-oriented processes. At that time, it became much clearer what we were actually looking for. In the beginning we had very general requirements, looking for a person. Later, we developed towards very specific requirements to fulfill the project needs, looking for expertise first and not a specific person. To make this happen, TempX is our strategic partner. (Michael)

I do think project work is the future and temp work or freelancing is the engine for it. I see a strong trend towards this, not just in our case of engineering, but in other areas as well. (Luca)

In sum, these accounts illustrate how Temp X establishes triadic employment relationships as it takes on more and more HR functions, moving progressively from matchmaking to administrating, and at the same time progressing from an initial market-organizing role as profiteer to alternating between profiteering and selling. In terms of the dynamics by which TempX makes this progression, it first populates the new space with new actors (matchmaking/selling) and then promulgates new rules (administrating/selling) as work becomes increasingly bound to specific projects. This focus on project-based work then allows TempX to reproduce its professional capital by developing projects in collaboration with its client organizations and then mediating the freelancers in its network to match the needs of those projects. In parallel, as TempX populates the new space with new actors, the direct relationships client organizations have with their workers becomes increasingly less important, since TempX’s efforts have replaced this relationship with a new, strong focus and emphasis on tasks and projects, which TempX mediates, and which creates a triadic employment relationship. The next section discusses how these findings demonstrate that the institutional work TempX does leads to a triadic employment relationship.

5. Discussion: how LMIs create and shape a triadic employment relationship

5.1 LMIs change the employment relationship through institutional work

TempX transforms dyadic employment relationships into triadic ones by using its powerful position to carry out four dynamic steps to bring about institutional change. This study shows exactly how an LMI establishes a powerful position in both the labour market and in its relations with client organizations through institutional work (Suddaby and Viale, 2011) (see Figure 3), transforming existing dyadic employment relationships into a triadic employment relationship. It does so by conferring on workers the status of either an employee of the LMI or a self-employed worker, (co)determining workers’ pay and assuming responsibility for worker recruitment and selection (Oyetunde et al., 2024; Meijerink and Arets, 2021; Ruiner et al., 2020). TempX accomplishes this transformation by progressing through four dynamics of institutional change. First, it takes over the tasks of its client organizations’ HR managers; then it populates this newly created economic space by providing client organizations with its own in-house consulting services. In the next step it writes new employment rules by claiming that it is an expert (both in HR and technical issues), shifting its client organizations’ focus to project-based work while at the same time assuming the role of workers’ legal employer and selling workers’ labour to its clients on a project basis. In the fourth and final step, it reproduces its powerful position by managing to “motivate others to cooperate” (Fligstein, 2001, p. 106; cited in Suddaby and Viale, 2011, p. 434) – in its case, motivating freelancers to cooperate with its client organizations for project-based work. The sequential nature of these dynamics explains how TempX is able to successfully transform previously dyadic employment relationships into triadic ones. This study therefore provides an important and necessary – but under-researched – understanding of how LMIs change their institutional environment, complementing research investigating the legal framework within which LMIs operate (Helfen, 2015; Lorquet et al., 2018) and their remuneration practices (Adamson et al., 2015).

The key shift in this transformative process takes place when the LMI manages to change the rules of the employment relationship. This step “ … serves as an extension and objectification of the power of the profession. Once established, such rule systems become part of the institutional fabric of a field […] conferring status on actors” (Suddaby and Viale, 2011, p. 433). LMIs capitalize on this newly acquired status with their client organizations by diagnosing their clients’ business problems while at the same time providing the business solutions that they themselves have created to solve them. Diagnosing and solving in turn enhances LMIs’ status and power both within client organizations as well as in the labour market, putting LMIs in a powerful position in the new triadic employment relationship it has created. This strategic behaviour of LMIs highlights their potential contribution to labour market evolution, and these findings add support to those of Bessy and Chauvin (2013) and others (Helfen, 2015; Lorquet et al., 2018).

5.2 LMIs and the projectification of work

This study also contributes to research on how LMIs add to the projectification of work (Lundin et al., 2015; Jemine et al., 2023; Bessy and Chauvin, 2013), as it shows how TempX account managers leverage their acquired legitimacy to foster project-based engagements. This study details the process by which TempX spurs this projectification of work – specifically, its ability to alternate between different labour-market-organizing roles (Ahrne et al., 2015) and to increasingly take over HR tasks (Bonet et al., 2013). These findings support Jensen et al.’s conclusion (2016) that it is these abilities that allow LMIs and their client organizations (by using LMI services) to thrive in (and through) a shift in employment relationships that favours the adoption of project-based work.

The process by which LMIs bring about these shifts and that are detailed in this study shows that LMIs not only have agency, but also shows how they use and capitalize on it. These findings thus go beyond the conclusions of Bessy and Chauvin (2013) and Boltanski and Chiapello (2005a) that LMIs do have agency, and contrast with the findings of Ahrne et al. (2015), who classify profiteers and sellers as separate types of market organizers. In showing how LMIs take on different market roles and HR tasks, this study illustrates how LMIs link the organization(s) (i.e. internal labour market) and the market (i.e. external labour market) across borders (Bessy and Eymard-Duvernay, 1997). This link not only shifts the organizational boundaries of the client organization, it also blurs the lines between internal and external labour markets by creating triadic employment relationships (Lorquet et al., 2018). By showing how LMIs exert agency and how they assume different labour-market roles (Ahrne et al., 2015) and take on different HR tasks (Bonet et al., 2013), this study provides a better understanding of how LMIs effect these shifts, complementing Lorquet et al.’s (2018) multi-dimensional classification of LMI career support and revealing that the proliferation of project work serves and advances LMIs’ own strategic interests. Furthermore, it provides an organizational perspective that can better account for SCWs’ and project workers’ career trajectories and transitions (Jemine et al., 2023). In sum, the shift towards a triadic employment relationship is supported by the ongoing projectification of work (and vice versa), and is continuously reinforced by agentic LMIs doing institutional work.

6. Conclusion

By drawing on the institutional-work lens (Suddaby and Viale, 2011; Muzio et al., 2013), this paper shows how LMIs transform traditional dyadic employment relationships into triadic ones. The critical case of TempX reveals how, in advancing their own interests, LMIs foster the projectification of work by taking over an increasing amount of HR work (Bonet et al., 2013) and alternating between different market-organizing roles (Ahrne et al., 2015). While the data for this study is narrow, by focussing in-depth on the case of one single subsidiary of a large multi-national LMI and how it entered a new market and established itself, this study is able to identify how LMIs use their agency to transform dyadic employment relationships into triadic employment relationships. Future studies could more-systematically explore the institutional dynamics described here in different industries, especially labour markets such as health care, nursing and law, where LMIs, especially since the COVID-19 pandemic, are playing an increasingly powerful role (Spurk and Straub, 2020). Furthermore, as this study is limited to studying a traditional “offline” LMI, researchers should more-systematically explore the organizational practices of various types of LMIs and the respective labour market outcomes. In particular, future research could focus on multiple LMIs, some of which might employ only some and not the full range of institutional work dynamics, as TempX does, but which nonetheless contribute in the stream of intermediating the overall institutional shift to triadic employment relationships. This research should include OLPs, which reproduce and capitalize on their professional capital (Suddaby and Viale, 2011) through algorithmic management (Duggan et al., 2020), yet whose processes for assuming a powerful role both within client organizations as well as with workers has yet to be explored.

The findings of this study also have implications for SCWs’ careers. The very fact that LMIs can appropriate career development from organizations, which tend to neglect temporary workers’ careers (Sulbout et al., 2022), is a powerful illustration of Boltanski and Chiapello’s (2005a) project world that they describe in their New Spirit of Capitalism. In a project world, capitalism can no longer legitimate itself by claiming to provide security to the individual in the form of predictability; instead, individual security in a project world needs to be constantly renewed and reinvented by individuals themselves as they transition between projects in the face of continuous movement and change (Jensen et al., 2016). While this study is limited to the LMI perspective, we need more research (see Lorquet et al., 2018; Jemine et al., 2023) to investigate the impact that LMIs have on workers’ job transitions and career development, since this project-based work will likely be the future of work.

Relatedly, this research also has direct implications for HR practitioners and SCWs alike. While the HR practitioners’ professional legitimacy in organizations is under constant scrutiny and threat (Wright, 2008; Syrigou and Williams, 2023), LMIs, as a third actor in employment relationships that gradually takes over HR tasks, may pose an additional risk for in-house HR practitioners’ legitimacy. For HR managers to be successful in the future, they need to know how LMIs operate so they can be prepared rather than surprised, which means that HR managers need to know how to manage LMIs as partners in the triadic employment relationships. Correspondingly, SCWs also need to be aware of how LMIs operate, since they are the key resource in the business models of many LMIs such as TempX. With this understanding, SCWs can then decide whether they want their career path to be “quasi-employee” or “quasi-self-employed” and they will be better prepared to combat employers’ potentially abusive practices (Lorquet et al., 2018) and to see LMIs as an ally in negotiating working conditions (Ruiner et al., 2020).

Figures

Figure 1

Analytical framework

Figure 2

TempX organigram – overview of informants

Figure 3

LMIs’ institutional work

Table 1

Informant characteristics – temp X

	Location	Position/Tasks	Tenure at TempX	Interview duration/mode	Notes
Joe	Subsidiary under study	Regional Director/Key Account Manager	10 years	On-site, face-to-face; 62 mins.	Subsidiary under study was his fourth new market
Peter	Neighbouring region	Regional Director/Key account manager	18 years	Phone; 42 mins.	Supported initial phase of subsidiary under study on a project basis
George	Subsidiary under study	Branch/Account Manager	4 years	On-site, face-to-face; 47 mins.	Subsidiary under study was his first new market
Severin	Subsidiary under study	Deputy Branch/Account Manager	2 years	On-site, face-to-face; 67 mins.	New employee in subsidiary under study
Paul	Neighbouring region	Account Manager	11 years	Phone; 35 mins.	Supported initial phase of subsidiary under study on a project basis

Source(s): Author’s own creation

Table 2

Informant characteristics – client organizations

	Client organization	Industry	Position/Tasks	Collaboration tenure with TempX	Interview duration/mode
Eve	CO 1	Technical consumer goods	HR Manager	3 years	On-site, face-to-face; 33 mins.
Michael	CO 2	Abrasives	Technical Department Manager	5 years	On-site, face-to-face; 47 mins.
Chris	CO 2	Abrasives	Logistics Department Manager	3 years	On-site, face-to-face; 25 mins.
Omar	CO 2	Abrasives	IT Department Manager	5 years	On-site, face-to-face; 30 mins.
Tom	CO 3	Energy	Technical Department Manager	5 years	On-site, face-to-face; 40 mins.
Luca	CO 4	Metal	Technical Department Manager	7 years	On-site, face-to-face; 39 mins.

Source(s): Author’s own creation

Table 3

Overview of data analysis

	Aim	Method	Examples
Step 1	To code for the HR roles TempX carries out	Deductively coding and operationalizing HR roles carried out by TempX based on Bonet et al. (2013). As Information Providers (e.g. job boards), LMIs carry out only recruiting activities, while as Matchmakers (e.g. search firms) they carry out selection and promotion tasks in addition to recruiting activities. As Administrators (e.g. staffing agencies) they act as a worker’s legal employer, fulfilling regulatory requirements as well as carrying out recruiting, selecting, training, performance monitoring and managing relations with client organizations	Coded as matchmaking – “ … look for job advertisements and then get into the companies through placement offers” (George) – because his role in this task was providing client organizations with TempX workers who met the job requirements Coded as administrating – “ … with the temporary employment model, we can sell technical know-how in [the] form of staff” (George) – because TempX assumes an HR role by providing temporary staff to meet a client organizations’ short-term demands and requirements
Step 2	To capture the labour-market-organizing role	Deductively coding and operationalizing labour-market-organizing roles TempX performs while carrying out HR tasks, according to Ahrne et al. (2015). Profiteers profit from transactions between sellers and buyers and hence organize markets in order to make a profit. A temp agency may act as a buyer and a seller of labour	Coded as profiteering – “ … look for job advertisements and then get into the companies through placement offers” (George) – because TempX’s aim was to generate profit by offering an available worker from TempX’s pool to a client organization and collected a transaction fee for doing so Coded as buying/selling – “ … with the temporary employment model, we can sell technical know-how in [the] form of staff” (George) – because TempX was hiring out a worker on a temporary basis and acting as employer
Step 3a	To identify the process by which the different combinations of HR roles and labour-market-organizing roles relate to one another	Deductively coding and re-analyzing the instances coded in the interviews through the lens of the four institutional work dynamics driving institutional change: (1) Defining a new uncontested space, (2) populating the new space with new actors, (3) promulgating new rules that redefine the boundaries of organizational fields and (4) managing the reproduction of professional capital (Suddaby and Viale, 2011)	Coded as (2) populating the new space with new actors – “ … when we see that client organizations have key areas where they need expertise, we offer an entire project team that works both on-site and off-site, employed and organized by our engineering service office” (George) – because in this step because George is describing TempX’s attempt to take on a client organization’s HR work, whereas in step two this task was coded as matchmaking/selling
Step 3b	To identify the transition from one HR role and labour-market-organizing role to one another	Inductively coding the accounts in step 3a to identify a sequential transition in which the institutional work dynamics are related (Suddaby and Viale, 2011)	Moving from (1) through (2) to (3): “ … in the beginning, many clients just want to recruit through us, but do not know the option of engaging [us for] an on-site engineering service project. This is how we then get closer to our [TempX’s] core business model”. (Paul) Moving from (3) to (4): “I do think that we change the way the labour market used to work, because our clients start to think and operate differently. Now they think much more about whether they need permanent posts or not, because they first think about the project that lies behind the need”. (Severin)
Step 4	To capture the project-based focus in client organizations’ work organization	Inductively coding for client organizations’ accounts that highlight an increasingly project-based focus of work organization as well as a shift towards a triangular employment relationship when working with TempX	“It was a strategic decision 4–5 years ago to have a larger network of experts to expedite projects. To do so, the implementation of a professional project management was key, otherwise we wouldn’t have been able to work with external staff.” (Michael)

Source(s): Author’s own creation