Boosting work performance with job security

Many companies rely on flexible, temporary contracts to keep labor costs low. But new research by Ingrid Koch, assistant professor of marketing at UNC Kenan-Flagler, suggests that offering permanent roles pays off in the long run. Workers in permanent jobs, particularly women, are more productive, and they maintain their momentum over time.

The findings arrive amid growing attention to job quality and gender equity in high-turnover sectors. The research shows permanent contracts drive stronger performance for workers and companies alike, especially in female-dominated roles where women represent the lion’s share of the workforce but lack job stability. For organizations seeking to improve both gender diversity and productivity, the takeaway is clear: permanent employment achieves both goals.

The study, by Koch and her colleagues, Diego F. Salazar and Noah Lim of the National University of Singapore, is published in the journal Marketing Science.

“The prevailing mindset in many companies is cut costs wherever possible and don’t offer workers more than you have to,” says Koch. “But our study suggests that when workers have job security, intrinsic motivation kicks in. Freed from the worry about making ends meet, they can focus on their work. This drives up their personal productivity and directly impacts the company’s bottom line.”

Gig work’s gender gap

The share of workers in non-traditional jobs—who instead work as temps, contractors or gig workers—has soared in recent decades, with women bearing the brunt of this shift. Between 1990 and 2021, temporary work among women under 25 jumped 30% in Organisation for Economic Co-operation and Development countries, more than twice the rate for all workers. This rise was most pronounced in lower-skilled service roles like retail.

While temporary work promises lower costs and worker flexibility, there are downsides, too. For employers, temporary contracts drive up recruitment costs, fuel turnover and drag down productivity. Gig workers, meanwhile, have short tenures, limited opportunities to learn new skills, and low job satisfaction.

Studies show that workers prefer permanent employment and will accept lower pay for job security. Yet research reveals a puzzling pattern: when workers transition from temporary to permanent contracts, their productivity dips and their absenteeism rises. Women show steeper declines than men, with researchers typically blaming household obligations.

“The theory is that once women have job security, they’re more likely to take their foot off the gas at work, distracted by families and other responsibilities,” says Koch. “But as a behavioral economist—and as a woman—I was skeptical.”

So Koch and her colleagues designed a study to test it, drawing on a rich dataset that captured the daily sales output of 536 sales agents, 86% of whom were women, working for a large Indonesian retailer. The agents were initially hired on temporary contracts. After 18 months, roughly half were offered permanent roles while the rest kept their temporary status. This change gave the researchers a way to study how moving to permanent employment affected performance.

They found that after receiving permanent contracts, female sales agents boosted their daily sales by 6% within 30 days. Six months later, their performance was still up nearly 7%. (Male sales agents experienced comparable gains.)

The intrinsic factor

Since previous studies reached different conclusions, Koch wanted to understand what was driving the gains. Prior research pointed to external factors like policy changes that restructured jobs or updated quotas that shifted expectations. But those didn’t apply here.

Instead, the boost appeared to be rooted in something else: intrinsic motivation.

This could have played out in several ways, says Koch. For starters, having a permanent job meant that workers experienced a sense of relief. Job security took away the uncertainty about losing a paycheck, and with that stress gone, they focused on work. Second, workers could have also been driven by a sense of reciprocity. The company invested in them by offering job security, and the workers responded by investing more in their jobs.

Finally, the employer’s show of trust may have fostered a sense of confidence and self-belief, she says. “If the company thinks I’m good at my job, maybe I really am.’’ This validation became a self-fulfilling prophecy and workers performed better because they believed they could.”

Limitations and other factors

The study has some contextual factors and limitations to consider. First, the findings come from only one retail organization. What’s more, the study took place in a challenging economic environment where young workers faced limited outside job opportunities.

The workers also earned commission-based pay, which meant that if they became less productive after moving from a temporary role to a permanent one, they would lose income. This built-in financial incentive likely prevented the shirking behavior that other studies found.

Finally, when workers gained job stability at this company, their duties stayed the same. Other research looked at white-collar environments where a promotion to a permanent position often came with additional demands. This could make workers less effective, as they juggle expanded responsibilities.

But Koch says that despite these constraints and qualifications, the findings would likely hold true in other work environments. “The data speaks for itself: Women perform just as well as men and offering them permanent roles is a win-win. It’s good for their individual performance, and good for the company overall.”