A Guide To Implementing The Right Labor Schedule
The article, Focus On Four: A Guide To Implementing The Right Labor Schedule can be obtained by going to the Core Practice Partners website for a free formatted download or write or call 115 E 86th Street Suite 53 / New York, NY 10028 / (212) 534-0539 / www.CorePractice.com
Making Best Practices Your Core Practice
Critical areas: Operations and
Labor, Employee Buy-In, Health
& Safety and Implementation.
Operations & Labor
Many cost saving opportunities are difficult to see at first. With a trained eye and the right methodology, productivity and labor effectiveness can improve significantly. Businesses
typically focus only on those measurements reported to higher management. While tracking and reporting are necessary, a rigid approach often results in missed opportunities outside the
traditional set of parameters. Knowing what data to gather and how to interpret it is critical to providing necessary information for sound business decisions. Look at your current
system for deploying your labor assets from a new perspective. This is not a suggestion to try some “neat ideas.” With labor dedicating resources and time towards continuous improvement will always be constrained within businesses, both large and small. All too often the day-to-day
obligations, including fighting fires and dealing with constant operational changes,
limits improvement activity to purchasing costly capital equipment and then hoping
productivity improves enough to justify the cost. While capital improvements should have
a significant role in your business strategy, the right labor schedule can minimize a
variety of existing problems and result in substantial cost savings. These benefits hit
your bottom line year after year. Savings between 11% and 17% at stake, you can’t rely only on past analytical practices. For example, many companies pride themselves on keeping overtime
to 8% or less. This type of thinking can actually cost the company money and lower morale. With today’s health care costs rising, the total benefit load paid on behalf of employees can be astronomical. Fixed cost benefits like healthcare and vacation are based on 40 hours of work.
Additional benefits do not accrue if full time employees work overtime, so overtime is
not 50% more expensive than straight time. Often, overtime is actually less expensive. The
high cost of benefits that are only associated with straight time are not part of the overtime
calculation. Depending on how high some of those benefits are, they can elevate the cost of
straight time more than 50% higher than the base wage. Therefore the 50% premium for
overtime is balanced by the 50% reduction in benefits. The biggest concern for facilities
from a cost perspective should not be overtime, but idle time. This is when an employee is not
productive. Assuming one idle hour, the facility must pay for the benefits and the wage of that
employee – all for non productive work. At least with overtime, the assumption is that
productive work is occurring. Therefore, the adverse cost of that work may be zero.
Overtime is always more cost effective than idle time. Put differently, understaffing is
always more cost effective than overstaffing.
Employee Buy-In
With millions of dollars on the line it is critical that your employees participate in the
change process. Employees will wonder how the impending change will affect them and will
be skeptical as to whether or not management will incorporate their preferences. Inevitably,
rumors will start and objections will surface. This point is confirmed by our extensive
database of responses from shift workers who state that their number one source of
information comes from the grapevine. Regular and frequent communications with employees
can help disprove rumors and minimize tension inherent in the change process. This is critical
because a mere 35% of employees feel that management communicates well with hourly
employees. Providing a comprehensive survey that is specifically based on the unique needs of your business and targeted to your employees’ specific challenges is the most meaningful
collection of data that can be used for effective change. In our experience, when employees
are part of the process, capturing long lasting value becomes achievable. Gaining buy-in from
the workforce means they will help drive the results. Of course you cannot make everyone
happy. However, the most direct path to failure is to make decisions based on leadership’s
perceived knowledge with an ear listening only to the vocal minority.
Health & Safety
Scheduling solutions, which might be healthy and safe at one facility, might not work well at a
different facility. The following needs should be considered when factoring the solution for
each company.
• The type of work
• Employee demographics
• Work environment
• Experience level
• Current safety measures
• The historical frequency of accidents
For example, remote facility locations often force long commute times for workers. Employees may push for 12 hour shifts to reduce total commutes each week. management must look at the
implications of total travel and work time to understand potential health issues. The same facility in a more populated region may have more flexibility with schedules. Contact centers that handle language translation services often require frequent breaks throughout each shift based on the intense intellectual nature of the work. For some, longer days with split shifts work well where a large break can refresh staff. Scheduling decisions depend on the factors at your facility. If the reality of your business is around the clock operations, employees need to be properly trained to handle added complexities. With the importance of maximizing the
utilization of your capital and demands for 24 hour service increasing, it is not surprising
that the number of people working alternative schedules continues to grow. There is no
perfect schedule that will solve all the problems of shift work. A 24 / 7 operation will always
require someone to be at work on Saturday at 4a.m. Fortunately, there are ways to
manage the realities of shift work while improving employee morale. With the proper schedule at your facility, it is possible for around the clock employees to improve their health and safety. Specific techniques for working the off shifts can be adapted to your facility’s unique challenges and help employees adjust to their new schedule, minimizing the disruption to the quality and
quantity of their sleep. This not only is the right thing to do, but it can have financial rewards as
well by reducing drops in performance.
Implementation
Labor schedule changes are often an emotional and stressful event for employees, regardless
of the degree of change. Even a simple start time adjustment can challenge some employees.
Schedule changes can also be stressful for managers and supervisors if there isn’t a thorough implementation plan. Managers must understand all implications of a new schedule, such as the impact on support departments, as well as startups, shutdowns and pay policies. A detailed plan must be developed to ensure all departments are ready for the change. This plan must include a well thought out communication strategy. All members of the leadership team must understand the change and be able to communicate that change effectively. Meeting with each employee to
discuss all facets of his or her new work schedule is important to facilitate the transition from
old to new. Human Resources must also be involved to determine how policies, such as vacation pay, need to be customized for the new schedules. Implementing new schedules without understanding all the implications or being able to answer employee questions will result in confusion and mistrust.
Conclusion
You only get one shot at making a successful schedule change. Most facilities can achieve an
11% to 17% improvement in labor costs by implementing the right schedule. With millions of
dollars on the line, you must follow the four critical focus areas: Operations and Labor,
Employee Buy-In, Health & Safety and Implementation.
Making Best Practices Your Core Practice
Focus On Four: A Guide To Implementing The Right Labor Schedule
115 E 86th Street Suite 53 / New York, NY 10028 / (212) 534-0539 / http://www.corepractice.com/
Core Practice Partners LLC is the world’s leader in operation and Labor strategy,
specializing in shift work and scheduling. If your organization operates outside the 9-5,
Monday through Friday work week, contact John Frehse, Chief Strategist and Executive
Coach in Labor Strategy at: JFrehse@Corepractice.com or call 1-212-534-0539 Executive Workshop You can also learn about our free half day executive workshop on our website at:
www.CorePractice.com/workshop.htm
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