Free Video Conference Consultation

During this time of uncertainty caused by the Covid-19 virus, we here at Shiftwork Solutions have asked ourselves, “What can we do to help our shiftwork communities get through this?”

Last week, we shared some “out of the box” type ideas to consider in your battle against Covid-19. We’ve received several positive responses to this post. Additionally, companies contacted us to discuss the steps they are experimenting with to balance demand and resources.

We’d like to keep up our support by popular demand.

We are offering a free video conference call with one of our shiftwork experts. You can drive the agenda and discuss your shift work, operation, and staffing related questions, including:

  • Considering higher overtime to use as few employees as possible?
  • Are you struggling with the “Ramp-Down” or “Ramp-Up?”
  • Are you thinking about shorter work weeks to keep as many employees as you can?

There are any number of issues that we would be happy to discuss with you. This includes your stories of success or of things to avoid.

To set up a Video Conference Call, send us an email at contact@shift-work.com

How to Manage Variable Workloads

How to maintain the right amount of coverage and minimize the costs

by Dan Capshaw & Bruce Oliver- Shiftwork Solutions LLC

Does the demand for your company’s product(s) follow a seasonal pattern or exhibit other periodic variations? As long as the changes in demand are not “permanent,” there is no reason to hire enough employees to cover the peak workload requirements. If you did, you would have to either lay them off when demand dropped, or retain and pay them during periods when they were not needed. Paying for this “idle” time can be very expensive.

Here are four options frequently used to maintain the right amount of coverage and minimize the costs:

  • Planned overtime
  • Temporary employees
  • Discretionary work management
  • Planned time-off management

Planned Overtime

Planned overtime is the most flexible option of the four. It allows you to vary the coverage from a fixed number of employees. Although the overtime is usually paid at a higher rate, it is not an on-going cost. You pay for it only when the extra capacity is needed. Thus the incremental cost of increasing coverage is relatively small.

When you hire more employees, the added cost includes both wages and benefits, and you pay these “loaded” wages even when the workload drops and the people are no longer needed.

This means you can minimize your costs by covering the majority of the workload variations with overtime.

The major drawback comes from higher levels of overtime over an extended time period. When overtime exceeds 20% of the total hours for a sustained period, it can have adverse effects on morale, safety, and productivity.

Temporary Employees

Fortunately, overtime is not the only mechanism that we can use to match the coverage to varying production demands. Another alternative is to use temporary and contract labor to cover 10% or more of the labor required to run a typical manufacturing organization. While the problems associated with using temporary labor are well documented, the ability to economically flex up and down by 10% without affecting the rest of the workforce should not be ignored.

Discretionary Work Management

Another way to address variable workloads is to use discretionary work (such as training) to fill in for the slow periods. Discretionary work needs to be done at some point during the year, but its timing can be matched to the availability of resources to perform that work.

Suppose you have a significant drop in demand around the holiday period in December and January. These months would be an ideal time to build in some extra training. In fact, this is an ideal time to hold training that is best done when the entire crew needs to be together.

Other discretionary work, such as special maintenance or cleaning activities, can also be scheduled for these slow periods. One of the goals of discretionary work during slow periods is to convert potential idle time into productive time. Using “busy work” to fill idle time will not reduce operational coverage costs unless that work must be done to keep the plant operational.

Depending on how much discretionary work exists, it may be worthwhile to increase staffing slightly to allow more unassigned time to perform the discretionary work. The risk of doing this is that when the discretionary work cannot be matched to the built-in idle time, costs rise.

Planned Time-off Management

Employees take planned time-off for vacations and floating holidays. This time-off typically is more than 5% of an employee’s scheduled work hours over the course of a year. During peak production periods, employees taking time off are usually replaced by other employees working overtime. During non-peak periods, there is no need to use overtime to replace these absences, so idle time is reduced.

The objective of managing this planned time-off is to encourage personnel to take their time-off during slow seasons, and not to take it off during periods of peak production. Three ways to do this are:

  1. Restrict the number of people that can be on vacation at any one time. During peak production demand seasons, time-off controls can be tighter than they are during the non-peak seasons. This effectively shifts planned time off to the non-peak seasons.
  2. Schedule plant shutdowns during the slow months and require unnecessary personnel to take a vacation. This uses up vacation, reduces production hours, and allows for maintenance to be performed.
  3. Schedule personnel to take a vacation even if the plant is operating. In other words, if employees have not chosen a vacation time that meets the business needs, schedule it for them (with their input). This allows management to substitute vacation hours for idle hours.

For all three of these methods, the biggest risk lies in the employees believing that their time-off is restricted for arbitrary reasons. Therefore, when one or more of these methods is used, management needs to carefully explain why the needs of the business require time-off to be managed. Equal application of the planned time-off management techniques will reinforce the message that the rules are established to help manage seasonal workload and other business issues.

Managing planned time-off effectively can allow you to increase staffing so that more work is performed on straight time and less on overtime. Like discretionary work management, if planned time-off is not managed effectively, it can exacerbate the variable workload problem.

Summary

To summarize, the best practices for managing variable workloads are to:

  1. Use overtime to cover the majority of workload variability that exists.
  2. Use a 10% buffer of temporary employees to flex your capacity up and down to match the changing workload (but only if the skill requirements allow it).
  3. Minimize actual idle time by planning discretionary work and training to be performed during the slow periods.
  4. Manage planned time-off so that more time is taken during slow seasons than during peak demand seasons.

Call Us and We Can Help

Call or text us today at (415) 858-8585 to discuss your operations and how we can help you solve your shift work problems. You can also complete our contact form and we will call you.

Reducing Employee Turnover

A case study

Problem

This food processing company was experiencing severe problems with employee turnover. The underlying cause of this turnover problem was excessive overtime.

Located in a small town with several other labor-intensive companies, the company constantly competes for labor, often operating with less than a full complement of personnel. This staffing shortfall was resulting in substantial overtime which, in turn, created an even higher turnover. Overtime policies allowed senior employees to accept or decline overtime work as they saw fit. When the senior employees chose not to work overtime, the newer employees were forced to work tremendous amounts of overtime, especially during the undesirable periods (i.e. on weekends). The high overtime levels meant that new hires frequently worked long stretches of days in a row causing them to seek greener pastures.

Action

Employee preferences: Employees wanted predictability, a choice in the type of schedule they worked, and reasonable time off to spend with their families.

Business requirements: A business analysis indicated that considerable productivity improvement would be realized if most of the operation changed from a combination of high production on weekdays and limited production on weekends to moderate, steady production seven days a week.

Implementation: In the end, two schedules were implemented. One schedule was a traditional 5-day schedule using 8-hour shifts. The second schedule, used by half of the operation, was a 7-day shift schedule using 12-hour shifts.

Employees on the 7-day schedule were protected from working a scheduled weekend off. They also received about 10% more income and 78 more days off than those on the 5-day schedule.

Interestingly, the company had no problem filling the employee positions on the 7-day schedule. The increased predictability, income and number of days off actually made the 7-day schedule more popular than the 5-day schedule.

Results

After six months on the new schedule, the workforce was surveyed to provide a “before and after” picture. Using indices to measure performance, the change is shown below:

  1. Communication: +5.5%
  2. Management’s openness to workforce input: +13.8%
  3. Employees feeling that they are a part of the company: +11.9%
  4. General quality of work environment: +21.1%
  5. Facility rating relative to other companies in the area: +21.2%
  6. Schedule predictability: +40.6%
  7. Schedule flexibility: +47.5%

These improvements in employee perception pertaining to the company and the work environment resulted in a greater than 50% reduction in turnover.

Call Us, and We Can Help

Call or text us today at (415) 858-8585 to discuss your operations and how we can help you solve your shift work problems. You can also complete our contact form and we will call you.

Are Maintenance Workers Really Different than Other Shiftworkers?

By Bruce Oliver and Dan Capshaw, Shiftwork Solutions LLC

Many maintenance managers will tell you their workforce is different than other shift workers — that their attitudes and behaviors are not the same. Recognizing, understanding, and accounting for how maintenance personnel evaluates shift schedules are essential to finding a schedule that will satisfy their needs and give you the required coverage to meet your business needs.

When it comes to shift schedules, what makes maintenance workers unique? Using our database of over 20,000 employee surveys, we compared the responses of maintenance personnel with those of the average shift worker surveyed. The database includes information on the following topics:

  • Demographics
  • Health and alertness
  • Working conditions
  • Shift schedule features
  • Overtime

Let’s look at the maintenance worker results for each of these categories and compare them to the overall shift worker results. If our assumption that maintenance workers are different is true, we should see some differences in the results.

Demographics

Almost 98% of the maintenance workers are male. This is a sharp contrast with other shift workers, 76% of whom are male. The maintenance field is clearly dominated by men. A graphic comparison of the two groups is shown in Figure 1.

Maintenance workers have worked 43% longer in their current department than the average shift worker (8.6 years for maintenance vs. 6.0 years for the average shift worker). Unlike production workers who can quickly learn a new job in another department such as quality control or the warehouse, maintenance workers tend to stay in their specialized trade. They usually are paid more and spend more time working weekday day-shifts, which also may influence their reluctance to transfer to other departments.

This finding has two important implications for maintenance workers:

  1. Maintenance personnel expects to stay in their jobs, possibly for their entire careers. If they are required to work on a schedule they don’t like, they may see little opportunity to correct the schedule. This makes the stakes and consequently the emotions high when alternative schedules are considered. In fact, the shift schedule is so important that a substantial percentage of maintenance workers said they will quit their jobs before changing to a new shift schedule (24.7%).
  2. Since maintenance skills are often transferable to other companies, maintenance workers are able to change jobs to another maintenance job in a different company. Losing people because of your schedule is expensive. Of course, this also means that an attractive schedule can be a very effective tool for recruiting and retaining the best maintenance personnel.

Health and Alertness

The opinions and preferences of maintenance workers and other shift workers are aligned when it comes to health and alertness. They have similar sleep patterns and habits (e.g. alarm clock usage and their hours of sleep while working various shifts are almost identical), and their self-reported alertness is similar.

Working Conditions

Maintenance workers also gave similar responses to those of the average shift worker on all facets of the work environment except the need for training. As shown in Figure 2, more maintenance personnel feel their employer doesn’t train nearly enough (65.8% from maintenance vs. 55.3% of the average shift workers). Maintenance employees are well aware that training can make their jobs faster and easier. They also often believe that more training for employees in other parts of the organization will reduce the number of breakdowns.

Shift Schedule Features

There were only a few schedule features where maintenance workers’ preferences differed from the average shift worker. As shown in Figure 3, a larger percentage of maintenance people prefer fixed shifts (88.3% from maintenance vs. 82.9% among all shift workers). Most maintenance workers are assigned to weekday day-shift since most preventative maintenance work is done during this time. Minimal staffing is needed for corrective maintenance on nights and weekends. The likelihood of maintenance workers getting the shift they want is pretty high, so it is understandable that more of them want fixed shifts.

Maintenance personnel gave lower ratings to the importance of keeping their current crew members together (maintenance = 3.11 vs. average shift worker = 3.71 on a 5-point scale where 1 is lowest and 5 is the highest possible rating). Unlike other job functions that require extensive teamwork, maintenance work is given to individuals or small groups. Maintenance work often requires a high degree of independence, making the individual team member composition less important than the team skill composition is to the success of the organization.

Overtime

One interesting difference noted between maintenance personnel and the average shift workers is their preference for time-off instead of overtime. When asked, “If you had to choose between more time-off or more overtime, what would you choose?” 70% of the maintenance workers said “More time-off” in contrast with 61.4% of the average shift workers. This is shown in Figure 4.

Maintenance personnel are paid more than other shift workers, so they are not as dependent on overtime. In addition, maintenance workers work most of their overtime on weekends, since many companies push the maintenance work to the weekends. Since weekends are the most desirable time off, it is not surprising that maintenance personnel will choose to have more time off instead of more overtime. To them, asking if you want more overtime is like asking if you want fewer weekends off.

Conclusions

The survey results reveal only a few differences between maintenance workers and the general shiftwork population. The most significant difference is the lack of mobility within a company coupled with the high mobility to move outside the company. Shift schedules are always important to shift workers, but if the only apparent choice to improve a schedule is to change companies, the importance to maintenance personnel is even greater. The nature of the job attracts strong, independent personalities, so when emotions run strong, discussions can be intense. This passionate response to schedule changes explains why so many managers perceive maintenance workers to be significantly different than other shift workers – even though their overall schedule preferences are very similar.

Since maintenance work can occur anywhere in the facility, maintenance workers have many opportunities to come in contact with employees from other departments. That puts them in a perfect position to support communications along the grapevine. It is therefore incumbent on the entire management team not only to be aware of the maintenance team’s differences but also to understand their unique and valuable roles in the organization and use shift schedules that work well for their maintenance team while still meeting their business needs.

Call or text us today at (415) 858-8585 to discuss your operations and how we can help you solve your shift work problems. You can also complete our contact form and we will call you.

How to be thorough when assessing the true cost of paid sick leave

The health and well-being of the employees is the companies’ top priority. As news about the coronavirus (COVID-19) continues to develop, giving employees more paid sick time gets in the focus.

Although Congress has just passed (March 18, 2020) a major package including an expansion of paid sick days and emergency paid leave for a subset of workers, the bill is not universally applicable to all sizes of businesses and all employees.[1]  

Knowing the actual cost of paid time off can help companies assess the financial impacts of giving more paid time.  

So, what is the cost of the paid sick days? 

Calculating the cost of additional paid time off is relatively straightforward for companies with both 40 hour or 24/7 schedules.

Let’s start with this: there are 52 weeks in a year.  This represents 2,080 hours of work if your workers are on a 40-hour schedule and 2,184 hours of work if they are on a 24/7 schedule (per person before unscheduled overtime).  For example, increasing paid time off by 3% is equivalent to giving employees an extra 62 to 65 hours of paid time off every year.

However, most employers would continue the calculations as follows: “I just gave one person 64 more paid hours off.  I also now need to pay someone else to cover those 64 hours at an overtime rate. Thus, this cost me 64 pay hours plus 1.5 times 64 pay hours for a total of 160 pay hours!”

What’s amiss with this latter way of thinking? There are three inaccuracies with this calculation: 

  • First of all, the 64 hours that you are paying the person to be absent were going to be paid to him/her if she was at work so this is not an “extra” cost. 
  • Secondly, there is an extra cost to pay someone overtime to cover the newly created opening, however, overtime generally costs about 10% to 15% more than straight time; much less than the assumed 50% additional cost.  The reason for this is that while people get paid at a higher rate when working overtime, they don’t earn extra medical benefits, vacations, holidays, etc.  Those costs are associated with straight time wages, not overtime wages.  The liability for these costs is incurred when companies hire someone, not when someone works overtime.
  • And finally, the statement includes no consideration for what would happen if you didn’t give people paid sick time.  What is the cost of a sick person coming to work?  How many others will become sick? How well does a sick person perform?  How does a person view their company when they have always been there when needed and now that they are sick, they are on their own?  How are you viewed as a prospective employer if you don’t pay for sick days but the plant across the street does? The consequential costs of not providing paid sick leave are harder to measure, yet can be substantial.

There is another consideration with regards to paid sick time: How will it be administered? 

  • People shouldn’t be able to schedule it in advance because then it becomes a vacation instead of sick time. 
  • A use-it-or-lose-it policy encourages people to take all of their sick time every year.  A buy-back policy encourages people to come to work when sick so they can get a check at the end of the year when they sell the time back.
  • Carrying sick time over is probably the best idea, however, some companies don’t like carrying an ever-increasing paid sick time liability on the books, even though there is no additional cost.   There are several ways to make this more acceptable.  For example, let employees carry over as much time as they want, then when they retire, the company can buy back the unused sick time at a reduced rate.  This allows a worker to build up a huge store of sick hours that are available for use if they ever get seriously sick.  When they retire, they may have a year’s worth of sick time that is worth half a year’s wages. 

I’m not advocating for or against increasing paid sick time.  These guiding posts are here to help you make informed decisions ― about a subject that needs careful and accurate considerations.

Call us today to discuss your questions. (415) 858-8585.

[1]: https://www.vox.com/2020/3/18/21185065/congress-coronavirus-tests-paid-sick-days

When should Management consider a Shift Schedule Unsustainable?

Most production managers have been there. Demand is higher than their ability to supply ― without the use of overtime.  The logical, and possibly, the best solution in the short-run is to go ahead and produce more by using overtime hours.

What is going on when you ramp up overtime?  What are the costs?  What are the benefits?  Most importantly, if using more overtime is a good decision now, is it still a good decision going forward?  In other words, are the cost-to-benefit rewards consistent over time?

The benefits in the short run should be clear – you are meeting the demands of your customers. Furthermore, you are doing so without additional capital and at only a small inconvenience to your employees. The cost of such an action, using overtime, is minimal.  The actual labor cost of a fully-loaded straight time hour and an hour of labor paid at the overtime rate are probably comparable.  The workforce is likely to tolerate a reasonable amount of overtime.  In fact, our database indicates that you should expect about 20% of your workforce will take all the overtime they can get.

What about the long run?  What happens if you start running your operations every Saturday instead of just a few?  What happens when you start running through the weekend?  In other words, your employees work Monday – Friday, then they work the weekend and then, they work Monday – Friday again. That’s twelve days in a row!

Business leaders recognize occasional overtime is not a problem but they are equally certain that overwhelming overtime is.  The question becomes, “When are you going to do something about this?”  When have you crossed the line from “Overtime is Reasonable” to “Overtime is Out of Control?”  This line can be fuzzy when you cross it but looking back, you will see that you are on the wrong side and possibly have been for some time.

Expect these things to happen as your schedule ― packed with overtime ― becomes unsustainable:

  1. Employees will begin to complain about never having a day off
  2. Absenteeism will begin to go up as employees find ways to get time off and have plenty of overtime income to finance missed work
  3. Recruiting new employees into a high overtime schedule will be difficult
  4. Turnover will increase as your employees seek “greener pastures”
  5. Quality will begin to suffer as sleep deprivation begins to affect performance
  6. Productivity per labor hour will drop
  7. Safety incidents will begin to rise
  8. Labor costs go up as performance per labor hour drops
  9. First level supervision will become less supportive of management goals as their overtime goes up in parallel with their workers
  10. Total productivity begins to drop as the workforce tires and vacancies become difficult to fill
  11. A significant portion of the workforce will begin to rely on their overtime to make ends meet, making them resistant to lowering overtime levels

The above symptoms tend to blossom as time goes by and are often ignored in their infancy.  (This is understandable as the very genesis of the situation is one where you are scrambling to find a way to meet your production numbers. You had higher priorities.) Eventually, a shift schedule, inundated with overtime, will reach the point when you ask yourself, “How much longer can we keep this up without creating new problems?” (Points 1-10.)  This is when you realize that your current shift schedule is unsustainable.  Yes, you can hold it together with “duct tape” solutions, but you can never make it do well what it was not intended to do.

If you resort to replacing overtime hours with straight time hours (hiring more people) but you don’t change your schedule, you will end up overstaffing where you already have coverage ― while adding no new hires where you currently have no staffing.  Labor costs will go up and high overtime will remain unaffected.  In short, you added straight time hours but the hours didn’t land where you needed them to.

If you want to reduce overtime without overstaffing you need a new schedule.  

At Shiftwork Solutions, we create custom-designed schedules that enable business leaders to increase production, attract a skilled workforce and keep costs under control. Our data-driven processes, communication centered approach and project execution bring about the changes needed to improve business operations and production output, reduce per-unit costs, all while creating an environment where workers feel empowered to help the organization achieve its goals.  Our experts bring in best practices from wide-ranging industries with complex operations to tailor solutions for specific operational needs. Call or text now at  (415) 858-8585.

Overtime: A Grab-Bag of Information

If you manage a shiftwork operation or if you are a Human Resource manager in a shiftwork operation or if you are a shift worker then – Overtime is a big deal.

Based on my 30 years of experience working with shift workers and shiftwork operations, I consider myself to be an overtime expert.  I have worked with companies around the world for more than 25 years helping them address staffing and scheduling issues, most of which have some level of overtime as a component of the overall situation.

  I thought I would try to put all of these issues into a single blog along with my own perspective.  Wish me luck…

  1. An hour of straight time (fully loaded) costs a company about the same as an hour of overtime paid at the rate of time and one-half.
  2. About 20% of people love overtime.  About 20% of people hate overtime.  About 60% of people will work their “fair share”.
  3. When it comes to overtime, the “marginal propensity to save” is always less than one (1).  What this means is that people don’t save 100% of their overtime income.  This also means that they up their standard of living when they spend overtime income (even if this means they only bought an extra candy bar).
  4. As people adjust their standard of living, they become “addicted” to the overtime.
  5. Consistent high levels of overtime extending beyond 6 months in a row will result in “Golden Handcuffs.”  This is a phenomenon where people will complain about too much overtime ruining their family lives AND complain if overtime hours are cut because they can no longer afford to make a car or house payment.
  6. Overtime at union sites is a particularly tough problem.  Senior employees get the prime overtime during the week and the junior employees end up working the undesirable weekend overtime  The result is a high turnover of new employees who tire from never having a day off.   I typically recommend that senior people get first shot at overtime up to a certain level (56-60 hours in a week) before they go to the bottom of the volunteer list.  I also typically recommend that junior employees are the first to be forced to work overtime up to a certain level (56 -60 hours in a week) before they go to the bottom of the forced list.  This recognizes seniority while keeping people from “voluntarily” working themselves to death while, at the same time, giving the junior people time off to recuperate every week.
  7. If your workload is flat (does not change by the week, or month or season) then a good target for overtime is between 5% and 15%.
  8. If your workload is highly variable, the optimal level of overtime (considering both cost and fatigue) may be much higher than 15%.
  9. Too much overtime is less of a problem than too many days of work in a row.  We short ourselves sleep on days we work.  The more days in a row we work, the farther we fall behind in our sleep.  We need days off to catch up on our sleep.  In other words, it’s better to work four 12-hour shifts in a week than to work six 8-hour shifts.  Both have 48 hours but the 12’s have 3 times as many days off for recovery.
  10. If a machine paces the work, then moderate levels of overtime will not have an impact on productivity.
  11. If people determine the pace of work, more overtime will cause the people to slow down, even if it is unintentional.
  12. Overtime at high levels will cause drops in productivity, safety, quality, and retention.
  13. When assigning overtime, do so as far in advance as possible to minimize the disruption to the plans your workforce may make outside of the work environment.
  14. If your overtime level is zero, you are not “perfectly” staffed.  You are over-staffed.
  15. The accident rate per hour should be expected to go up between the 12th and the 14th hour worked in a day.
  16. Overtime does not make people sleepy.  Lack of sleep makes people sleepy.  Circadian rhythms also play a role in alertness.
  17. Overtime allows a company to compete for labor with other companies that may pay higher hourly rates but offer very low overtime amounts.
  18. When people work outside of their normal schedule, pay them a premium.  They are helping you on time that was originally considered to be their own.
  19. Straight time is typically purchased in 40 hour/week increments when you hire someone.
  20. Overtime hours can be purchased in any quantity you wish.  Even though it costs the same as straight time, you are actually getting a fully qualified person as opposed to hiring and training someone to provide more hours.
  21. All employees want overtime when they want it and they don’t want it when they don’t want it.  Go figure.

I welcome your questions and feedback.  If you disagree with me, first ask yourself, “Is my perspective different from the one Jim was using when he wrote these?”  I say this because I can easily find unique situations where each of the above is not true.
 

Call Us and We Can Help

Call or text us today at (415) 858-8585 to discuss your operations and how we can help turn overtime into an asset that your workforce appreciates. You can also complete our contact form and we will call you.

5 Things You Should Know About Overtime

  1. Quantity Matters.  If your workforce is complaining about overtime, don’t assume that it’s always because there is too much.  It may be just the opposite.  In most workforces, about 20% of your workforce will avoid all overtime.  At the same time, about 20% of your workforce will work all the overtime they can get.  The remaining 60% will tolerate what they consider “their fair share.”  Find out how much overtime your workforce wants and try to make it available to them, within reason.  Too much overtime and you run into fatigue-related issues, even if your workforce wants it.  Too little overtime and you lose flexibility to respond to short term labor needs.
  2. Distribution Matters. Suppose you knew, on average, your workforce wants 8 hours of overtime a week.  If you gave everyone 8 hours of overtime a week in response to this knowledge, you will likely find that you made very few people happy.  Why?  Because not everyone wants the same amount of overtime.  You may have a workforce where half want 16 hours of overtime a week and half want none.  So, giving 8 hours to everyone meets the needs of no one.  The key is to have a process that gets overtime to those that want it without forcing it on those that do.  While it’s probably impossible to hit this mark all the time, efforts to do so will be noticed and positively received.
  3. Cost Does Not Matter. While employees make 50% more money when working overtime, the company actually does not incur an increased cost when they pay this 50%.  The reason for this is that straight time and overtime are not “loaded” the same way.  When looking at the cost of paying for a straight time hour, one must not only consider the wage, but the additional costs such as medical coverage, payroll taxes, holiday and vacations.  Of these extra costs, only payroll taxes apply to overtime.  The result is that overtime and straight time probably cost the same (plus or minus 5%).  Companies may worry about their overtime costs and try to lower these by hiring more people.  They can then see overtime costs drop, but this should be accompanied by a nearly identical increase in straight time costs.
  4. Lead Time Matters.  Resistance to overtime is inversely proportional to how far in advance the overtime is announced and assigned.  If the lead time is short, resistance is high.  If the lead time is several days or weeks in advance, resistance is low.  Actively look for ways to extend the amount of time between the assignment of overtime and when the overtime will actually occur.
  5. The Schedule Does Not Matter.  Overtime quantities depend on two things: (1) How much work there is and (2) How many people you have to do that work.  Low staffing equals high overtime and high staffing equals low overtime.  The schedule only determines “Where” the overtime will occur.  Does it occur before or after a shift?  Does it occur on a weekend?  Does it occur on a day off?  These are the things a schedule determines.

Call or text us today at (415) 858-8585.

How many people does it take to staff your schedule? (Part 2)

There is a short answer and a long answer to this question.  Here is a link to the short answer.

As for the long answer:

Take a look at the “short answer” in the previous blog post.  That is a good place to start.

The following should be considered to refine the number you get using the “short answer”:

  1. The cost of full-time labor matters.  How much does it cost you to pay someone for an hour of straight time?  How much does it cost you to pay for an hour of overtime?  I am not talking about “how much an employee receives.”  I’m talking about cost-to-the-company.  If you do the analysis correctly, you should find that the two costs (overtime and straight time) are within 10% of each other.  This is important because the amount of overtime you use will play a big factor in staffing levels.  For a fixed workload, the higher the overtime, the lower the staffing level you need.
  2. How much training does it take to qualify an employee for a position?  It is likely that there is a wide variance in this with regard to different positions.  Do Not use and “average”.  If you need an astrophysicist and a box stacker, an average will give you a bad number (4 years of post-graduate study for the physicist and 5 minutes for the stacker = about 2 years, on average, to train an employee).  Long training times lead to increased use of overtime and less reliance on other labor options such as temporary help.  If your workforce is staffed with highly skilled people, whose skills are easily transferable to another nearby company, then you will have to bend a more towards compensation scheduling and employee preferences for overtime so as to not lose these people.
  3. How variable is your workload?  If your workload level is flat, you will still have some fluctuations in staffing as people are on vacation or FMLA, etc.  When staffing fluctuates, you have extra staffing available or you can use overtime or you can reduce production.  Cost, degree of variability, employee preference and the nature of your operations will all play a role in determining how you staff for variability.   It’s worth noting here that the most expensive option is to over-staff or staff for peak production as this leads to frequent over-staffing which is costly. A highly variable workload tends to mean lower staffing and higher overtime.
  4. How available are alternative sources of labor? Is your workforce pro-overtime or overtime-adverse?  Is temporary or part-time labor available? If you are in Memphis and need temporary, highly skill forklift drivers, there are temp. agencies that can give you all this type of labor that you want.  However, if you need those same temporary skills in San Francisco, you may need to “grow your own.”  Can you scale back with seasonality by using shorter workweeks or voluntary layoffs?  Note: If the answer is no, the staff to the lower end and use overtime when things get busy.
  5. What about support activities?  Things like maintenance, engineering, quality shipping/receiving and administration all need to be staffed appropriately as you grow (or shrink).  There is no simple formula for how to staff these as there is often not a “straight line” relationship between staffing numbers in operations and staffing numbers for support areas.  For example, a 30% increase in operation staffing does not mean you need 30% more CFO’s.  In some areas, you may actually find that you need less support staff.  For example, maintenance struggles to fix everything on the weekend but if you go to a 24/7 schedule, maintenance can now take place any time in the week; including weekdays where it can be performed more efficiently.
  6. Are you LEAN?  It’s “old school” to think you should stockpile between cells in a value stream to ensure you never run out of product either upstream or downstream.  Instead, just-in-time is what modern operations strive for.  Many companies can maximize or throttle production using staffing alone.   This may mean you staff an area below its maximum capacity to ensure it does not outrun its value stream neighbors.
  7. What is the opportunity cost of lost time?  This must be a consideration if you are going to staff with as few people as possible.  You may save a lot of money by having fewer maintenance specialists but then you might lose even more money if you suffer downtime because you are understaffed.

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Call or text us today at (415) 858-8585 to discuss your operations and how we can help you solve your shift work problems. You can also complete our contact form and we will call you.

The difference between “a schedule” and “your schedule”

The number one way that companies find a shift schedule is to hold a meeting and ask, “So, does anyone know of any shift schedule patterns?”

There are several false assumptions built into this methodology.  One is that all schedules are created equal; that any schedule that covers the hours needed is as good as any other schedule.  Another is that the workforce, having been allowed to choose between a couple of patterns will be satisfied that their needs have been considered.  Also, there is the one-size-fits-all idea which says that if one area goes to a 24/7 schedule (for example) then all other areas must follow suit.  There is the staffing assumption that you must staff to allow for ZERO overtime and that all areas of the operation must increase or decrease staffing levels in lock-step; that is to say, if a new schedule covers 40% more hours you will need 40% more employees across the board (including supervision, quality, maintenance, etc.)  Finally, there is the assumption that policies for things such as holidays and vacations, which worked for your old schedule, will also work for your new schedule.

There are actually many, many more issues that are overlooked or swept under the carpet in the name of expediency, but I think you get the picture.

The right schedule is one that is implemented using the old carpenter’s adage of “Measure Twice and Cut Once.”

Taking the time to do a schedule change right will not only save you from problems down the road but will likely result in immediate productivity gains and cost decreases which are not realized by the “Who knows a schedule pattern” methodology.

Here are my thoughts on just a couple of the “assumptions” mentioned above.

Employee participation is more than just allowing them to select between a couple of patterns.  Participation means they know why a change is taking place.  They are educated about what schedules can do (and can’t do).  They are given a wide variety of options that span the range of what is available instead of just a few similar patterns.  They are allowed to have meaningful input on things like overtime levels, start times, the day on/off patterns and more.  They are given “perfect” information about their final options in such a way as to allow them to discuss the options with their families before making a choice.

One-size-does NOT-fit-all:  You may have an operation that absolutely needs to go to 24/7 (for example).  In some cases, this means a “balanced” schedule across all days of the week where every day has the same number of people in production.  However, suppose one or more areas can keep up with the 24/7 production by only running one shift a week; should they go to the 24/7 schedule?  What about maintenance?  Should they have a “balanced” schedule or should the labor be moved to parts of the week that maximize production?  Remember, maintenance is at its peak performance when production is at its lowest.  (It’s hard to fix equipment while it is running.)  What about quality, engineering, and office staff?  These areas rarely need to go to a 24/7 schedule (in their entirety) when production does.   The “Best Schedule” is usually a collection of schedules that allow all areas to operate and support each other seamlessly.

Staffing is where most companies make the most costly mistakes.  They either over-staff and thus, pay for labor they don’t need or they under-staff and run the risk of high fatigue and turnover that typically come with a worn-out workforce.  Staffing is not guesswork.  There are mathematical solutions that will tell you what the optimal staffing level is for your site.

As for policies, let me just say this: “If you think your 5-day policies will all work just fine on a 24/7 schedule – you are wrong.”

If you decide to “go it alone” let me at least offer you this: Give me a call when you get stuck.  So long as I don’t have to pick up a pencil, I’m free.  So don’t make a mistake because you didn’t have someone to go to. 

Call Us and We Can Help

Call or text us today at (415) 858-8585 to discuss your operations and how we can help you solve your shift work problems. You can also complete our contact form and we will call you.