What does the New Year Bring to a Tight Labor Market?

During our 30+years of cross-industry experience we have found that once unemployment drops below 6%, companies find it hard to staff adequately to meet production demands.  At the current 3.6% unemployment rate [1] a labor shortage is the single biggest production problem many companies are facing. For as many as eleven states, unemployment falls to between 2.3% and 2.9%.[2] What this means, is that almost everyone who wants a job has a job.  No wonder, if you ask any production or human resource manager: “What was the biggest challenge last year?” they will almost certainly give some version of “It’s becoming harder and harder to find employees in this ever-increasingly tight labor market.” They are most likely fighting this battle on two fronts:

(1) Getting quality employees to join their company

(2) Keeping those employees satisfied enough to keep them from leaving.

When it comes to attracting quality employees, the beginning of the year, however, represents an opportunity to jump-start your hiring efforts to hire quality employees ― without “poaching” from the company down the street.  According to the BLS, more than 600,000 temporary jobs were added for the holidays nationwide in 2018.  Most of these new hires were let go by February of 2019.  Given this seasonal pattern for the new year, we can expect that there are going to be a lot of people looking for work this January and February.  Keep this in mind as it may be a good idea to strike while the iron is hot. 

When it comes to keeping quality employees, it is always preferred to keep them rather than trying to constantly replace them.  When you slow down turnover, you immediately take a huge burden off of your recruiting and training efforts.

How to do that? Here are some insights for a shift work environment

  • Why Your 12-hour Schedule is More Attractive than You Think?
  • What is important about work-life balance?
  • What do you need to know about overtime?
  • 12 Unexpected Insights: do you know what you don’t know?
  • Why should you consider changing your shift schedule?

Our experts at Shiftwork Solutions have looked at the reasons why employees leave companies, such as inclusiveness, work-life balance. Their workforce survey is an integral part of their solutions which leads to happier employees who feel valued and are instrumental in delivering on growth targets.

Give us a call at (415) 858-8585 and talk to an expert for free.  We can help you to succeed.

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Footnotes:

[1] Bureau of Labor Statistics (BLS), January 1, 2020

[2] Local Area Unemployment Statistics (LAUS) January 1, 2020

Have you Made Your Business Resolutions Yet?

If you want happier employees this year, you may consider doing some things differently than last year. Otherwise, if you do what you did, you’ll get what you got. Employee engagement, better-work life balance, and improved communication might be at the top of the wish list. But what comes after establishing these resolutions? How to execute on those? You may start collecting a set of SMART goals1 that support the resolutions the best. However, before starting to jot down your goals for the year, let us borrow James Clear’s thoughts on goal setting. Clear, the author of Atomic Habits, claims that “goals are good for planning your progress and systems are good for actually making progress. Goals can provide direction and even push you forward in the short-term, but eventually, a well-designed system will always win. Having a system is what matters. Committing to the process is what makes the difference.” 2  

An example: if you’re a writer, your goal is to write a book by a certain date. Your system is the daily writing schedule you follow. Committing to writing a blog every day is a process that makes a writer confident (s)he is going to get to his/her ultimate goal of publishing the book.

It is also true for a shift work operation. Goals are useful and needed for setting a direction, but you need a system in place to make progress. Deploying a vetted, transformed shift work system is the way to achieve many of the high priority goals.  Changes in the outcome require changes in the process.

If some indicators have revealed that workforce and schedule related changes are needed for your business success, you might be ready to implement some change. A well-designed, transformed shift work system will ensure that the desired changes happen, and your resolutions come true. It will support numerous underlying goals, which include:

  1. Reduce employee turnover
  2. Improve overtime distribution policies
  3. Reduced absenteeism
  4. Increase employee involvement
  5. Improve work-life balance
  6. Eliminate unnecessary labor costs
  7. Improve communication with the workforce
  8. Adjust supervision: optimal direct-reports ratio
  9. Increase time for maintenance
  10. Fully staff all non-day shift positions
  11. Improve shift turnovers
  12. Identify workplace issues that employees find problematic
  13. Solve staffing needs for a seasonal workload
  14. Maximize productive time per line
  15. Maximize employee schedule satisfaction
  16. Build training time into the employee work schedule
  17. Implement interactive electronic employee schedule management system
  18. Increase schedule flexibility
  19. Improve technical support for non-day shift operations
  20. Increase workforce involvement in problem-solving exercises

That is how the right schedule in place can bring about happier employees. Side effects may include improved responsiveness to customer demands, an increase in revenues, a good grip on overtime, product quality improvements, and more effective communication with the workforce and within teams.  

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If you have questions or want to find out more, contact our team.  Call or text us today at (415) 858-8585 to discuss your operations and how we can help you achieve your goals. You can also complete our contact form and we will call you.

Shiftwork Solutions’ Consulting Services creates a shift operation framework that enables business operations leaders to increase production and attract a skilled workforce into a custom-designed schedule. Our experts bring in best practices from wide-ranging industries with complex operations to tailor solutions for specific operational needs. Our data-driven processes, communication centered approach and project execution bring about the changes needed to improve business operations and production output, and reduce per-unit costs, while workers feel empowered to help the organization achieve its goals.

Footnotes:

1. SMART ― specific, measurable, achievable, relevant, and time-based.

2. James Clear on goal setting https://jamesclear.com/goal-setting

Why Your 12-hour Schedule is More Attractive than You Think

If you are a Human Resources Manager, then you are well aware of the difficulty in finding quality employees in today’s tight labor market.  You and everyone else in your local area are competing for an ever-shrinking pool of potential employees.  You have a 12-hour schedule and, at first glance, this seems to be putting off new hires before they even start.

If this is true for you, then you may find yourself asking, “Maybe an 8-hour schedule would be better for attracting employees.  Should I try that?”

The answer to this comes from recognizing your audience and the motives of those you are trying to recruit. You might be on a winning track if your offering, is based on the appreciation for your candidate’s goals and showcases the values and benefits of a 12-hour schedule in comparison to an alternative employer and schedule that your candidate may be considering.  Often you will find that your 12-hour schedules are just not “packaged” right in order to make the point that you are the better offer.

Let’s take an example.

The facility across the street is offering an 8-hour day shift with every weekend off.  They are also advertising “No overtime!”  The final nail in the coffin is that they are offering 10% more per hour than you are.

How can you compete? You could point out:

  • the great healthcare plan you have, but if your potential employees are young enough, they are on their parent’s plan.
  • the great retirement benefits but again, younger employees will see retirement as a very distant issue. They want more immediate compensation.

This may feel hopeless but in reality, you may be holding the winning hand; that is if you can get the right message out. Try this instead:

  • “Our schedule has the same annual pay as the company across the street.” You can say this because a 12-hour schedule averages 44 pay hours a week instead of 40 (like the schedule across the street).  The extra pay hours make up for the lower rate of pay.
  • “We don’t have mandatory overtime, but we do offer overtime to those that want it.”  This will appeal to those that don’t want overtime as well as those that do.  The ability to work a lot of overtime is a big attractor for at least 20% of your potential new employees.  Point out how much more money this is. “This can add as much as $XXXXX on an annual basis.”  Remember, they may have a 10% higher wage across the street but overtime pays 50% more!
  • “Our schedule has 78 more days off than the schedule across the street.”  This is a key benefit of 12-hour shifts.  Yes, the days are longer but 78 more days off is very, very attractive.
  • “We offer a 10% shift differential for those that work on the Night shift.”  If your shift differential is not this high, then consider changing it.  10% is the minimum rate it takes to attract people to non-day shifts.
  • “You can use 24 hours of vacation and get a week off.”  This will depend on the schedule pattern, however, a better vacation using fewer hours is a lesser-known benefit of 12-hour shifts.

Depending on the specific 12-hour schedule that you are using, there can be several other benefits that might help you appeal to potential new employees.

Let us help you design a shift schedule that makes you the employer of choice.  We can transform your work environment.  Our employee engagement process ensures maximum support from your workforce.

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.

 

Non-wage Solutions to Rising Wage Pressure

Human Resource managers: How can you attract a quality workforce when you know that doing so with wages is out of the question?

Back when we were recovering from the Great Recession, we all knew this was coming. We watched and cheered as unemployment numbers dropped, month after month. This meant the economy was recovering. Manufacturing, in many industries, has reached the tipping point and is returning to the United States at a pace not seen in decades.

One of the results of this “bountifulness” is a lack of skilled labor. In some cases, it’s a lack of labor at even the most basic levels.

Part of this is a training issue. We have modernized our production methods without a training mentality to keep pace with the new skills we need. Part of this is just “not enough bodies.” The result is a scarcity of labor which drives up the cost of labor as we compete for this ever-dwindling resource.  

Image result for attracting employees
The most obvious way to deal with this; to bring in the labor with the skills you need; is to raise wages. Raise that wage bar high enough and labor no longer becomes a problem. However, you have now changed your cost structure and thus your profitability. In some industries, labor costs are a small component of the Cost of Goods Manufactured and increased wages have relatively little impact. In other areas, labor costs eat away at a small profit margin and your very survivability depends on your keeping these costs low.

So, what can you do if you don’t want to, or don’t have the ability to raise wages?

The answer is to use your schedule as part of the attraction. Make it one of the reasons people want to work for you and not the company across the street.

Here are just a few ways to do this:

  1. Maximize days off. The overwhelming preference of our labor force is to work longer days to get more days off. As an example, let’s assume an employee works 40 hours a week or 2,080 hours a year. If they work 8-hour days, they will have to work 260 days a year. If they work 10-hour days, they will have to work 208 days a year. If they work 12-hour days they will have to work 173.3 days per year.
  2. Make your work schedule one that fits the needs of your employees. Don’t assume you know what your workforce wants. Ask them. Ask them in such a way as to allow everyone to participate. This means creating a setting where the “loud cannot intimidate the meek.”
  3. Make your work schedule predictable. This means creating a system where your employees know when they can work and when they can plan on not being at work.
  4. Look at flex-time or work-from-home ideas.  There is little doubt that employees find these types of ideas attractive.
  5. Use overtime as a benefit. This means finding out how much overtime your workforce wants as well as who wants it and who does not. You want to be able to get overtime to those that like it while not forcing it on those that don’t. This will improve predictability as well as help you to compete wage-wise. A company across the street may pay $15 an hour while you only pay $14. However, if you offer a lot of overtime, your overtime employees will recognize that they can make a lot more money working for you. Along with making overtime available, try to absolutely minimize the number of times overtime is “mandated” or assigned on short/no notice.
  6. Create a participative work environment. No one likes to be told what to do. When I go to a site and find the workforce somewhat disgruntled, it is nearly always a communication issue. More specifically, it’s a feeling of “I don’t matter” or “No one is listening to me.” Keep in mind, people come to work for the money but stay for other things such as job recognition, the ability to advance and a feeling of accomplishment.
  7. Make your actions and policies transparent and apply them fairly. All too often, I come across employees who misunderstand a policy or feel they are being singled out. When this happens, it is important to listen and investigate. They might be right. Or, they might be wrong but are just seeing things incorrectly. Feelings of “not fair” are precursors to an employee leaving for greener, more just, pastures.

The right schedule choice can help keep costs and attrition low and employees engaged. Asking the workforce about their preferences, however, has the utmost importance and so does the way you manage and communicate the change and keep up the participative work environment.

Call Us and so we can help you compete for labor in an increasingly tight labor market.

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.

What is the Worst Shift to Work? Night Shift? Afternoon Shift?

The night shift is difficult physically, but the afternoon shift can be hard on your family and social life.

In my last post, I talked about shift workers’ preferred shift, which is the day shift, and the implications of that preference on worker satisfaction levels.  An obvious follow-on question to the preferred shift assignment is to understand shift workers’ least-preferred shift.
Over the last 23 years working with shift work operations, I have observed that there is often one least preferred shift at a site, and it is either the night shift (also known as 3rd, graveyard, or sometimes the hoot-owl or hoot shift) or the afternoon shift (2nd or swing shift).  Which shift is least preferred at a particular site is typically driven by the demographics of the workgroup and the work environment.

Here are the overall results from our database of survey responses to the question “What is your least-preferred 8-hour shift?” : Least preferred 8-hour shift.

 

From a sleep management perspective, most shift workers have more trouble getting enough good-quality sleep on the night shift.  This makes it less desirable for facilitating high alertness.  On the other hand, it allows the people on night shift to meet other obligations in their lives like managing childcare, going to school, working a second job, and spending time with their families.

Afternoon shift allows many shift workers to manage their sleep patterns better (second shift workers get more sleep than either day shift or afternoon shift) so they often feel better on this schedule than on a night shift schedule.  The main downside to the second shift is that it requires work during the “prime-time” evening hours when family and friends are available.  For parents, this can be a deal-breaker since it may mean that they almost never see their families during the workweek.

This difference of opinion on the least desired shift is an opportunity when it comes to staffing your shift schedule.  On an 8-hour schedule, it is often possible to give an overwhelming majority of folks either their first or second choice of shift assignments and avoid the least desirable shift.  All it takes is some flexibility in the shift-bid system and sufficient cross-training of the workforce to meet the skill requirements on all shifts.

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.

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.

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.

Staffing? – Good Question

Considerations for answering – How Many Do I Hire?

I’m a shiftwork expert so my posts are always centered on shiftwork operations.  That doesn’t mean that there isn’t something that a non-shiftwork operation might find helpful.  My hope is that every reader of every post is able to find value.

Most of my work, about 70%, is with companies that want to expand their operations while minimizing capital investment.  Basically, I help answer the question “How can I get more out of the equipment I already have?”

Once that’s been determined, my bread and butter is “process and implementation”.  I help them find where they want to go.  I valuate that destination and then I help them to get there.

One question is always “How many people do I have to add to get to where we want to go?”

There are short and long answers to this question.

If you are running three shifts, Monday – Friday and want to go to a 24/7 operation, you need to add 33% more operators.  You will also need to add another supervisor.

That was the short answer.

Here is the longer one…

This is really more of a list of considerations rather than The Long Answer.

First, we have to land on an overtime number.  This is more than just creating an arbitrary goal of so many days or hours of work in a row.  Try answering the following questions for a start:

  • How much overtime do you want to have?
  • What does overtime cost (the cost to the company not income to earner) as opposed to fully loaded straight time?
  • What is the workforce’s appetite for overtime?
  • Is the process seasonal in that sometimes you need more people than at other times? What is the level of operator specialization?
  • What is your turnover?
  • What is the lead time between needing a new hire to having a fully trained person?

The overtime issue is a big one since, with a fixed workload, overtime is a function of staffing.  More people = lower overtime.

If production is going to run more days, what does this imply for support operations?  Will quality, maintenance, and sanitation requirements be expanded? Often the answers are something like this:

  • Quality will be affected slightly.  They will need more people but not 33% more.  Maybe something like 10% more.
  • Maintenance will actually become more efficient as you no longer have to be staffed at a level where you can fix everything on a weekend.  When running 24/7, maintenance is often spread out on the more productive weekday shifts.  This may actually lower your maintenance staffing.
  • Sanitation crews sometimes drop to zero staffing.  This is because 24/7 operations no longer sanitize in accordance with a fixed day or time of day schedule.  Instead, they run for as long as they can and then the operators simply become sanitors and clean up their own lines; starting back up as quickly as possible.

​You don’t need 33% more Plant Managers, HR Managers or Engineers.  There is definitely a “cheaper by the dozen” affect when it comes to many of the higher level non-direct labor positions.

Clearly, if production goes to a 24/7 pattern, not everyone at the plant needs to do so as well.  In fact, there is a good chance, depending on your operation, that not all of the production needs to go.  It’s not unusual for some lines to go to 24/7 while others remain on a 5-day schedule.  In some instances, running your high volume equipment more hours will actually take fewer people instead of more if you are able to retire some of you older, more labor-intensive capital.

So there you have it….the longer answer.

The point here is that you need to do your homework.  Look at the fully loaded cost of a single employee.  Hire too many and things start to get expensive in a hurry.  My rule of thumb is to initially staff lean when in doubt.  If you are wrong, you can use overtime until you get the staffing right.  Coming in with too many people to start with will cause “income shock” to those that just lost all of their overtime AND you run the risk of overstaffing which is expensive and only fixable by painful layoffs.
 

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.