The Productivity Drain
August 26, 2009
In our most recent survey conducted in conjunction with Harris Interactive, we asked over 1000 US workers how they are faring as the recession reaches the one year mark. Although there are some glimmers of hope being expressed that we’ve seen the worst of the recession, many of our respondents have already felt the impact in the form of layoffs, increased workloads and lower workplace morale.
Thirty-eight percent of our respondents said that there had been layoffs in the past year at their primary place of employment. Forty percent of them further indicated that productivity had been negatively impacted by layoffs:
o 66 percent said that morale has suffered and people are less motivated;
o 64 percent said that there is too much work and not enough people to do it;
o 37 percent said the wrong people or departments were laid off, leaving inefficient systems and workflows; and
o 36 percent said they are concerned that as the economy picks up, they won’t have the right resources to meet demand.
Employees also have some advice for employers on how to improve the work environment:
o 50 percent said employers should look for ways to improve morale. The most frequently cited mechanism to do so is increasing hours or salary;
o 46 percent said their employers have processes that should be automated to be more efficient;
o 36 percent said their organizations should invest in new technology to help manage productivity – interestingly enough, more men (42 percent) than women (30 percent) believe this would help; and
o 36 percent of employees believe that organizations need to take a fresh look at how to redistribute the workload among those employees who are left.
In an upcoming CFO.com webinar with Jim Holincheck of Gartner, he’ll be offering insights into what organizations are doing to balance recession economics and productivity. If you’d like to learn more, you can register here.
If you’ve felt the sting of cutbacks in your workplace, what’s your employer doing to help you work smarter, not just harder? If you’re one of the optimists who believes the economy is starting to recover, how prepared is your organization to sprint out of the recession?
Labor Expense Management - Start with the Basics
July 29, 2009
Even as we hope that we’ve seen the bottom of the recession, many of us are still watching our expenses closely. While economic output may have stopped contracting according to economists, it doesn’t feel like the recession is over. Most families are saving more, paying down their debt and cutting back on discretionary expenses like lattes and vacations. Faced with job losses and pay freezes, we’ve rediscovered the difference between necessity and luxury.
Businesses are in the same boat. According to an April survey by Watson Wyatt, 70% of businesses have implemented some level of layoffs or downsizing. For many, though, the difficult measures they’ve already taken haven’t been enough. So what more can organizations do if they need to manage expenses even more closely?
They can get back to basics. For families and businesses, this means measuring what you spend so you can plan and manage to a budget. It means inspecting your largest variable expenses for opportunities to reduce those expenses. For most organizations, that’s the workforce, somewhere between 30% and 80% of their operating budget on average.
According to Nucleus Reseach, many companies still rely on paper based or semi-automated timekeeping and payroll solutions, yet payroll errors can cost them over 1% of their payroll per year. In my conversation with David Caruso earlier this year, he indicated that more manufacturers are focusing on the use of automation to manage labor cost and productivity as they’ve reached the point of diminishing returns with other strategies for cost containment. It can be hard to justify the capital outlay to invest in the hardware and software needed to automate time and attendance data collection, however the measurable returns are there to be had.
What has your company done to make the case to spend more in order to save more?
Gaming the Clock
June 15, 2009
In a recent survey we conducted with Harris Interactive, we asked over 700 hourly paid employees if they had ever cheated in reporting their hours in order to increase their paycheck. Twenty-one percent indicated that they had. Not surprisingly, of the 21% of respondents who admitted to cheating on their time reporting, the highest percentage (35%) of them were using paper based systems. As the means of time reporting became more automated and harder to deceive, the percentage of cheaters declined, with only 5% of those using biometric time clocks reporting themselves as having gamed the system. Among those who cheated, the tactics included:
- Punching in earlier or out later than scheduled (69%)
- Adding extra time to their timesheet (22%)
- Failure to punch out for meals or breaks (14%)
- Having someone else punch them in or out (5%)
How much does time theft hurt businesses? A recent Diagnostic Assessment analysis Kronos conducted for a 6,800 employee manufacturer revealed rounding-rule abuse cost of over 1.3% of total wages paid. The 4 worst-performing departments in terms of rounding-rule abuse cost the organization approximately $3.6M annually. According to a 2006 Nucleus Research Report ROI report, companies with manual time and attendance systems typically incur unnecessary payroll costs upwards of 1.2 percent of their total payroll costs due to inaccurate application of pay rules, as well as human errors, intentional and otherwise.
Feelings run high on both sides of this issue. This discussion thread from Woodweb, a website for the woodworking industry, is a spirited debate between employers and workers regarding whether automated time tracking is a necessary management tool or Orwellian incursion. The truth lies in how the tools are used, of course. Employee punches collected by time clocks are indisputable data elements. Friction between employers and employees, or failure to comply with standards such as those set by FMLA, FLSA or union rules, is caused by how that data is used to calculate pay. Fair and legal policies, consistently applied via technology, can help to close those gaps.
Discussion with David Caruso: Reducing Costs and Boosting Productivity in a Challenging Economy
May 6, 2009
I recently had the opportunity to talk about the importance of labor cost management in manufacturing with David Caruso, the founder and Principal of David Caruso & Associates, Inc. David’s consulting firm specializes in manufacturing, supply chain, and technology strategy. We talked about how manufacturing organizations are increasingly focusing on labor cost management in the current challenging economy.
In our conversation, David provides a number of examples of how manufacturers have used labor analytics tools to analyze and improve both worker productivity and product quality. In one firm he assisted, they found that quality eroded over the course of the day due to worker fatigue. They inserted more breaks into their process and achieved significant improvements in productivity and quality. Click here to listen to a podcast of our conversation and hear more tips from David Caruso.
You can find additional information on this topic in this new Kronos whitepaper as well as in this article from IndustryWeek by my colleague Gregg Gordon on effective ways to manage a global workforce.
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