Managing an efficient and happy workforce is a matter of good communications, a strong team ethos and a great deal of flexibility. But in these tough times how do you keep staff motivated for the task? Nick Allen
Recessionary pressures are taking their toll on the labour market. When companies cutback, inevitably this means a reduction in headcount and that creates a difficult situation for both management and staff. But is the knee-jerk reaction of cutting staff necessarily the right approach?
Nick Weetman, director at consultants Davies & Robson, sees that on an operational level there are some obvious ways of avoiding the need to make redundancies. “Reducing labour costs by adjusting potentially inefficient shift patterns and minimising overtime working is one way; another, as we are seeing in UK manufacturing industries, is the introduction of short-time working.”
Where there is a requirement to take people out, decisions about where and when to do this need to be carefully considered at the earliest opportunity. “Taking out the wrong people, or the right people but at the wrong time, can damage a company’s long-term competitive position,” says Weetman. “They need to think ahead to ensure that they emerge from the recession stronger and not weaker than before.”
When it comes to management, it is perhaps more critical than ever to have people with the right skills in these testing times. “Companies need to spend time, and in some cases money, to make sure their people are up to scratch,” he says. “This is the time when the supply chain really matters; managers with the right mix of skills, vision and nerve can identify and deliver efficiency improvements and cost savings which may make the difference between success and failure.”
Weetman is of the view that, “too many companies believe that a ten per cent reduction in activity can simply be offset by a ten per cent reduction in headcount.” But he points out, “this fails to take into account that they still have 100 per cent of their fixed overheads.” In a recession, as in a growth phase, companies need to re-engineer their assets to reflect actual activity levels. By thinking laterally companies may be able to redesign or perhaps redeploy underused resources.
Craig Willoughby, operations director of Consilium, the logistics and supply chain consultancy division of Wincanton, believes that it is important to, “identify and drive through enhanced ways of working that are good for the employer, as much as they drive efficiency, and good for the employee, as much as it makes their task more realistic and achievable.”
In recent years the emphasis has been squarely placed on retaining good staff. “This will not necessarily change just because of the present business climate, you always want to have well motivated, well enthused staff who are keen to do their best for your business,” he says.
According to Willoughby, “the best way of doing this is to make sure there are good communications with the staff – and that’s not just at the shop floor level, that’s from senior management down to the operational workforce.”
These days, the way that both staff and employers like to organise themselves is to incorporate high levels of flexibility into working practices. “The key is to have people that are trained to flex between different jobs,” he says. “Some businesses look to have fully flexed multi-skilled staff right across their operation, whereas other companies will have people who are trained for perhaps two or three jobs within a large warehouse or logistics operation, where they will flex between those jobs only.”
Many companies are more focused on productivity but, says Willoughby, “not in an aggressive way, in a positive way,” by implementing good productivity measurement standards that provide really good targeting for the teams. You get a broad mix of approaches across the board. “They often align with bigger picture issues within the way staff might be managed overall; for example, the introduction of technologies such as voice picking which can be used to tie in with well measured and accurate KPIs for staff achievement and performance. This can be used to drive enhanced productivity, greater teamwork and better goal setting within the staffing,” he says.
On the subject of annualised hours, or banked hours as it is often known, Willoughby sees that there are both pros and cons. “It works well for some businesses and not so well for others. It may give the staff a shorter day when they know they don’t have to be there, but they have the knowledge that they are going to have to work a longer day later on in the week or month.
“I’ve seen some businesses where the work pattern is so biased to one end of the year, particularly around Christmas, that annualised hours are hard to achieve. It’s all about the specific challenges of the operation,” he says.
“When it comes to absolutely flat profiling, where you are looking at four on, four off, or three on, three off, that’s good if you’ve got a very solid forecastable volume throughout the year, where you are going to need a consistent number of staff. But this doesn’t work so well in an operation subject to big peaks and troughs, for instance, in a big food retail warehouse, on say, a summer’s day when there has been a big spike in demand due to the weather.”
The biggest challenge is getting your business forecasting as close to reality as you can. Everything is subject to volatility, but the best businesses are those that place great emphasis on providing accurate forecasts at a corporate level that can then be adjusted to a local logistics environment. Willoughby believes that the businesses that look at their forecasts three months out and then review them a month out, two weeks out and finally a week out from when they will be delivering the volume through the operation are the ones that are able to plan their labour the best and drive out cost.
However, he says it is also easy to go the other way. “If your forecasts are under the actual requirements, you might not be able to get hold of temporary labour in a hurry,” he says. Most big logistics operations will have tie-in arrangements with local agencies that are able to provide short-term labour. Efficient businesses will train people from specific agencies so that when they are brought in at short notice they are well equipped with an understanding of what the role will be, and that they will have been trained with all the appropriate equipment.”
Bigger businesses that have numerous operations may run national pooling operations and will balance labour between different sites, sending staff on minivans to locations as required.
According to Willoughby, collaboration between local non-competing companies works well in the transport field where fleet and driver labour pools can be used effectively. “It’s a harder challenge if you have warehousing operations that might be in a similar area to work out a balancing programme between the two sites unless there is a neutral third party such as a 3PL that can co-ordinate between the two and can work out who picks up the cost one week and who picks it up the following week.”
There is no right or wrong answer with regard to bonuses. “The generally held view is that a good well-motivated team, with a good basic salary, can achieve every bit as much as a team that has a lesser basic salary but is bonus driven. In fact, they may be focused on the bonus rather than quality or accuracy and that’s why many companies are now setting bonuses based on pick accuracy rather than volume,” he says.
Technology too can play an important part in planning and co-ordinating labour resources to meet patterns of demand. Oxford University Press has cut its order fulfilment costs by 27 per cent after installing a RedPrairie workforce management system at its UK warehouse.
The publishing house says it achieved a 19 per cent increase in order throughput in the first week of implementing the system, and after a year saw the cost of fulfilling an order fall by 27 per cent. That is shaving £100,000 off its annual budget for warehouse staff as it can now handle orders during peak periods using less resource.
Elwyn Roberts, OUP infrastructure manager, says: “The key to successfully implementing the system was to involve staff fully in the project. We gave them ownership of their productivity and the chance to contribute ideas so that all the changes made were their own. This proved to be a catalyst to re-energise the team and showed them a wealth of new opportunities.”
Manhattan Associates has just released Labour Schedule Optimisation, which analyses and calculates numerous labour factors such as number of workers, skill levels, individual performance levels, length of shifts, overall workload, break times and hourly rates.
Manhattan claims the new system creates savings of six to nine per cent, which it says is in addition to the 15 to 20 per cent savings created by implementing its core labour management solution.