Good labor-management involves striking the right balance between labor costs, worker health and safety, required output, and product quality. Achieving this balance is a continuous endeavor that’s complicated by the fact that, especially in this tight labor market, employers have to ensure high standards while still attracting and retaining talent.
At nGROUP, we use several strategies to improve labor management, including production standards, production tracking mechanisms, and production feedback mechanisms.
Production standards are critical to running any performance-based business. They give everyone in the organization, from workers on the floor to upper management, something to aim for and benchmarks against which their performance can be measured. Note that in organizations without formal production standards, employees will set their own standards — and that can affect cost, productivity, product quality, and worker safety.
Production standards are a fundamental piece of developing an efficient production process. A process must first be documented and understood before you can improve it. Once you’ve determined a realistic process improvement, you can develop best practices and process improvement techniques that will enable you to grow from the current state to your desired future state.
At nGROUP, we distinguish between two types of production standards:
- An engineered standard is a highly time-intensive, heavily data-driven type of standard that has to meet specific criteria. To develop an engineered standard an engineer or team of engineers break down a process, defines its various elements or steps, and performs time studies for each element.
- A reasonable expectation or production expectation is a less time-consuming standard to develop and generally does not require as much data. Its development involves observing a process and calculating what a reasonable expectation is based on the current data. This data is cross-referenced against historical data and a basic time study is performed. All of this data together yields a historical output/performance rate, an observed output/performance rate, and an ideal output/performance rate.
Production standards are well-suited to processes that involve a single worker at a workstation. However, when a worker has to perform a lot of walking or traveling, there are more dynamics at play: more steps and different expectations involved. As such, developing standards becomes more challenging and time-consuming.
When a process is more sophisticated and involves large groups of workers such as an assembly line, it’s advisable to work from a holistic perspective. Instead of studying each individual worker, you have to analyze the process throughout the entire assembly line.
It’s important to understand that both engineered standards and reasonable expectations take health and safety, consistency, and product quality factors into account. Take the hypothetical example of improving a process that currently involves a worker being on his or her feet all day at a workstation. Standing up for an extended period results in fatigue, which impacts health, safety, product quality, and productivity. Part of the process improvement would logically be to provide a chair to reduce fatigue and diminish the associated problems. Despite the costs of acquiring the chair, the process would significantly be improved, and the desired outcome would be achieved.
Production Tracking Mechanisms
Having a good production tracking mechanism in place is essential to process improvement. Why? Because when a process isn’t yielding the desired results, it’s ineffective to simply look at your output. You have to study the process to see what’s impacting the outcome. At the same time, to know whether a process improvement is working, you need to track — or measure — the production so you can analyze the data and refine the steps as needed. A suitable tracking mechanism will give you insights into all of the factors that are in play and allow you to pinpoint exactly where the issues lie.
Without a good production tracking mechanism in place, measuring results can become highly labor intensive. However, the time- and cost-savings- that result from improving process generally free up sufficient funds to hire an administrative professional to manage production tracking.
Implementing a production tracking mechanism can yield improvements ranging from 25 to 100 percent. The reason for this variance is that there has to be someone in the organization who understands what’s needed to successfully implement the process — in other words, who possesses a deep understanding of the relevant data collection and analysis methods. Without such a person, you won’t be able to achieve your desired outcome.
Production Feedback Mechanisms
When implementing process improvements, it’s crucial to provide feedback to your workers. As a rule of thumb, you should do so early and often.
A typical feedback mechanism involves printing out individual performance graphs for the current and previous days and presenting them to workers at the end of their shifts. This forms a good system of automatic feedback.
Supervisors can also perform hourly checks against the standard performance rate and provide workers with feedback accordingly. This is especially important when training new employees, as it allows you to help them overcome any obstacles while simultaneously motivating them. It will also give you insights into whether workers are behind, in line with or ahead of expectations.
Note that a useful feedback mechanism doesn’t have to comprise highly sophisticated software; it can also consist of spreadsheets and other basic tools. Yet to leverage it to your advantage, you need people with the right knowledge, skills and management capabilities to execute the process correctly.
The Benefits of Good Labor Management
By employing these three strategies, you can achieve good labor management, which in turn offers several business benefits. You can better utilize people, equipment, and facilities. In addition, you can streamline your workforce, which results in lower costs associated with everything from talent management to operating costs. Ultimately, you can reduce CPU, improve product quality, increase productivity, and enhance employee safety and satisfaction. This all goes a long way to strengthening your competitive positioning, both as a business and as an employer.