Employee productivity and Role of HR


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A Learning Resource on Employee Productivity enhancement and Role of HR by Jayadeva de Silva (Humantalents)

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Employee productivity and Role of HR

  1. 1. HumantalentsEmployee Productivity-Role of HRJayadeva de Silva. M.Sc, FIPM, FITD Overview Productivity and Human Behavior Designing Workers’ Jobs Empowering Workers Work Methods Analysis Work Measurement Learning Curves Employees’ Health and Safety Wrap-Up: What World-Class Companies DoProductivityProductivity means the amount of products or services producedwith the resources usedProductivity = Quantity of products or services produced Amount of resources usedProductivity varies with the amount of production relative to theamount of resources used.Ways to Increase Productivity  Increase output using the same or a lesser amount of resource.djayadeva@gmail.com 1humantalents-subscribe@yahoogroups.com
  2. 2. Humantalents  Reduce amount of resource used while keeping output constant or increasing it.  Use more resource as long as output increases at a greater rate.  Decrease output as long as resource use decreases at a greater rate.Impact of Price/Cost Change on ProductivityWhen the cost of a resource increases and profit is to remain thesame, some combination of the following must occur:  output is increased  resource usage is decreased  price of output is increasedWhy do We Care About Productivity?  Without productivity improvement, businesses do not survive in a global economy.  Higher productivity means higher standard of living.  The US has traditionally been the leader in productivity gains but other countries are closing the gap.Single Factor Approach to Measuring ProductivityCapital - Number of products produced Divided by asset valueMaterials - Number of products produced Divided by dollars spent on materialsDirect Labor - Number of products produced Divided by direct labor-hoursOverhead - Number of products produced Divided by dollars spent on overheadSingle Factor Approach to Measuring Productivitydjayadeva@gmail.com 2humantalents-subscribe@yahoogroups.com
  3. 3. HumantalentsNote that the productivity of a particular resource can be increasedsimply by replacing some of this resource with a different type ofresource.For example: If automation is substituted for direct labor and outputvolume is unaffected, direct-labor productivity increases (and capitalproductivity decreases).Our view of productivity must be toward improving the productivityof all the factors of production.Labor ProductivityFor some firms, production labor (touch labor) represents a verysmall part of the firm’s total costsFor other firms, particularly service firms, direct labor cost remains asignificant cost and the need to improve labor productivity is still aserious concernVariables Affecting Labor Productivity  Physical work environment  Technology, equipment, materials, lighting, layout  Product quality  Defects, scrap, rework  Employee job performance  Employee ability, motivation  Employee Job PerformanceMotivation is perhaps the most complex variable in the productivityequation. o Only unsatisfied needs are motivators. o Maslow identified five basic needs: physiological, safety, social, esteem, and self-fulfillment.djayadeva@gmail.com 3humantalents-subscribe@yahoogroups.com
  4. 4. Humantalents o The higher level needs (social, esteem, and self-fulfillment) might hold the most promise for motivating.If productivity is seen as a way to fulfill needs, higherproductivity is likely to result.Factors affecting MotivationFormal organizationInformal groupsJob designLeadershipUnionPsychological needsEconomic conditionsPersonal situationsSpecialization of LaborAdvantages  High production rates  Low wage rates  Low skill requirementsDisadvantages  High turnover, absenteeism, tardiness, grievances, sickness, and sabotage  Low production quality at timesModifying Jobs to Provide Broader Range of Needs SatisfactionCross-training -- workers perform multiple jobsJob enlargement -- adding similar tasks to worker’s job - horizontaljob expansionJob enrichment -- adding more management functions to job -vertical job expansionTeam production -- organizing workers into teams; assigningmanagement responsibility to teamsdjayadeva@gmail.com 4humantalents-subscribe@yahoogroups.com
  5. 5. HumantalentsJob DesignCan we simultaneously give workers the satisfaction they want fromtheir work and still give the organization the productivity andefficiency to survive economically?Guidelines for DesigningJobs and Work Environments o Workers’ Job Tasks o Avoid machine pacing of workers o Design jobs so that workers inspect their own output o Open work areas for communication & visual contact o Combine job planning into workers’ jobs o Automate boring, uncomfortable, or unsafe jobsImmediate Job Setting o Rotate jobs that are repetitive, monotonous, boring o Assign new workers to undesirable jobs, then transfer them to more preferred jobs o Recruit disadvantaged persons for high-turnover jobs o Give rest periods to workers with repetitive jobs o Set higher pay rates for undesirable jobsGuidelines for Designing Jobs and Work EnvironmentsLarger Work Environment o Select/train supervisors who openly communicate o Develop supervisors who are comfortable with a participative team environment o Remove physical barriers between management and other employees o Create climate that recognizes workers & work teams o Develop formal/informal channels of communication in all directionsdjayadeva@gmail.com 5humantalents-subscribe@yahoogroups.com
  6. 6. HumantalentsEmpowering Workers o It is the employees who have control of, and know the most about, the details of production. o To get employees to accept this responsibility, managers must first give employees the authority to act. o The process of conveying authority from managers to workers is called worker empowerment. o Workers accepting responsibility for production can lead to what is called internal ownership.Steps of Work Methods Analysis 1. Make an initial investigation of the operation 2. Decide what level of analysis is appropriate 3. Get suggestions from anyone familiar with operation 4. Thoroughly describe and evaluate present method 5. Devise a new proposed method 6. Compare new and present methods 7. Modify the proposed method 8. Perform the proposed method on a trial basis 9. Install the proposed method and train workers10. Check on new method periodicallyWork Measurement  Work measurement refers to the process of estimating the amount of worker time required to produce one unit of output.  A goal of work measurement is to develop labor standards that can be used for planning and controlling operations.Labor Standardsdjayadeva@gmail.com 6humantalents-subscribe@yahoogroups.com
  7. 7. Humantalents  A labor standard is the number of worker-minutes required to complete an element, operation, or product under ordinary operating conditions.  Ordinary operating conditions refer to a hypothetical average situation ….. average or typical worker, material, machinery, environment, etc.Labor standards are used in:  Cost estimation  Pricing of products and services  Incentive pay systems  Capacity planning  Production schedulingDetermination of Labor StandardsA labor standard can be determined using one or more of thefollowing approaches:  Time study  Work sampling  Predetermined time standards----------- Subjective ------------  Historical standards  Supervisor estimatesTime StudySuitable Jobs  Job performed by a single worker in a fixed location  Job involves repetitive short cycles  Job expected to continue unchanged for a long period  Job produces large quantities of output  Resulting time standard must be very accurateTime Studydjayadeva@gmail.com 7humantalents-subscribe@yahoogroups.com
  8. 8. Humantalents  Analysts use stopwatches to time the operation being performed by workers  These observed times are then converted into labor standards  The labor standards are expressed in minutes per unit of output for the operationDetermining Labor Standards from Time Studies1. Make sure correct methods are being used to perform theoperation being studied.2. Break the operation down into basic tasks (elements).3. Determine how many cycles to time. A cycle is one complete setof the elemental tasks.4. Observe and record the elapsed time for each element for thenumber of required cycles. 5. For each element, estimate the observed worker’s performancerating. A rating of 1.00 indicates the worker is working at normalspeed.6. Compute the allowance fraction for the operation. The allowancefraction is the fraction of time that workers cannot work through nofault of their own.7. Compute the mean observed time for each element: (Sum of observed element times) (Number of cycles timed)8. Compute the element normal time for each element: = (Mean observed time) x (Performance rating)9. Compute the total normal time for the entire operation: = (Sum of element normal times for all elements)djayadeva@gmail.com 8humantalents-subscribe@yahoogroups.com
  9. 9. Humantalents10. Compute the labor standard for the operation: = (Total normal time) / (1 - Allowance fraction)Self study materialExample: Time Study ApproachIn a time study of a manufacturing operation, the average timeobserved to complete a product was 8.6 minutes. The performancerating applied to the observed worker was 0.95 and the allowanceduring an 8-hour shift was 12.5% or 60 minutes. Compute the labor standard.Observed time = 8.6 minutesPerformance rating = 0.95Allowance fraction = 0.125Normal time = Observed time x Performance rating = 8.6 x 0.95 = 8.17 minutesStandard Time = Normal time / (1 - Allowance) = 8.17 / (1 - .125) = 8.17 / (0.875) = 9.337 minutesPredetermined Time StandardsCommonly used for new operations or new productsWhen labor standard must be determined in advance of performingan operationUtilize data that have been historically developed for basic bodymovements, elements of operations, and entire operationsdjayadeva@gmail.com 9humantalents-subscribe@yahoogroups.com
  10. 10. HumantalentsExample of Learning curve Labor-Hours for nth Unit 120 Aircraft Assembly 80% Learning Curve 100 80 60 40 20 10 20 30 40 50 60 70 80 90 100 110 120 130 Unit Number (n) (nLearning CurvesAt the start of production runs:  Workers are unfamiliar with their tasks  Time it takes to produce the first few units is high  As the workers learn their tasks:  Their output per day increases up to a point  Then their output levels off to a rather constant rateMost aircraft manufacturing tasks experience an 80% learning rateLabor-hours required to assemble an aircraft is reduced by a factor of0.8 as the production quantity doubles  If first aircraft assembled requires 100 labor-hours  Second aircraft would require 80 labor-hours  Fourth aircraft would require 64 labor-hours  Eighth aircraft would require 51.2 labor-hours … and so onBy analyzing workers’ learning situations, we are able to estimate:djayadeva@gmail.com 10humantalents-subscribe@yahoogroups.com
  11. 11. HumantalentsThe average number of labor-hours required per unit for N units in aproduction runThe total number of labor-hours required to produce N units in aproduction runThe exact number of labor-hours required to produce the nth unit ofa production runPersonal ProductivityExercisedjayadeva@gmail.com 11humantalents-subscribe@yahoogroups.com
  12. 12. Humantalents Personal Productivity Exercise Productivity at home Good/Service Unit Price Cost Rankings Per unit Per monthA Rice KgB Coconut nutsC Soap PackD Vegetables KgE Meat /fish KgF Toothpaste KgG Red onions KgH Bombay Kg OnionsI Tea KgJ Pepper Kg djayadeva@gmail.com 12 humantalents-subscribe@yahoogroups.com
  13. 13. HumantalentsK Box of Boxes MatchesL Flour KgM Electricity UnitsN Sandal Sticks BundlesO Coconut oil BottlesP Salt KgQRS Employee Health & Safety Several regulations and government agencies monitor and control; - Safety and health in the workplace. (By State... pro-active) Worker’s Compensation - safety and health in the workplace. (By State .... re-active) Environmental protection outside of the workplace. (Pro-active) Safety and Health departments in plant World-Class Practice  World class companies recognize employees are of strategic and tactical importance  Workers must have problem-solving abilities and be trained, cross-trained, educated and empowered so that they can work in teams and respond to customer needs djayadeva@gmail.com 13 humantalents-subscribe@yahoogroups.com
  14. 14. Humantalents  Organizational structure must be developed to encourage full use of employees  Information is the main media of managementdjayadeva@gmail.com 14humantalents-subscribe@yahoogroups.com