Sunday, October 14, 2012

Working Overtime? How's That Workin' for Ya?

Business owners have been hesitant to add employees due to their continued uncertainty about our economic future.   I don't share that uncertainty, but if you do, here's something you may be able to use.   

Many of those same business owners are covered up with orders.  One member at a recent Chief Executive Boards International meeting said "I can't take another order for delivery before June 2013!"    

So, they revert to overtime as their only means of meeting their current production demands.   We all know overtime is expensive.  What we mostly don't know is how bad a strategy long-term overtime really is.   Here's a graph of productivity for an extended period of 50 and 60 hour weeks in construction.  This data has been replicated time after time.  It's fact.  And it's likely the same in manufacturing or any kind of service business.  

Take a look:    

This graph demonstrates that there's a "point of no return" -- a point at which continued overtime produces no more output than the original 40 hours.  Trouble is, you're paying a huge premium for the overtime and your employees are getting used to the income.   What happens when you stop the merry-go-round?   Can't be pretty.    

Here's a different idea, taught to me by a St. Louis contractor named Ron who had been building highway bridges.   He said, "I got to be a pretty good estimator of a day's work.  I'd stop by each site (each bridge under construction) and see how the rodbusters were doing tying reinforcing rod out across the bridge deck.  I'd pace out a ways down on the deck, draw a chalk mark on the plywood form, and tell them when they got to that chalk mark they could go home.  My crews always beat the estimates." 

What do you think?   Instead of setting up 50 or 60 hour mandatory overtime weeks, what would happen if you said something like this?  "When we get this done, this order out, or this stack of parts finished, you can go home.  If that takes some overtime, it's OK, but when you get done you can go home."  

You'll likely see a lot more variability in the overtime schedule (probably a good thing) and you'll probably see higher productivity -- actually getting the work you wanted out the door -- within normal hours.   You may be paying some overtime, but not near as much as the implied contract of "stay here whether you want to or not, and I'll pay you for your time as long as you stay."

Think about it, and if you try this or any other strategies to improve productivity during peak demand times, click "Comments" below and share them with others.    
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Terry Weaver

Chief Executive Boards International
Chief Executive Boards International: Freedom for business owners & CEOs -- Less Work, More Money, More Freedom to enjoy it

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