Part III: Achieving an Effective Workforce
Asset utilization and efficiency does not have a comparable cost metric — and for good reason, as fleet equipment generally has predictable costs, such as depreciation and scheduled maintenance. Adding a labor element to an operation brings in three dimensions of variable costs.
First, drivers have different wage rates. Second, drivers may earn premium wages, such as a safety bonus, experience premium, and earned vacation. Finally, a difference in cost attributed to performance against a standard may actually be caused by labor.
To get a true picture of operational performance, we also need to look at labor efficiency, which provides insight into the critical elements of workforce preparation and execution. It helps managers see how the workforce influences profitable fleet production and points to the root causes of ineffective labor utilization. In its own way, analysis of driver optimization can show how assets and employees come together to drive performance.
- Driver optimization provides the ability to analyze the labor impact at the operator, terminal, division, fleet, and even corporate levels of the organization. Driver efficiency can expose the interaction of interdependent variables. Changes made to improve one area may have a negative impact elsewhere. For example, a process change may make it faster to get load volumes and service to the customer floor, but it complicates warehouse operations.
- Trends that individually might be too small to be noticed are highlighted earlier because of their cascading effect on total performance.
- The identifying familiar asset utilization factors — availability, performance, and quality — are the basic elements used in measuring labor effectiveness. But in measuring the contributions human beings make, it's useful to look deeper and consider additional factors.
Powerful Diagnostics for Improving Workforce Contribution
Effective labor contribution is accomplished when managers can see and manage the three labor efficiency elements— availability, performance, and quality — in concert. A fleet can improve operations productivity, and therefore the level of profitability, by understanding the interdependency and trade-offs of these three factors and managing them in real time. Let's examine these elements.
Three Elements of Achieving an Effective Workforce
Availability - Performance - Quality
The Labor Evaluation Process
Clearly availability is a basic criterion, and utilization is the most important component of availability. There are many things that influence workforce availability, and therefore the potential output of equipment and the fleet.
- Absenteeism & Utilization: Standard labor utilization measures — which include employee illness, approved or unapproved leaves, and times when people are unavailable due to training, hours of service, or other company-defined activities — come into play here.
- Scheduling: Involves having the right skill at the right time. Beyond merely providing a driver, we must consider employee skills and certifications, as well as flexible work schedules.
- Indirect Time: Includes equipment delays, idle time, equipment failures, and downtime due to poor operations planning.
This is the recording of output, which determines whether producing or delivering a service took as long as company labor standards indicated it would (whether tangible measurements of specific services are delivered). Performance output includes:
- Availability of Processes, Instructions, Tools, and Equipment: Fleet maintenance issues, such as parts failures, lack of parts availability, or missing instructions, will slow production and limit output — and likely have a negative impact on quality of service and employee morale.
- Training & Skills: Do employees know how to do the tasks they are assigned? Certainly these factors affect the ability to deliver the expected output throughout a complete delivery cycle.
- Indirect Support Staff: A workforce that is insufficiently trained or skilled will require additional support staff, including supervisors, maintenance technicians, and customer service personnel.
With labor evaluation analytics, interdependencies between factors are brought to the surface.
Here's a scenario:
Something disregarded in fleet dispatch as a minor issue shows up as a troubling performance shortfall. Labor evaluation analytics track the problem back to a failure to meet standard job times, which was caused by production that wasn't started on time because the right employees weren't aware of a problem requiring a solution and ready for the work at hand. When performance consistently falls below expectations, evaluation of labor quickly highlights the root causes, including inaccurately set labor standards.
At the end of the day, we need to know if the output of production met specified quality levels. While quality is certainly a function of the processes used, it is impacted by important human factors:
- Employee Knowledge: Do employees understand the quality drivers of their specific operations? Employee skills directly affect the quality of output. Knowledgeable operators know how to measure their work and understand how the processes operate, how variability affects quality, and what adjustments keep processes to spec as they run. They also should know when to stop for corrective actions, should fleet equipment fall below specified limits. Applying this type of knowledge reduces the amount of downtime and increases utilization, that when properly structured, will increase profitability.
- Proper Use of Instructions & Tools: Did workers use the right judgment and follow the right procedures?
In part 4 of this 5-part series, I'm going to focus on “Moving from Administering Human Resources to Measuring the Workforce Investment.”