Monday, 28 December 2015

Prepare for a more efficient New Year

As one year ends, another begins, and it’s a good opportunity to assess what has happened over the last year and consider what we can do to improve next year. Personally we tend to do new year’s resolutions, things like “I will not eat chocolate” or “I will go to the gym every week”. But a company can also have New Year’s resolutions too.

The first thing is to assess the problems and consider which one will have the biggest impact. In our experience the biggest impact on an operation is holidays. You might not think 28 or 33 days has much of an impact. But consider if the company has 10 employees all with 33 days of holiday in an office hours’ environment, that means that there are 330 days of holiday to accommodate and there are only 260 days when you are working. Clearly everyday at least one person has to be on holiday. So even with 10 people on average you are always operating one person down.
When you have shift workers the problem becomes even bigger because you need to think not only about the effect an absence has on the shift itself but also the impact to the adjacent shifts. Companies can quickly find that they are continually missing targets while their overtime bill is sky rocketing and they don’t know why! Yet when we analyse the operation, we always start with the holidays. A quick assessment of how holidays have been taken and are covered reveals that managers forget to consider the effect holidays make to the operation, so they haven’t got adequate cover in place or they have the cover but it is in the wrong place.
The Saving can be Substantial 
Let’s go through a typical problem. You have 10 people on shift and you need 10 on shift to operate effectively. 10 people with 30 days of holiday is 300 days of holiday per shift. You have four shifts so that’s 1,200 days of holiday.
So here is some simple maths; if 40 people are on a 40-hour week with 30 days of holiday each, how many shifts is that if they are working 8-hour shifts?
Each day of holiday is one fifth of a working week, or 8 hours (40/5=8). If each shift is 8-hours then they each get 30 shifts off per year. Nice and simple.
If they are working 12-hour shifts, then they are each entitled to 20 shifts of holiday (each day is 8-hours so it’s 1.5 days of holiday for each shift).
So how many people do you need on each shift to fit in everyone’s holiday?
Sounds like a simple question, and most people would give the answer to be two. That’s because on average you have 1.15 of a person off each shift. So you would round up to two. That means that now you have 12 people on shift. So how many will be on holiday on the average shift? With 10 people the answer was 1.15, however when you increased the number of people you also increased the amount of holiday. So now you have 1.38 off each shift on average.

So is two the correct number?

Let’s look at what would happen over the year. So you have two extra people coming in each shift. So that’s 4,160 hours of holiday resource (2x40x52=4,160). That’s per shift, so in total, you have 16,640 hours of holiday resource. That’s a lot of hours.
You are covering 2,880 hours of holidays per shift or 11,520 hours for the operation. So that gives you a spare capacity of 5,120 hours or about 45% of the holidays.
So in theory yes two extra on shift would give you the correct number to cover for holidays.
However, in practice you run into problems. When do people like to take holidays?
  • Summer
  • Christmas
  • Good weather
  • Weekends
  • School Holidays

People don’t take holidays like robots, they take holidays when it’s convenient to them. So during the summer and Christmas companies say, we recognize that people want to take more holiday so we will allow two people off every shift and then cover for a third with overtime.
Sounds like a good policy, however you have now given mangers carte blanc to use overtime to cover for absences and holidays.
From the manager’s point of view, they have a quota to meet so if they need to bring someone in on overtime, that is a small cost compared to missing their quota. So they bring someone in on overtime. Then have you ever tried to refuse someone’s holiday request. It’s not an easy thing, and now they have the resources to bring someone in on overtime. So what happens is during the summer it is not uncommon to only have half of the original shift in and half covered by overtime.
Hence while you started out with the correct number, you now find that you have a high overtime bill which is completely unnecessary.

So what’s the solution?

Well there are two, you can go down the route of a holiday management plan. This sets out the rules, to minimize the disruption that holidays cause. It’s very effective and when used correctly will ensure that you have the correct number on shift at all times.
However, it does require someone to manage it, at least one full time equivalent per fifty people. And really you should spread the job between three people, so that they can have holidays too.
The alternative is to introduce holidays included. Holidays included shift patterns are where everyone’s holiday is pre rostered into the shift pattern at the start of the year. This time is not randomly allocated, it is given in good quality chunks of time off in a way that the shift workers would like. So they have a week off regularly, and a two-week holiday in the summer. They always get whole weekends off or a minimum of three days between shifts. We’ve set up hundreds of holidays included shift patterns for companies around the world. So once a year you need to spend a week or so setting up next year’s shift pattern, and then that’s it. The shift pattern runs itself. So now you have no holiday problem.
Or contact us directly at alec@oranalysts.com or by phone on (+44) 01636 816466 and find out how we can help you have a more efficient Happy New Year.



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