18. employee productivity

7/31/2019 18. Employee Productivity

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Chapter 18

Employee Productivity



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Overview

Productivity and Human BehaviorDesigning Workers’ Jobs Empowering Workers

Work Methods AnalysisWork MeasurementLearning Curves

Employees’ Health and Safety Wrap-Up: What World-Class Companies Do



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Productivity

Productivity means the amount of products orservices produced with the resources used

Productivity = Quantity of products or services produced

Amount of resources used

Productivity varies with the amount of productionrelative to the amount of resources used.



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Ways to Increase Productivity

Increase output using the same or a lesser amount of resource.Reduce amount of resource used while keepingoutput constant or increasing it.Use more resource as long as output increases at agreater rate.Decrease output as long as resource use decreases at a

greater rate.



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Why do We Care About Productivity?

Without productivity improvement, businesses do notsurvive in a global economy.Higher productivity means higher standard of living.The US has traditionally been the leader inproductivity gains but other countries are closing thegap.



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Single Factor Approach toMeasuring Productivity

Capital - Number of products produceddivided by asset value

Materials - 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 overhead



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Single Factor Approach toMeasuring Productivity

Note that the productivity of a particular resource canbe increased simply by replacing some of thisresource with a different type of resource.For example: If automation is substituted for directlabor and output volume is unaffected, direct-laborproductivity increases (and capital productivitydecreases).

Our view of productivity must be toward improvingthe productivity of all the factors of production.



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Labor Productivity

For some firms, production labor (touch labor)represents a very small part of the firm’s total costs For other firms, particularly service firms, directlabor cost remains a significant cost and the need toimprove labor productivity is still a serious concern



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Variables Affecting Labor Productivity

Physical work environmentTechnology, equipment, materials, lighting, layout

Product quality

Defects, scrap, rework Employee job performance

Employee ability, motivation



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Employee Job Performance

Motivation is perhaps the most complex variable inthe productivity equation.Only unsatisfied needs are motivators.Maslow identified five basic needs: physiological,safety, social, esteem, and self-fulfillment.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.



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Motivation

Formal organizationInformal groupsJob design

LeadershipUnionPsychological needsEconomic conditionsPersonal situations



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Modifying Jobs to ProvideBroader Range of Needs Satisfaction

Cross-training -- workers perform multiple jobsJob enlargement -- adding similar tasks to worker’s

job - horizontal job expansionJob enrichment -- adding more management functionsto job - vertical job expansionTeam production -- organizing workers into teams;assigning management responsibility to teams



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Guidelines for DesigningJobs and Work Environments

Workers’ Job Tasks Avoid machine pacing of workersDesign jobs so that workers inspect their own outputOpen work areas for communication & visual contactCombine job planning into workers’ jobs Automate boring, uncomfortable, or unsafe jobs



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Guidelines for DesigningJobs and Work Environments

Larger Work EnvironmentSelect/train supervisors who openly communicateDevelop supervisors who are comfortable with aparticipative team environmentRemove physical barriers between management andother employeesCreate climate that recognizes workers & work teams

Develop formal/informal channels of communicationin all directions



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Empowering Workers

It is the employees who have control of, and knowthe most about, the details of production.To get employees to accept this responsibility,managers must first give employees the authority toact.The process of conveying authority from managers toworkers is called worker empowerment.

Workers accepting responsibility for production canlead to what is called internal ownership.



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Method study is thesystematic recording

and criticalexamination of waysof doing things inorder to makeimprovements



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STEPS:

1.SELECT

2.RECORD3.EXAMINE4.DEVELOP5.EVALUATE6.DEFINE7.INSTALL8.MAINTAIN



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Steps of Work Methods Analysis

1. Make an initial investigation of the operation2. Decide what level of analysis is appropriate3. Get suggestions from anyone familiar with operation4. Thoroughly describe and evaluate present method

5. Devise a new proposed method6. Compare new and present methods7. Modify the proposed method8. Perform the proposed method on a trial basis9. Install the proposed method and train workers

10. Check on new method periodically



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Critical Examination-a (forgotten

!)technique in the crowd



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Examine critically

Means by which each activity is subjected to a systematic andprogressive series of questions.Grouping of activities: Five sets of activities can be grouped intwo categories

Those in which something actually happens to the work-piece(it is moved, worked upon or examined)Those in which it is not being touched (in storage or in delay)Objective is to maximize proportion of “do” activities.

All other activities, however necessary, are considered “non - productive.”



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Primary questions

The PURPOSE for whichThe PLACE at whichThe SEQUENCE in whichThe PERSON by whom

The MEANS by which……………………….…………the activities are undertaken.

With a view to ELIMINATING, COMBINING,REARRANGING, or SIMPLIFYING those activities.



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Primary questions

PURPOSEWhat?Why?

ELIMINATE unnecessarypart of the job

PLACE Where?

COMBINE wherever possibleor REARRANGE thesequence for better result

SEQUENCE When?

PERSON Who?

MEANS How? SIMPLIFY the operation



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Work Measurement

Work measurement refers to the process of estimatingthe amount of worker time required to produce oneunit of output.A goal of work measurement is to develop laborstandards that can be used for planning andcontrolling operations.



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Labor Standards

A labor standard is the number of worker-minutesrequired to complete an element, operation, orproduct under ordinary operating conditions.Ordinary operating conditions refers to a hypotheticalaverage situation ….. average or typical worker,material, machinery, environment, etc.



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Labor Standards

Labor standards are used in:Cost estimationPricing of products and services

Incentive pay systemsCapacity planningProduction scheduling



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Labor Standards

A labor standard can be determined using one ormore of the following approaches:Time studyWork samplingPredetermined time standards

----------- subjective ------------Historical standardsSupervisor estimates



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Time Study

Suitable JobsJob performed by a single worker in a fixed locationJob involves repetitive short cycles

Job expected to continue unchanged for a long periodJob produces large quantities of outputResulting time standard must be very accurate



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Time Study

Analysts use stopwatches to time the operation beingperformed by workersThese observed times are then converted into laborstandardsThe labor standards are expressed in minutes per unitof output for the operation



D i i L b S d d



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Determining Labor Standardsfrom Time Studies

1. Make sure correct methods are being used to performthe operation being studied.2. Break the operation down into basic tasks (elements).3. Determine how many cycles to time. A cycle is one

complete set of the elemental tasks.4. Observe and record the elapsed time for each element

for the number of required cycles.

. . . more

D t i i L b St d d



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5. For each element, estimate the observed worker’sperformance rating. A rating of 1.00 indicates theworker is working at normal speed.

6. Compute the allowance fraction for the operation.The allowance fraction is the fraction of time thatworkers cannot work through no fault of their own.. . . more

D t i i L b St d d



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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)

. . . more

=

D t i i g L b St d d



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9. Compute the total normal time for the entireoperation:

= (Sum of element normal times for all elements)

10. Compute the labor standard for the operation:

= (Total normal time) / (1 - Allowance fraction)



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Example: Time Study Approach

In a time study of a manufacturing operation, theaverage time observed to complete a product was 8.6minutes. The performance rating applied to theobserved worker was 0.95 and the allowance during

an 8-hour shift was 12.5% or 60 minutes.Compute the labor standard.



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Example: Time Study Approach

Observed time = 8.6 minutesPerformance rating = 0.95Allowance fraction = 0.125Normal time = Observed time x Performance rating

= 8.6 x 0.95= 8.17 minutes

Standard Time = Normal time / (1 - Allowance)= 8.17 / (1 - .125)= 8.17 / (0.875)= 9.337 minutes



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Example: Work Sampling

A work sampling study was performed on anelectronic assembly operation at OK Instruments.The study covered an 8-hour shift with a singleworker. The results of the study were:

Activity % of Worker’s Time Assemble Units 80

Allowances 20

If the worker received a performance rating of 1.20 on the Assemble Units activity and 400 unitswere assembled during the study, what is the laborstandard for this operation?



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1) Compute the average time per assemble:= Total Minutes of Assembly Work

Number of Units Assembled

= .8(480)/400 = .960 minutes per unit2) Compute the normal time per unit:

= (Average Time per Unit)(Performance Rating)

= .960(1.20) = 1.152 minutes per unit



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3) Compute the labor standard:= Normal Time/(1 – Allowance Fraction)= 1.152/(1 - .20) = 1.44 minutes per unit




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Predetermined Time Standards

Commonly used for new operations or new productsWhen labor standard must be determined in advanceof performing an operationUtilize data that have been historically developed for

basic body movements, elements of operations, andentire operationsMany predetermined time standard systems are used:

Work factor

Methods-time measurement (MTM)Basic motion time (BMT) study… and others



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Predetermined Time Standards

Suitable JobsJob performed by many workers over a compact areaTasks may involve little repetition, but if repetitious – the cycles are very longWorkers must be observed by a single analystA moderate degree of accuracy in the labor standardis desirable, but a time study is too costly

Only large elements of work need to be observedLittle detail is needed in setting the time standard



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Subjective Methods

Suitable JobsAny job or group of jobs in which:

Very accurate labor standards are not required, orThe cost of time study, predetermined timestandards, and work sampling is prohibitive



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Learning Curves

At the start of production runs:Workers are unfamiliar with their tasksTime it takes to produce the first few units is high

As the workers learn their tasks:Their output per day increases up to a pointThen their output levels off to a rather constant rate



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Learning Curves

Most aircraft manufacturing tasks experience an 80%learning rateLabor-hours required to assemble an aircraft isreduced by a factor of 0.8 as the production quantitydoubles

If first aircraft assembled requires 100 labor-hoursSecond aircraft would require 80 labor-hoursFourth aircraft would require 64 labor-hoursEighth aircraft would require 51.2 labor-hours… and so on



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Learning Curves

10 20 30 40 50 60 70 80 90 100 110 120 130

20

80

40

100

60

Unit Number ( n )

120Labor-Hours for n th Unit

Aircraft Assembly80% Learning Curve



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Learning Curves

By analyzing workers’ learning situations, we areable to estimate:The average number of labor-hours required perunit for N units in a production runThe total number of labor-hours required toproduce N units in a production runThe exact number of labor-hours required to

produce the n th unit of a production run



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Learning Curves

Three approaches to learning-curve problems are:Arithmetic analysisLogarithmic analysisLearning curve tables



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Learning Curves

Arithmetic AnalysisThe simplest approach to learning-curve problemsIf we wish to find the labor-hours required to producen units, and n just happens to be a number that is oneof the doubled values, then this approach works



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Example: EZ Machine Shop (A)

Learning Curve - Arithmetic AnalysisEZ Machine Shop has a contract to manufacture 100

turbines. The first 20 turbines have been completed.The labor-hours required for a portion of the completedturbines are listed below. Use this data to estimate theshop’s learning rate in manufacturing the turbines.

Unit No. Labor-Hours Unit No. Labor-Hours1 140 5 952 118 10 813 109 15 754 102 20 68



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Example: EZ Machine Shop (A)

Learning Curve - Arithmetic AnalysisCompute the learning rate for each of the “doubles”.

Units 1 and 2 118/140 = .8429

Units 2 and 4 102/118 = .8644Units 5 and 10 81/95 = .8526Units 10 and 20 68/81 = .8395

(.8429 + .8644 + .8526 + .8395)/4 = .8499The approximate learning rate is 85%.



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Example: EZ Machine Shop (B)

Learning-Curve TablesThe manager of EZ Machine Shop wants a good

estimate of the total labor-hours required tomanufacture the entire 100 turbines. Also, he iscurious about how many labor-hours will be neededfor the last (100 th) unit. Use the observed 85%learning rate and 140 labor-hours required for the firstturbine to compute your estimates.

l h h ( )



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Learning-Curve TablesTotal Labor-Hours Required for 100 Units= (Hours for 1 st unit)(Table total time: 85%, 100 th unit)

In Table 18.12, locate the line for the 100th

unit andread across to the Total Time column under the 85%learning rate. The value is 43.75.

Total Labor-Hours Required for 100 Units= 140(43.75) = 6,125 labor-hours

E l EZ M hi Sh (B)



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Learning-Curve TablesLabor Hours Required for the 100 th Unit= (Hours for 1 st unit)(Table unit time: 85%, 100 th unit)

In Table 18.12, locate the line for the 100th

unit andread across to the Unit Time column under the 85%learning rate. The value is .340.

= 140(.340) = 47.6 labor-hours

(100 th unit will require 34% of the time 1 st unit required)

L i C



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Learning Curves

Logarithmic AnalysisThe following relationship allows us to compute T n,the labor-hours required to produce the nth unit:

Tn = T 1(nb

) and b = log r/log 2where: T 1 = labor-hours to produce the first unit

b = slope of the learning curve

r = learning rate percentage



L i C



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Learning Curves

Selecting a learning rateIndustry journalsHistorical experience

Uses and limitationsProducts and services tend to be custom designedBatches tend to be smallProduct/services tend to be complex.... learningoccurs quickly

E l H lth & S f t



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Employee Health & Safety

Several regulations and government agencies monitorand control;OSHA - safety and health in the workplace.Federal... pro-active

Worker’s Compensation - safety and health in theworkplace. State .... re-activeEPA - Environmental protection outside of the

workplace. Federal... pro-activeSafety and Health departments in plant

W U W ld Cl P ti



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Wrap-Up: World-Class Practice

World class companies recognize employees are of strategic and tactical importanceWorkers must have problem-solving abilities and betrained, cross-trained, educated and empowered so

that they can work in teams and respond to customerneedsOrganizational structure must be developed toencourage full use of employeesInformation is the main media of management

E d f Ch t 18



End of Chapter 18

18. employee productivity

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