Improving Working Time Arrangements in SMEs

An Assessment of the Working Time Demonstration:A research-oriented pilot project in SMEs in Indonesia

Jon C. MessengerTeam Leader, Working Conditions

GroupILO/WORKQUALITY/INWORK

How working time is organized—called either “working-time arrangements” or “work schedules”—can have important effects on productivity and firm performance

Specifically, working time arrangements can (Golden, 2012): Enhance individual and/or organizational productivity, and

thus directly restrain unit labour costs of production Improve employee health and well-being and satisfaction

with the job or life, without raising current labour costs, and thus reduce costs due to job dissatisfaction & human capital investment

Background: Effects of Working Time Arrangements on Firm Performance

“Action Research” in SMEs to show how changes in working time arrangements (work schedules) can balance workers’ needs with business requirements, by: Improving firm performance, and Improving workers’ satisfaction

with their jobs and their work-life balance

Objective of theWorking Time Demonstration

1. Not possible to know a priori what types of working time arrangements (work schedules) are most likely to produce desired results

2. Work with managers and workers to develop customized working time arrangements in each participating enterprise based on their needs

3. Build on key features of the ILO Sustaining Competitive and Responsible Enterprises (SCORE) Programme Participating enterprises completed SCORE training (workplace

cooperation) Participating enterprises established Enterprise Improvement Teams (EITs)

Some Key Assumptions

5

Implementation (I)

Seven SCORE Programme factories in Greater Jakarta, Indonesia volunteered to participate in the Demonstration

o Automotive parts and accessories (4)

o Medical equipmento Printing and tool bagso Garment manufacturing

1. Informal focus group discussions conducted with managers and workers in participating enterprises

2. Customized training materials prepared based on the identified needs

3. Training Workshops conducted on designing and managing working time Workshops for enterprises (managers & workers) and SCORE

consultants 4. “Kick-off Meetings” conducted with EITs in each participating

enterprise 5. EITs in each enterprise developed working time

arrangement/schedule SCORE business consultants visited firms monthly to assist the EITs

6. Enterprises implemented the new working time arrangement/schedule

Implementation (II)

Qualitative assessment of the processes used by firms to develop and implement working time adjustments, based on site visits

Quantitative assessment of key business and worker outcomes

• Simple before-and-after comparison of outcomes

• Based on survey data collected from managers and selected workers at beginning and end of the Demonstration

IMPAQ international, a Washington, DC-based evaluation firm, assessed both the process and outcomes and prepared a report

Assessment Methodology (I)

Limitations of this Assessment: Small number of firms participating in the

Demonstration Participating firms volunteered for the

Demonstration (i.e., they were self-selected) The small sample of workers and managers

interviewed

Assessment Methodology (II)

Some firms tested various small changes in work schedules Starting work 30 minutes earlier (to finish earlier) Starting work 30 minutes later

Some firms tested adjusting overtime hours Reducing daily overtime Reducing Saturday hours

Some firms tested adjusting break times Providing short breaks (e.g., 10 minutes) One firm enforced a one-hour lunch break

However, no firms implemented major changes in working time arrangements (e.g., adding a shift) despite planning to do so

Observations from Site Visits (I)

Frequent changes in Enterprise Improvement Team (EIT) membership affected design and implementation of new WTAs/work schedules

Lack of HR support created serious limitations at some firms Inadequate HR units/functions to support hiring and WTA implementation Frequent turnover in HR staff

Heavy customer demands was a major constraint to making working time changes Firms could not reduce daily overtime due to heavy and often unpredictable

workloads One firm could not cut Saturday hours because customers insisted on Saturday

deliveries Shortages of skilled workers was a constraint for some firms

High turnover among skilled workers, due in part to dissatisfaction with long hours

Competition for skilled workers made it hard to find enough workers to add an extra shift; this would have enabled these firms to reduce long hours

Observations from Site Visits (II)

Manager and Worker Surveys

IMPAQ International developed two survey instruments: (a) Manager survey and (b) Worker Survey

IMPAQ collected Baseline Survey Data (April - May 2013) 20 managers and 21 workers

IMPAQ collected Follow-up Survey Data (February – March 2014) 19 managers and 22 workers

Manager Survey Responses

C11a. How many worker accidents were recorded last year?

C11a. How many worker accidents were recorded last year?

  Baseline Follow-up

None 1 5

1-5 accidents

6 2

Manager Survey Responses

Baseline Follow-up0%

20%

40%

60%

80%

100%

65%79%

58%

83%

All respondents Repeat Respondents

Manager Survey Responses

A B C D E F G0

102030405060708090

21

85

20 21

45

3332

72

17

36

21

45

Baseline Follow-up Average

Worker Survey Responses

Baseline Follow-up0%

20%

40%

60%

80%

100%

58%

82%88%

100%

All respondents Repeat Respondents

Worker Survey Responses

Baseline Follow-up0%

20%

40%

60%

80%

100%

50%

73%

50%

75%

All respondents Repeat Respondents

Worker Survey Responses

Baseline Follow-up0%

20%

40%

60%

80%

100%

35%

73%

51%

75%

All respondents Repeat Respondents

Few changes in working time arrangements were implemented during the demonstration While efforts were made to develop and implement new working time arrangements, only

small adjustments in work schedules were successful Efforts to make major changes in work schedules did not succeed due to

a variety of obstacles E.g., lack of HR support, inadequate infrastructure, etc.

Both managers and workers believed that working time adjustments improve productivity

Managers became increasingly aware of the need to measure productivity; however they were unable to measure it correctly During the project, managers asked for support in measuring productivity SCORE business consultants tried to assist them, but firms were still unable to measure

productivity accurately

Enterprise profitability did not change as a result of the demonstration There does not appear to be a consistent change in revenue or profitability across

enterprises

Conclusions (I)

The demonstration appears to have reduced the number of accidents at participating firms

At follow-up, workers felt substantially more positive about their job and work-life balance than they did at baseline despite few changes in working time arrangements

One possible explanation of this finding is that workers appreciated management’s concern about their work-life balance

Moreover, workers' involvement in the process of developing new work schedules may have indicated a level of respect from managers that contributed to workers feeling more positive about their job and work-life balance

This finding could be interpreted as an effect of worker voice

Conclusions (II)

SMEs have significant limitations in implementing new WTAs/work schedules Limited HR staff and weak HR support Weak (or no) infrastructure to measure the effects of working time changes Other business distractions (e.g., heavy customer demands, inadequate

space) The range of WTA options offered to participating SMEs was

too broad Some enterprises attempted schedule changes that were not feasible for

them Less ambitious changes in work schedules might have been more

successful SMEs lack the necessary infrastructure to implement new

WTAs/work schedules Firms could benefit from practical tools (manuals, software)

to help them: Develop and implement new WTAs/work schedules Measure the effects of WTA/schedule changes on productivity and

profitability These tools could enhance development & sustainability of

new WTAs/schedules

Lessons Learned

Thank you for your attention!

Jon C. MessengerTeam Leader, Working Conditions GroupILO/WORKQUALITY/INWORK