Author: Frank Marchand
In today’s highly competitive business environment, it is a must that businesses optimize their labor performance and minimize their labor spend. The cost of labor already accounts for more than half of a typical business’ total costs, and that is sure to increase as business volumes increase and customers demand more value-added services.
A valuable first step to balancing labor productivity and costs is developing and implementing engineered labor standards (ELS) as part of your company’s employee scheduling process. But you are probably asking yourself, “what are Engineered Labor Standards?”
Unlike guesstimates, which aren’t based on data at all, or historical standards, which are based on past data (for instance, how long did it take an employee to perform a certain task last year), engineered labor standards use recognized principles of industrial engineering to define the actual time necessary for a qualified employee to complete a specific task in a specific way.
The goal is simple – to determine how the job can be done with the least amount of effort in the least amount of time, without compromising quality or safety. They establish a baseline for performance measurement and are used to assess productivity and utilization levels in key cost areas of the business, enabling operations executives to effectively manage workforce performance while also implementing improved labor planning and budgeting. With engineered standards in place, organizations can focus on driving high performance in day-to-day operations.
Before establishing engineered labor standards, companies need to understand how work is being performed and how it can be optimized. Current processes should be documented and evaluated, with as many non-value added steps eliminated as possible. These steps enable companies to develop process improvements and establish best practices before developing the standards for each operation.
Using labor standards, developed with input from employees, businesses can:
- Improve employee scheduling
- Predict changes in staffing needs
- Reduce labor costs
- Decrease operational costs
- Eliminate waste
- Improve individual and team performance
- Motivate managers, employees, and temporary employees
- Enhance job satisfaction and morale
- Improve retention and talent acquisition
- Improve forecasting
- Improve customer service and retention
- Maximize workforce utilization