Increase Productivity Now!

 

The Hawthorne Effect’s well-documented phenomenon

 that affects many research experiments in social sciences.

It is the process where human subjects of an experiment change
their behavior, simply because they are being studied. This is one of the
hardest inbuilt biases to eliminate or factor into the design.

When I was hired to manage a turnaround of a Industrial Healthcare laundry
facility the primary factor hurting the bottom line was the high labor cost
compared to the rest of the industry. it took quite a while to get to the root
of it because in that industry they use a formula to calculate productivity
that is different than any other company I had ever been involved with. They
used a measurement of Pounds ( of laundry processed) per operator hour. This is
the industry standard but it was very confusing to me how the management team
kept telling me our number was within the industry average but payroll was
starving the company of cash?

 

I did some good old fashioned calculation and divided the Sales by labor cost and
came up with an 83% labor cost one week! Well the industry standard in Percent
of sales was 48% and so I knew something was wrong but rather than try to
backtrack the Pounds per operator hour I started using the old fashioned
Percentage of sales measurement every week. After the 70 to 83 % swings I was
seeing in the next couple weeks I did the Hawthorne experiment and took two
bright and aggressive young women who were potential upwardly mobile managers.

 

We had a meeting and I instructed them to take a clip board with a legal pad on it
each and one took the east side of the plant and the other took the west side.
I put out a notice that they were both new Production Managers in training.
They were told to just walk around all the workers and stand, observe and write
something down. I said I don’t care what you write even if you just write down
what they are wearing or the weather sure is nice? The point was that the
employees would feel that they are being measured and would increase their
personal production out of a desire to please the boss and be viewed as
valuable and hard working. Whatever the reason in a period of two weeks doing
this they got the labor cost as a percentage of sales down to 48% in the third
week of this experiment.

 

The good news is once you have gotten the work done in an affordable manor it freed up thousands of dollars to pay bills and the employees knew that I knew it
could be done properly and expediently. There was no turning back for them once it is proven it can be done.

 

There should be a way you can do this experiment in your company in some way starting tomorrow. So if cash is tight the fastest way to improve cash flow is cutting labor costs by increasing productivity. Most companies pay weekly so the return of cash is faster than getting a loan from the bank. Give it a try!!! you won’t be sorry. Be sure to check back for the next post that is about how it gets so out of hand in the first place, Hint it is about the story of ” Feeding the Hog”