By Darryl Demos
The manufacturing industry has long been reaping the benefits of lean manufacturing and just-in-time (JIT) production principles, in which materials are delivered right before they are needed on the assembly line, relieving manufacturers of the costs of housing inventory. By accurately forecasting the materials needed and working with their supply chain partners to deliver only those materials that will be quickly used, manufacturers such as Toyota Motor Corp and Dell have reduced costs, and increased efficiency and profits.
But lean manufacturing and JIT principles have wide applicability off the factory floor. Services industries such as financial services firms and call centers can apply JIT principles to manage their workforce, ensuring that employees work during peak volume times while minimizing employee downtime.
Of course, in practice it is challenging to apply JIT production principles to service industries. Unlike widgets, employees can not as easily be shifted to where the work is. An employee may be more motivated to work some days, and less motivated other days. They call out sick. They have scheduling conflicts. They may not want to work when you need them to work.
But with technologies such as enterprisewide networks and forecasting tools, banks and other services organizations can apply—and benefit from—lean manufacturing and JIT principles.
The Part-Time Predicament
In any business there are lulls in the workload on a daily, weekly, monthly, and yearly basis. A bank branch is typically busiest at lunchtime and on Fridays. An accounting firm is busiest at the end of the quarter. A retail store in a mall is busiest around gift-giving holidays and back-to-school shopping time. As a result of these peaks and valleys, employees are typically overworked at times, and underutilized at others.
Many service organizations consider using part-time employees to supplement their full-time staff during peak volume periods, but struggle with several challenges:
—Using technology to properly forecast for part-time needs
-—Compensating the part time job so it is financially sound and attractive in the market
—Recruiting people who truly want part-time work and will stay in the position
—Creating training programs that fit the part-timer’s schedule
The gains form an effective part-time program are spectacular in many organizations, helping management provide better service for equal or lower costs. For example, one of our bank clients gradually moved from a staff in which 88% were full-time employees to a 60%/40% mix of full-time and part-time employees. The result was a reduction in 21 full-time equivalent employees with better employee productivity and customer service, since the part-timers were accurately scheduled during peak volume times which in turn reduced customer wait time. The bank successfully lowered costs at the same time it provided better customer service.
Fully Loaded Costs
To attract the right part-time employees, it’s important to pay them equitably to full-timers. But when comparing the costs of full-time versus part-time employees, the comparisons must be made on a fully loaded basis. For example, since part-time employees are not typically eligible for benefits, organizations can afford to pay them a higher hourly wage to compensate. In this example, paying peak timers almost 20% more on an hourly basis than full timers can be justified because of the cost of benefits.
Another consideration is output per hourly cost. Take for example two employees who are each paid $10 per hour. One employee works 40 hours a week and one works 20 hours per week. Since the full-time employee is on the job during both slow and peak times, their average output is less than the part-time employee who works all 20 hours at busy times. The part-time employee’s effective utilization rate is higher, therefore, the unit, or fully loaded, cost is less. In this case, you can afford (and industry best practices dictate) to pay the part-time employee a higher hourly wage than the full-time employee.
Recruiting the Workforce
To succeed in recruiting and hiring part-time employees who are able to work during busy periods, match your scheduling needs with the demographic segment you are recruiting from. For example, a call center with peak call volume from 5:00 p.m. to 8:00 p.m. should recruit teachers or students looking for part-time work. Likewise, a bank branch busiest during the lunch hours should appeal to homemaker moms and dads who can be back home before schools let out.
It is a fallacy that low employment rates translate into difficulty finding part-time employees. Statistics don’t tell the whole story, since the employment rate only includes people actively looking for a job and does not include homemakers, stay-at-home parents, students or retirees, traditionally the largest pools of part-time employees. One New York City-based financial institution successfully attracted part-time employees from a previously untapped market: actors and actresses seeking part-time employment.
Technology Advantage—Forecasting and Networks
Of course, it’s critical to forecast workloads in order to accurately schedule both full-time and part-time employees. Typically a retailer with many stores, a bank with many branches, or a call center with several locations will forecast workforce needs specific to a single location. But the widespread use of enterprisewide networks enables organizations to look at their workload needs across many locations. Forecasting can take place at a central location and be distributed to decentralized locations via the Web, providing a just-in-time inventory of employees.
Organizations originally installed VoIP networks to reduce communications costs but quickly found additional benefits to having a single network for both data and phone to create better connections between employees in different parts of the franchise. For example, retailers can share employees between stores because the IP network allows more real time access to information about who is available at any given time.
A network also enables you to move work around to where the employees are. In the case of the contact center, the organization can use automated call routing to redirect calls to different locations based on employee availability. Or, if the contact center is overloaded, the network can redirect calls out to branch employees who may be currently underutilized. The network effectively blends dispersed workforces together by sharing work, moving calls anywhere around the organization, and providing the same tools to employees in all channels.
Hiring part-time employees will remain important for the services industry, but smart organizations are taking the concept one step further by using networks to move work to the employee so they can be as productive as possible.
Translating the precision that exists in manufacturing by employing part-time employees effectively and using network technologies means services industries can be more efficient and cost effective at the same time they deliver higher quality customer service.
About the Author(s)
Darryl Demos is the founder and general manager of Witness Enterprise Solutions Group, which provides resource planning, productivity, workforce management and workforce optimization solutions.