Labor management is key to productivity

May 1, 2009
Since the present economic situation is unprecedented in recent memory, it is all the more important to accurately estimate labor costs and be able to perform to the estimate.

The original intent of this column was to discuss how to maximize production in manpower by scheduling and project phasing, but with the onset of the current economic downturn and the very real prospects of large scale layoffs, I've opted to go a slightly different way.

It goes without saying that labor is the “fuel” that makes a job go. Of all elements in subcontracting, none is more difficult to quantify, and estimate correctly, than labor. None is more essential either. It's easy to get accurate material and sub-subcontract figures, but getting the most “mileage” per man hour invested is harder to get a cost on. There are so many variables to the labor equation that to try and put it in a box, as some of the estimating programs and labor charts do, is really an exercise in futility.

To be sure, statistically and over the long term, these algorithms have proven to be accurate in varying degrees, but we are not interested in long term accuracy, are we? We're talking the real world here, not statistics. Much as the odds of flipping a coin a given number of times will yield an equal number of heads and tails over the long term, labor statistics are great for historic or predictive value, but do not add much in the here and now. We are interested in performance on an individual job. It's all well and good to use 0.2 man/hours to install a half inch copper 90 on an estimate sheet, but hardly practical to try and quantify it on site.

Since the present economic situation is unprecedented in recent memory, it is all the more important to accurately estimate labor costs and be able to perform to the estimate. Making a profit on any one job is more critical today, as opposed to “averaging out” over several projects, and the best way to get an accurate estimate on labor expenses is to know your people. You know how long it should take to do a particular phase of a job if it was estimated accurately. Consequently, you should know which of your people can do the work within that time frame.

It is what it is

Let's not sugar coat the present situation. If you are a large shop, you probably have already laid off. How did you determine who to let go? Did you do it based on seniority or job performance? After all, it isn't so much a question of improving the bottom line anymore — it's a question of survival. If you are a small shop, the decisions become a bit more problematic, but no less critical. Issues and situations that you have allowed as “glitches” in the past, causing labor overruns, must be examined and corrected. You need to make every hour of every day count, labor-wise.

The answer isn't in pairing your best people either. Sometimes, a mediocre foreman who is great at paper work, but not great at getting production done can get more done as a journeyman without the responsibilities and the paperwork burden. He might see it as a demotion, but then again he might welcome the opportunity to reduce his stress level. A good foreman who can motivate his crew and gets peak performance, but who is lax in the administrative area of his position, may need to be assisted in that area by management, so that his talents in productivity can be maximized.

Everyone counts

Keeping your people “in the loop” is also an important aspect of labor management. Rumors and gossip within the organization can create tension and undercurrents, which will poison the atmosphere. Making sure that everyone knows what's going on, within reason, is one way to allay the angst generated by rumors.

On the other hand, making sure that everyone understands your expectations of them, their job and performance, and its value to the company is a great way to keep the team spirit in play. A friend of mine had a sign posted in the office which read, “The beatings will continue until morale improves.” Not the sort of message that would be welcome in every office, but the gallows humor struck just the right note with his people and eased the tension around the downturn in the work load and the possibility of layoffs.

Another way to approach the situation is to let your employees know that they are working with you, not for you, in making the company successful. After all, it's their livelihood too. Taking the inevitable gripes and grumblings in stride is a way for you, as the owner or principal, to keep perspective as well. Remember that it is every working person's right to complain. Acknowledging that and not taking it to heart will make it easier for you as well.

The Brooklyn, N.Y.-born author is a retired third generation master plumber. He founded Sunflower Plumbing & Heating in Shirley, N.Y., in 1975 and A Professional Commercial Plumbing Inc. in Phoenix in 1980. He holds residential, commercial, industrial and solar plumbing licenses and is certified in welding, clean rooms, polypropylene gas fusion and medical gas piping. He can be reached at [email protected].

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