Removing Labour Utilization Wastages through Manpower Right-Sizing

Disguised Unemployment to Lean Performance

This is a story of a 50-year old mid-sized agro manufacturing company, with a turnover of USD 100 million. Of the various strategic and transactional activities that our HR outsourcing team conducted in this organization, here is one that profoundly affected its bottom line.

Our initial diagnostics indicated the need for a comprehensive employee capacity utilization study. A ‘Time and Motion’ exercise was conducted, which mapped employee capacities to their day-to-day utilization. The findings were alarming! Employees were operating at below 50% of their true capacities. The company, in a bid to protect employee tenure, had lapsed into a practice of hiring two or sometimes even three employees to meet the varied needs of a single position. Since job descriptions and performance indicators were not well articulated, most hiring was ad-hoc, and analyses revealed ‘wastages’ amounting to almost 35% of the total employee cost!

Since the diagnostic study revealed such debilitating ‘hidden’ costs, the company initiated a right-sizing exercise, which matched people with specific roles and removed labour redundancies. The company put in place a robust performance management mechanism, based on mandatory job descriptions, clear responsibilities, and measurable performance indicators.