Posted on 10/30/2012 8:01 AM by Hank Austin
Achieving substantial and sustainable cost reductions is the greatest challenge facing management today. Organizations often think they are running as lean as possible and there just isn’t any room for significant improvement. So, with an understanding that Human Resources is by far the largest cost an organization incurs and productivity is the key to achieving sustainable cost reductions… where do we begin?
Measuring Where You Stand
“What gets measured gets managed.” That age-old axiom attributed to the great business management guru Peter Drucker is as important today as it was years ago when he wrote it. If something is not consistently and continuously measured, there is no way to accurately understand the impact that it has on your company. The measurement of important data is a primary part of the Six Sigma phenomenon that has swept across industry around the world.
First, identify what needs to be measured and how to measure it, measure it then analyze it and determine what improvements need to be made. The information that follows addresses the Black Hole of Corporate Productivity, how to measure it, and how to determine what impact it has on your organization.
In many large companies Six Sigma and other sophisticated techniques and software are used to gather large amounts of data on critical equipment (electrical, HVAC, chillers, servers, generators, water pumps, etc.) in a preventative maintenance program to ensure that this equipment will never fail significantly reducing the potential of disrupting company operations.
In regards to equipment, discussions about things like mean time between failures (MTBF), overall equipment effectiveness and availability (OEE) and mean time to repair (MTTR). All of these different equipment metrics are tracked, analyzed and acted upon. A lot of time, effort and money are put into understanding the current status of and preparing specific upgrades and actions to prevent any breakdowns or complete failures.
What is more important and costly to your company than your employees? How much time money and effort are put into studying, understanding and improving the way your employees work? This includes engineering out anything such as detailed scrutiny of furniture, equipment, chairs, lighting, noise and indoor air quality that could cause a negative productivity impact keeping knowledge workers from peak performance. Anyone who discounts the impact of these issues on worker productivity has their head buried in the sand.
There is very little actionable data that is gathered by companies about discomfort, risk of injury and understanding the causes of injuries to knowledge workers in business. Workers’ compensation insurance, traditionally the primary system for gathering employee injury data and providing care for injured employees was put in place over 150 years ago. It serves its intended purpose well, but is totally inadequate for true investigation, study and actionable data as described in the study excerpt below:
“The possible extent of underreporting in the workers’ compensation system was suggested in a Connecticut population survey in which only 11% of self-reported cases of work-related cumulative trauma musculoskeletal disorders of the hand, arm, and neck had filed a workers’ compensation claim. “ Group Medical Claims as a Source of Information on Worker Health and Potentially Work-Related Diseases” P. Timothy Bushnell, PhD, MPA, Jia Li, MS, and Deborah Landen, MD, PhD, JOEM , Volume 53, Number 12, December 2011.
This is also true for the OSHA injury and illness reporting system. Even if both systems were used to their full potential they still are totally reactive systems being invoked only after an injury has occurred. There are many reasons given for this underreporting including the bitter politics that became involved in the OSHA ergonomics standard between the Democrats and Republicans when George W. Bush became President. The current reporting system can cause unwanted scrutiny and distrust between employees and the company. One thing for sure is that there are systems much better suited for prevention of office work related injuries. Companies must take ownership of these office work related injuries in much the same way they would any other important corporate issue. Identify the problem, measure it, analyze it, implement corrective actions then follow up on the progress and continue again with further measurement and analysis.
Change Your Focus
To put it into a bit of perspective, organizations are spending millions of dollars to gain LEED certification for their buildings. The primary issue in regards to LEED is saving energy. While it is a good and noble cause, the annual cost a company spends on energy is about 1%. The total annual cost spent on employees is about 90%2. Where will efforts to improve operations have the most positive impact on the corporate bottom line?
In the past, knowledge worker productivity has been very difficult to measure from work product as there can be a gulf between quality and quantity of work product as well as each different job can have very different specifics. Each job would need to be engineered with very specific benchmarks on both quantity and quality in order to gauge total productivity.
The current state of company focus on improving employee productivity, health and prevention efforts is based on reducing high health care costs. As a result, companies have instituted wellness programs in order to improve overall employee health in an attempt to bring down health care costs. Wellness programs are important but in many cases, companies feel helpless as they find that there is little they can do to control the factors impacting overall employee health. What our research has found is that one very large component of health care costs is actually within direct corporate control and provides a substantial opportunity to realize sustainable healthcare cost reductions and significantly raising overall productivity.
“The details of the medical expenses of the WRMSD (work-related musculoskeletal disorder) cases suggest that very high proportions of the medical visits and procedures were paid for either by general health insurance or out of pocket. “ Source: The Economic and Social Consequences of Work-related Musculoskeletal Disorders: The Connecticut Upper-Extremity Surveillance Project (CUSP). This study was provided through Dr. Casey Chosewood of the National Institute for Occupational Safety and Health (NIOSH) and the Centers for Disease Control (CDC).
That means that the other 89% of the claims were handled in a different manner than through workers’ compensation. In other words, many (if not most) of the WRMSDs or ergonomics related injuries occurring are being handled through the corporate health insurance system and are significantly raising program costs. The big concern of injuries being handled in this manner is as employees go through the health insurance system, they are essentially unmanaged from a work perspective and little if anything is known much less tracked and managed about their real cost to the organization. When the impact of these injuries and general discomfort in the organization is studied in detail, the cost of the resulting lost productivity is significantly larger than any other cost including medical, equipment and even facilities.
People costs are by far the largest organizational expense and productivity is the key metric. Do not think that this means that offices should become sweat shops with managers timing all aspects of the job. What it means is that there are totally preventable and/or correctable issues and conditions that exist in most every office that are significantly impacting worker productivity. Each company must become the expert in what these issues are and what to do about them. As it currently stands, Safety, Health and Ergonomics departments are typically refused access to information health care insurance claims due to professed confidentiality concerns. This misguided action keeps the majority of the injuries and the costs out of the hands of those who can do something about them. The reality is that the information can be sanitized so that it can be proactively managed.
One way to quickly identify if this is happening in your company is if you see that Worker’s compensation rates are low but health care rates are up. Organizations usually interpret this type of trend as a situation where they have few if any ergonomics related issues and only a big health care insurance problem. An additional reason the company is unaware of the extent of the problem is the employee is taking the path of least resistance and when injured they are seeing their doctor and specialists through the health care insurance system. There is no scrutiny of how the injury happened, if it is work related or not nor hassling with reimbursements. There is no one questioning the intentions of the employee by suggesting they are a malingerer trying to game the system. The overall result is a company effort to improve wellness programs with no improvement at all in ergonomics.
Peter Drucker also wrote:
“The most important, and indeed the truly unique, contribution of management in the 20th century was the fifty-fold increase in the productivity of the manual worker in manufacturing. The most important contribution management needs to make in the 21st century is similarly to increase the productivity of knowledge work and knowledge workers. The most valuable asset of a 20th-century company was its production equipment. The most valuable asset of a 21st century institution (whether business or nonbusiness) will be its knowledge workers and their productivity.” Drucker P.F. (1999) Management Challenges for the 21st Century, Butterworth-Heinemann, Oxford.
What Mr. Drucker describes above is the real organizational challenge today, which is to raise the productivity of knowledge work and the knowledge worker. What is astounding is that most organizations are completely unaware of what is happening to their overall productivity and the black hole it is disappearing into.
How much do you really know about your knowledge workers? What is impeding their productivity? Our data and that of several peer-reviewed studies show that 50% -80% of your knowledge workers are suffering from significant discomfort and /or injuries. What impact do these facts have on your employees? Could it mean that they have difficulty focusing, staying on task, or even working at all? Think about it, the last time you had significant discomfort or pain in a part of your body; did that condition impact your productivity, accuracy and morale? What if the environment that your knowledge workers are working in is either causing or aggravating these conditions? You may have spent a lot of money on the furniture and equipment but is it set up correctly or can it be set up correctly for and by each individual employee?
Are you wondering right now if these numbers are exaggerated? If you are, there is a very simple way for you to test them within your company. You or your representative should go out to talk with employees and ask a few simple questions. It is important that the questions be asked properly. For example, do not simply ask, “How are you doing today?” or “How is everything, having any problems?” as the typical answer will be “Doing great, no problems!” You need to ask specifics like “Are you or have you experienced any hand, arm, wrist, shoulder, neck, leg or back pain or shooting pain while working or when you are sleeping?” Be prepared as you will be astounded at what you learn! Now that you have a feel for the problem, how do you possibly get a clear picture of all this across a large enterprise? Are there tools available that can quickly quantify and present detailed information about the extent of these issues in your organization, understand how it is impacting your knowledge workers and make a plan on how to mitigate the situation? Yes there are.
Getting Back on Track
The first step is to measure the situation. There are a number of ergonomic evaluation programs on the market today that help you gain an understanding of your current situation by surveying your employees. A few items to look for in a good program are:
- Brief is Better – Employees are busy people with many things “to do”; deadlines to meet and places to be; to gain maximum participation in your survey make sure it is brief. Optimally, if the survey is touching on the key ergonomic areas, less than 10 minutes spent on the survey should be sufficient. Obviously, more in-depth and in person follow up individual ergonomic assessments may take more time.
- Immediate Action - The best time to get an employee to train on something or in this case make minor adjustments to their posture, desk set up etc. is during the “Moment of Maximum Satisfaction” (MMS) which will be immediately after they complete their survey. Following suggestion #1, the training should be brief and to the point. Again, should follow up training be required on a one-on-one basis that can take place later and take the amount of time required.
- Fees, Fees, Fees – With ergonomic evaluation software there are many and different fee structures. In most cases, simple is better. Per user fees, annual maintenance fees, upgrade fees, and customization fees. . . keeping up with all these can be tiresome. If you value your time (and your money), look for a program that has a simple fee structure and doesn’t nickel and dime you to death.
- Customization not “Cookie Cutter” – All organizations are not the same so why should you be limited to a “one size fits all” survey? Look for programs that offer customization in areas such as text, numbers, weighting, questions and graphics.
- Easy Claims Management – Being able to identify high-risk areas by person, position and job location should be a standard feature on the survey program’s administration menu. After all, your goal is to identify, measure and correct any factors impeding your office worker’s performance. Seeing an individual employee’s risk areas should be a standard feature, and drilling up from the person to their position and location can often times uncover factors that are more position and location specific than individual specific.
A change in focus is warranted if organizations want to truly realize sustainable cost savings. Facilities, equipment, LEED certification are all important to your organization’s success, however in most cases your people costs account for over 90% of your spending. Focusing on ways to improve employee comfort levels and productivity will no doubt lead to reduce costs.
Productivity savings are real, substantial and sustainable with the proper implementation of a program that monitors employee comfort levels and commits to corrective actions. Real cost savings come from health care and worker’s compensation cost reductions as well as reductions in absenteeism and presenteeism.
A simple GAP Assessment and survey of employees will quickly give you an indication of where your organization stands. Should you use the Comfort Zone program you will be able to find out this information for free. If the results of your survey warrant further actions an investment in a program such as Comfort Zone will pay for itself many times over.
Bonus – Food for Thought
When an organization recruits an employee, it provides them with a place to work, furniture, equipment, supplies, and software and support which all come at a cost, not to mention recruiting and on boarding costs. The sum of these costs, HR, Facilities, and IT is the real cost per employee. Based on HR costs of $70,000, Facilities costs of $8,000, and IT costs of $2,000, the total cost per employee would be $80,000 per year. So, for every employee lost through attrition and not replaced or an employee not added to meet increased demand costs would be cut by $80,000 per year. By increasing existing worker productivity you in fact can seriously consider not replacing employees lost to attrition and save hundreds of thousands or even millions of dollars.
Hank Austin is an Ergonomist and Certified Safety Professional with an MS in Ergonomics from Texas A&M University and is an Ergo Squad consultant based in Austin, TX.