People-management is an important performance measure

Contributing Editor David Berger authors part two of his article on determining a small but successful set of performance indicators. In this portion, read about effective people-management measures.

By David Berger, contributing editor

Part 1 | Part 3 | Part 4

In last month’s column, I described one of the secrets to success in determining a small but powerful set of measures that trade off. The goal was to better facilitate the management of assets. I also explained the perils of having too few or too many measures, as well as the importance of how the measures interact or trade off. This column continues the discussion about key measures with a focus on managing people. Next month’s column will look at measures for managing your MRO supply chain, followed by financial measures in April’s column.

Metrics for people management
My small but powerful set of people-management measures is described below and includes an indication of how they trade off. Be aware that there’s a lot of discrepancy in how these measures are defined and used within a given company, let alone across industry. So, whatever measures you settle on, ensure their meaning is understood consistently across your enterprise.

What to maximize
Start with utilization. People are either working on productive activities or they aren’t. When maintenance workers are performing value-added activities (tool time), the utilization clock is ticking. Non-value-added activities include gathering parts, waiting for instructions and the like. Typically, North American maintenance worker utilization is less than 50%. Thus, there’s a real potential for improvement in most facilities.

Unfortunately, some operations managers still say things like, “I’d prefer to see my maintenance staff sitting around doing nothing than busy fixing equipment because then I know equipment uptime is maximized.” This attitude is especially pronounced in a decentralized environment, where production supervisors are provided with resident mechanics whose responsibility is to maximize uptime for a given production line. The trade-off, however, for babysitting the equipment is that utilization might be suboptimal, which in turn increases maintenance labor cost.

Instead of promoting this just-in-case culture, resident mechanics should be available to help with planned maintenance work orders in other areas of the plant. Of course, if an emergency breakdown occurs in the assigned department, the technician’s priority will be to return to the home area to solve the problem. Alternatively, resident mechanics can be assigned capital project work in their area to keep them productive. In some cases, it might be beneficial to increase the percentage of preventive maintenance work done in the area or move to more condition-based maintenance. This reduces the number and duration of unscheduled downtime occurrences, and thus frees the resident mechanic to work on planned work orders in other production areas.

One of the difficulties with ongoing technician utilization tracking is the accuracy of the self-reported data. Tradespeople are reluctant to break out their time by value-added and non-value-added activities, either because they are unsure of the subtle differences or they don’t want to draw attention to any excessive unproductive time. The typical work order doesn’t split out value-added and non-value-added activities related to completing a given job. Thus, a job reported as having a duration of four hours might include time to receive instructions from the maintenance supervisor or maintenance planner, walking to and from the job site and tool crib, fetching spare parts from stores, waiting for operations to bring the production line down, and so on.

Another way to measure utilization is with a technique called work sampling. This involves observing and categorizing, at random moments in time, the work technicians are doing. The number of observations necessary to achieve a meaningful statistical significance depends on the number of value-added and non-value-added work categories available. The more categories there are, the greater the number of observations required.

Suppose work sampling reveals that the average utilization of the 30 maintenance workers in your department is 50%. Achieving a 10% utilization increase would free up three person-years to be applied to special projects or put more emphasis on preventive/predictive maintenance. If necessary, laying off three people would save about $150,000 annually.

The 10-percent utilization improvement could come from better planning and scheduling, greater emphasis on planned maintenance and a better matching of the maintenance organizational structure to the work required.

The next variable to maximize is performance. As many executives readily admit, a company’s greatest assets are its people. So, it comes as no surprise that asset performance and people performance share essentially the same definition -- actual hours to produce a given level of output as a percentage of planned, standard or expected hours. Note that the debate regarding the definition of the term [i]expected[i] rages on for labor performance in the same manner as described for asset performance in last month’s column.

When it comes to people, however, the term [i]expected[i] is open to even more interpretation because the notion of allowances must be considered. Unlike equipment, allowances for fatigue, breaks, skill level, carrying excessive weight, harsh working environment and so on can be built into the standard or expected time to complete a job. Although allowances ensure standards are more fair and realistic, they sometimes hide or legitimize the root cause of the allowance, such as aging equipment, poor processes or an untrained labor force.

The third factor is effectiveness. Even if people achieve maximum utilization and, when so utilized, they’re highly efficient, they will still have low effectiveness if they’re not doing the right things. Improving effectiveness starts with developing a maintenance strategy in conjunction with operations and in light of the overall business strategy. This ensures that maintenance, operations and engineering are working on achieving common goals and objectives.

People are capable of innovating to find a better way to do things and, therefore, increase their own effectiveness. This could have a huge impact on other measures that trade off. For example, a maintenance worker might think of a way to adjust a machine such that production output, quality of finished goods or equipment safety is dramatically improved.

Another way to improve effectiveness is through better planning and scheduling. The most glaring example of a problem that inadequate planning and scheduling can produce is maintenance technicians being paid more than their supervisors because of chronic, excessive overtime. Better matching of work backlog to manpower requirements across all shifts might alleviate this situation.

One of the best ways to improve effectiveness is to increase the quantity and quality of training for both the maintenance and operations labor force. For example, providing training for equipment operators about detecting, correcting and avoiding certain maintenance-related problems will help improve asset reliability. Better training of technicians about performing a repair correctly the first time will help reduce the frequency and severity of subsequent equipment breakdowns. Setting quality standards helps define management expectations as to what constitutes a quality repair.

What to minimize
Start with labor cost. As you maximize labor force utilization, performance and effectiveness, be sure to keep labor costs to a minimum. This represents the most critical trade-off of them all. For example, be wary of a solution that simply throws more people at the problem instead of using innovation to minimize labor costs.

E-mail Contributing Editor David Berger at

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