Time study sleuths slip from shop floor to offices
For years, managers have watched factory employees at work, seeking ways to boost blue-collar productivity.
Now the tables have turned as a growing number of companies scrutinize the efficiency of white-collar workers.
For example, at the Bank of America, some 65,000 white-collar employees are being monitored by a productivity measurement system. The year-and-a-half-old project ''systematizes the identification of productivity improvement opportunities and creates incentives'' to do better, explains bank vice-president Daniel J. Wichlan.
While the bank will not quantify its gains from using the system, ''the gain in productivity we are getting is twice what it would have been otherwise,'' Mr. Wichlan says. White-collar productivity measures the amount of a goods or services an employee can produce in an hour.
The San Francisco-based financial institution is unusual only in that it is willing to discuss its bid to increase white-collar productivity. ''No one will talk about it,'' says Martin Stankard, director of the Productivity Development Group. ''It sounds like a layoff and is a very sensitive subject.'' His Cambridge, Mass., firm specializes in helping companies improve on white-collar productivity.
Business has been brisk for consultants who specialize in this area, including managerial work. ''There has been a tremendous increase in companies'' seeking ways to raise white-collar efficiency, says Charles K. Rourke, president of Hendrick & Co., a Massachusetts-based firm specializing in corporate restructuring.
''There has been an increase in business, . . .'' adds George Harris, who a consultant on service-industry productivity for Arthur D. Little Inc., also in Cambridge. ''Due to the recession companies need to cut costs and increase productivity.''
Interest in white-collar efficiency has also been given a lift from manufacturers of office automation equipment like word processors. ''Those people are out there selling white-collar productivity,'' says Martin Starr, professor of management science and operations management at the Columbia University Graduate School of Business. ''They are focusing on issues which people have not thought about.''
Attempts to boost white-collar productivity are growing fastest at ''paper factories'' like banks, insurance companies, and goverment offices, Mr. Harris says.
But interest is not limited to these areas. ''Many companies are seeing that an increasing percentage of their payroll is in the white-collar sector,'' says Professor Starr.
The amount companies can chop costs by expanding salaried employee efficiency ''depends on the company and its current effectiveness,'' says Donald Mizaur, vice-president of the American Productivity Center in Houston.
While savings levels are difficult to predict, a typical minimum gain in labor costs ranges from 10 to 20 percent in areas where changes are needed, Harris notes. But at some overstaffed banks, ''we find we can eliminate approximately 30 percent of the middle managers,'' Mr. Rourke contends.
The causes of bureaucratic fat vary in each company. But one general problem is that ''in good times businesses add managers and in bad times they do not let them go,'' Rourke says.
''Most places are overorganized and the span of control is out of whack,'' adds consultant Stankard. Span of control refers to the number of individuals reporting to a given manager.
The auto companies have been particulary active lately in increasing each manager's span of control. For example, General Motors Corporation is ''getting away from having one or two people reporting to one,'' GM vice-chairman Howard H. Kehrl says. ''We have gone after it (short span of control) and are trying to get 5 to 6 to 8 people reporting to one. When you do that you start to pull levels out of the organization.''
In addition to having too few Indians reporting to each chief, at many companies white-collar workers create unessential work. ''It is a simple matter to become Parkinsonian in an office,'' Starr says. Parkinson's Law holds that work expands to fill the time allotted to it.
And the work that managers create is often not tightly focused on producing a salable product. For example, one company that Hendrick & Co. recently studied was spending $7.5 million on maintenance operations but only $2.5 million producing the product. Because responsibility for maintenance was scattered in various places around the company, this strange allocation of resources had not been detected.
Consultants use a variety of methods to help the companies. Techniques employed are ''a blend of common sense and some of the traditional approaches to measurement,'' says Starr.
At Arthur D. Little, for example, Harris says the first step is diagnostic activity, in which consultants study an operation, search out problems, and measure current productivity levels. The final report calls for ''improved procedures utilizing automation to the best of (the firm's) ability.''
Individual diagnostic methods vary by company. For instance, Hendrick & Co. gathers information about staffing levels and type of work and uses a sophisticated computer program to compare the company's results with those achieved elsewhere.
By contrast, McKinsey & Co. uses a method called ''overhead value analysis.'' In this approach each department's work is graded by the other units in the business which receive the work. A report or a service that gets a low rating from people using it is a candidate for elimination. ''We set a goal of a 40 percent cost reduction. Setting it so high spurs big solutions,'' a McKinsey spokesman says.
While designing and installing a productivity boosting plan is complex, the rewards seem to be worth it. ''We are serving more customers today than we did in the past with fewer employees,'' notes Arnold Benes, general auditor at Detroit Edison. Edison installed a system to measure white-collar productivity four years ago. ''Our productivity would not have gone up as fast without it,'' Mr. Benes says.