OM in the News: Changing How Factories Schedule Employees

Until last April, there had really been just two ways to make 350,000 pounds of cheese a day at the Land O’Lakes plant in Melrose, Minn,: Start at 5 in the morning and work till 5 at night, or the other way around.

Rigid factory shifts were the default for churning out cheddar, as they are at factories the world over that make all kinds of products. “The most efficient way to keep production humming uninterrupted, 24 hours a day, 7 days a week, is to start and end in unison, bundling dozens of individuals’ efforts into a single unit of labor,” writes The Wall Street Journal (March 11, 2024).

The rigid schedule makes sense logistically. Each day, 70 or so trucks from member farms empty milk at the Melrose plant. Converting the unending inflow of milk into 500-pound blocks of cheese requires running the factory 24 hours a day. Divvying the day up into 2 shifts makes it easier for supervisors to ensure sufficient staffing.

But in recent years, the plant has struggled to find candidates willing to work full-time—a problem emerging across the company–and the country. There are less and less people going into manufacturing every year. And, like many employers, Land O’Lakes found its rigid traditional shift system buckling.

When companies need to boost hiring, higher wages are usually the lever they pull because it’s logistically easier to adjust to higher labor costs. But “giving workers more control over their schedules is a very valuable aspect of the job,” says a Land O’Lakes executive. Now employees choose their own start times and shift lengths.  Part time positions proved easier to fill than full-time openings, and had the knock-on benefit of boosting retention.

There are some trade-offs. The company needs 2 or 3 flex workers for every full-time employee, raising the cost of training. There are also increased costs that come with figuring out the weekly shifts. Some of this, however, is offset by cutting back on overtime pay.

Flex employees work with their supervisors every couple of weeks to choose their shifts. The supervisors then cobble together the schedule each day of the week, ensuring that all positions are covered.

Factories all over the U.S. are hiring only 6 people for every 10 openings posted, compared with 8 or 9 a decade ago. And some 2.5 million factory workers will retire by 2030, contributing to a shortage of around 2.1 million manufacturing jobs.

Classroom discussion questions:

  1. This system works well in the service sector, but will it work in all manufacturing companies?
  2. Why is there a shortage of manufacturing workers?

OM in the News: Happiness From a Shorter Workweek Can’t Overcome Costs

A Swedish nurse says the 6-hour workday raised her efficiency
A Swedish nurse says the 6-hour workday raised her efficiency

A controversial experiment with a 6-hour workday in Sweden just wrapped up with a cheerful conclusion: Shorter working hours make for happier, healthier and more productive employees. “There’s just one catch,” writes The New York Times (Jan. 7, 2017). “The practice is too expensive and unwieldy to become widespread in Sweden anytime soon.”

The 2-year trial centered on a retirement home where workers were switched to a 6-hour day, from 8 hours, with no pay cut. Seventeen new nursing positions were created to make up for the loss of time at a cost of $738,000 a year.

The experiment stoked discussion about whether investing in a better work-life balance for employees benefits the bottom line for companies. But the high price tag and political skepticism are likely to discourage widespread support for taking the concept nationwide. While a growing number of countries and companies are studying the concept of employee happiness, the idea of improving it through shorter work hours has by no means gained broad traction. A similar model in France has been controversial for more than 15 years, ever since a Socialist government made a 35-hour workweek mandatory. Companies of all sizes in France have complained repeatedly that the short workweek has damaged competitiveness and generated billions in additional costs.

In the Swedish experiment, employees reported working with greater efficiency and energy when their hours were cut. They called in sick 15% less than before and perceived their health to have improved 20%. The program increased costs by 22%, mostly to pay for new employees. However 10% was offset by reduced costs to the state from people being taken off the unemployment rolls and paying taxes into the system.

Classroom discussion questions:

  1. Do your students believe “we should work to live, or live to work?”
  2. What are some companies in the U.S. doing to improve working conditions?

OM in the News: Out of the Office, But Still on the Job

aetnaWork and home in the U.S. once were at the same place—the farm or the shop. The notion of working away from home emerged at the start of the 19th century, when New England mills hired young women and, later, immigrants, to tend machines and the mills put them up in dorms. Expanding offices hired clerks, who moved to cities and lived in boardinghouses. But The Wall Street Journal (Dec.20,2102) writes that work has now moved from office to employee homes in a relentless drive by America’s big service-sector companies to cut costs, as well the effect that the spread of cheap, reliable and fast communications, particularly the Internet, has on the economy.

The Journal cites Aetna, Inc. as the nation’s leader in home work. Worried about losing talent when it closed some offices in 1996, Aetna decided to let employees work from home. Ten years later, only 9% of the insurers’ employees worked from home full-time. Around 2005, though, the insurer began to see working from home as more than a favor to employees. Today, nearly half of Aetna’s 35,000 U.S. employees work from home. And we aren’t talking about checking email after dinner or working from home on Fridays. These employees stay home every day: no desk, no cubicle, no computer in an office somewhere. Aetna staff are required to have a quiet place—no barking dogs or crying kids. The company pays for office furniture, a locked file cabinet and a shredder, plus computer gear and telephone and Internet service.

For the company, this is a money-saver. Aetna’s real-estate costs are 15% -25% lower than they would otherwise be—annual savings of about $80 million. Working at home has reduced Aetna’s total office space by 2.7 million square feet. (Overall, about 9.4 million Americans work from home).

Discussion questions:

1. From an operations perspective, what are the advantages and disadvantages of home workers?

2. What types of firms can benefit from home workers? What kind cannot?