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A Big thank you to our colleagues at Counts Consulting, LLC for giving us permission to post their previously published article. Permission granted VIA email 10/13/11. All articles are reprinted in their entirety as originally published.

Parkinson’s Law (work expands so as to fill the time available for its completion)

C. Northcote Parkinson published this premise in 1958 while referring to civil servants and the government. However, I contend that his “law” applies to any and all enterprises where we pay people by the hour and pay overtime for the work if we get behind.

For example, it should take less than one hour to completely inventory and enter the information for a wrecked vehicle. Since there are approximately 160 work hours in a month, we should be able to inventory up to 160 vehicles per month. However, I often see a business where they have two people who can’t keep up with 100 vehicles per month. Why do you imagine this would happen? If the inventory person gets done in 100 hours, you will assign them more work. The first person got behind so we hired him a helper and sometimes pay them overtime to catch up. They need to “be busy” 160 hours each month with something so they slow down and create unnecessary paperwork and handlings to drag out the process and eat up the available time.

Another of the areas where Parkinson’s Law is common is in the accounting office. When you start asking questions as to what is done and how long it takes, you usually come way short of the 160 hours. You should be able to balance the inventory management system to the cash drawer every day in 30-45 minutes. Yet I’ve had people tell me it takes up to a half day. Why? The same reason the inventory person gets behind.

The people who dismantle vehicles on a hoist all day should be able to get the vehicle, pull the parts, tag them and stock them and on average, complete one vehicle per day. If your staff is taking longer, then you probably pay them by the hour, so why would they want to get more work done?

I could go on and on about how long it should take to do the jobs in our industry, but that is not the point. My point is recyclers are habitually overstaffed, which deduces the money they have available to buy inventory and pay bills. Then we complain that vehicles are too high or we can’t buy inventory because we don’t have any money. I contend we had the needed money, but we paid it to employees for jobs that don’t need to be done or should be done faster. What we need to realize is that if you pay your staff by the hour instead of the by the completed task, we will always have more payroll than needed. Why, because our employees are the ones who decide how much works done, not us. If we want them to be better organized and motivated to complete more tasks, we need a better motivational system. They need to get paid more only when they do more. That means no annual raises or cost of living raises unless the company gets the same. So, when was the last time your company received an annual or cost of living raise from the government or for the parts you sell? The answer is NEVER.

I realize that employees have ever increasing costs for food, fuel, taxes, etc., but we cannot expect our businesses to keep absorbing these expenses for the employees and stay profitable, unless we are getting a proportionate increase in production. I understand this is not a popular point of view, but I also understand that the cost of vehicles, fuel, taxes, etc. are going up for the business and the price of the parts we sell are not.

We need to rid our company of the effects of Parkinson’s Law. We have to get more production in order to pay more, and we need to reduce or eliminate unprofitable and unnecessary tasks and their associated expenses. Hiring more people is rarely the solution to being behind on inventory, dismantling, parts pulling or parts delivery. Incentive pay always increases production. After all, if you are paid by the vehicle or part, do you want the company to hire someone else to split the pay with?

Everyone who works for you is paid by the job or part, we just have not figured out want we are paying. Once you do that and change the pay system to piecework, you will be amazed how much more the same employees will accomplish.

If your excuse for paying by the hour is that quality will fall-off, then maybe you could spend the time you now spend checking to see if the employees are working on inspecting the added production. On pay per performance, the employees are looking for work instead of you looking for the employees.

So what’s holding you back?

Remember, no action is, in fact, an action and no decision is a decision.

I will see you at the “IT” show in Holland, Ohio, and the NEARA in Rhode Island.

www.CountsConsulting.com   –  JimCounts@USA.com  – 817-238-9991