Effective Personnel Management: Boosting Productivity & Satisfaction

Human resources are one of the most important and, at the same time, most costly assets for a company. For this reason, great attention must be devoted to their management.

Let's examine how human resources contribute to company results.

Productivity

Every worker (or employee) contributes directly and indirectly to the production of services or products.

As we have seen, productivity is the measure of production over a period of time.

Unlike a machine that can work continuously for long periods (within technical specifications), a worker's productivity depends on three factors in econopy:

The number of breaks during the day (in addition to the lunch break).

Let's take a numerical example.

A well-rested employee produces 60 products per hour. The employee works 8 hours a day, so the maximum daily productivity should be

60 units/hour * 8 hours = 480 units

However, this does not correspond to reality as fatigue negatively impacts productivity over time.

In the table, we can see decreasing productivity due to physical and/or mental fatigue.

Let's assume we introduce a 15-minute break every two hours, which restores productivity to its maximum but reduces the total number of hours worked.

The total productivity will therefore be 60 units/hour * (7.5 hours) = 450.

It should always be remembered that a high daily rhythm can bring benefits to production in the short term, for example in cases of sales periods, but in the long term, it will become unsustainable with possible consequences such as:

• Increase in resignations
• Increase in absenteeism due to health reasons
• Union disputes

This brings us to the second aspect, overall satisfaction.

Overall Satisfaction Level

An employee of a company can be said to be fulfilled and satisfied with their role when the following conditions exist:

• Fair compensation
• Regular payment of salary without delays
• Good working conditions (environment, breaks, benefits, conflict management, etc.)
• Good management of breaks and holidays
• Investment in training
• Company reputation
• Career opportunities
• Inclusivity
• Recognition of one's work
• Involvement in company objectives and its mission

All these aspects contribute to the company's overall productivity level and the quality of its process. In turn, these will contribute to company results and the financial solidity necessary to provide an adequate compensation package.

As we have seen, human resources are the engine of company success, and this success must serve to motivate them to maintain a virtuous circle beneficial to both the company and the employees.

For this purpose, many companies introduce a production bonus to directly link these two aspects.

An Adequate Holiday Period

As already seen in the lesson on productivity, adequate holiday planning allows for reducing impacts on daily production and maintaining high overall productivity.

Example

Each worker employee has a daily productivity of 100 units, the company has 3 workers and must deal with an average of 200 orders per day.

Let's see what happens when we authorize workers' holidays.

Now let's see how holiday management impacts annual planning.

From this example, we see how, theoretically, a distribution of holidays throughout the year has a better impact on overall productivity compared to accumulation and consumption in a single period.

Reputation and Quality of the Business Process

The manager must take all these factors into account to maintain a high level of productivity in the long term and ensure a high level of staff satisfaction.

High staff involvement in the business process has, among others, the following benefits:

• Increase in company reputation
• Reduction in time needed for new hires
• Reduction in employee resignations
• Retention of know-how within the company
• Greater staff training and consequently higher productivity

Correct Sizing of the Workforce

Sizing the company with the correct number of employees is an ever-present topic.

Remember that the workforce is generally among the top 3 expense items of a company. It is often a fixed expense, based on contractual forms, and therefore can significantly affect the economic and, consequently, financial results of the company.

A company that is unable to overcome a long crisis with market levers alone might find itself in the position of having to lay off part of the workforce to avoid bankruptcy and therefore the dismissal of all human resources.

Key points:

Size the workforce directly involved in production based on market demand considering:

• Productivity
• Break management
• Absenteeism (both due to planned holidays and absence due to illness, resignations)
• The level of experience and seniority
• The necessary organizational and supervisory structure

Let's take a practical example.

A company has 12 employees and grants 20 days of vacation per year.

For simplicity, each month consists of 20 days, so a year consists of 240 working days.

This means that on average there will always be 1 employee on vacation every day!

Let's assume that each employee produces 100 units per day.

The minimum annual production to be guaranteed is 260,000 units.

The maximum theoretical production would be:

At this point, we might say that we have correctly sized the workforce, but this is wrong!

Each employee has 20 days of vacation available, so we must reduce the number of working days to 220.

At this point, we might say that we have correctly sized the workforce, but this is still wrong!

We must consider that during the year, the company will have to manage cases of absenteeism due to periods of illness, leave, resignations, unpaid leave, training, and more.

Assuming that the average absenteeism is 5% (220 * 5 / 100 = 11), we will have 209 days on average of effective presence and production.

This brings us to:

If production must guarantee 260,000 units per year, this will mean that the workforce will need to be oversized by adding a part-time worker to compensate for absenteeism.

In this case too, doing business is solving a sizing problem!

Summary

Keeping staff satisfaction high produces benefits for the company in the long term. Reducing absenteeism and proper holiday planning have an economic impact on company results and therefore must be carefully evaluated.