Like most operational executives, Bob Duron has faced THE CHALLENGE – How do you address worker retention, find enough good people, manage rising labor costs, implement productivity improvements AND reduce costs?
These limiting labor issues slow productivity, often reduce KPI achievement and most often increase labor costs, none of which achieve pressing business objectives and customer experience targets. For businesses with peak seasons and labor-intensive processes, the use of contingent workers adds additional challenges of training, accountability and management.
What if these labor issues could be solved, not by addressing each one individually, but by changing how we view the problems?
Meet Bob Duron …previous General Manager/Vice President at Walmart, GAP, Amazon, DHL/Excel, and Americold. Bob has a reputation for significantly reducing labor costs while increasing productivity and quality standards, without major capital improvements of automation, robotics or software systems. What does he know that others don’t?
While at Walmart.com a persistent salesperson finally convinced Bob to test an unconventional labor model pioneered by staffing expert David Hair and Industrial Engineer Jim Zimmerman, now principals of nGROUP performance partners, a national workforce solutions company based near Charlotte, N.C.
According to Hair, the uniqueness of the labor management model began by looking first at the human being that is performing the labor-intensive processes, common to warehouses, distribution centers, assembly lines and other labor-intensive environments.
David and Jim looked for answers to the daunting question, “What motivates unskilled or semi-skilled contingent workers to achieve higher productivity at quality standards?” Once they discovered the multiple layers that answer this question they created the Human Performance Coaching methods that help the model achieve its stellar results.
With Jim’s industrial engineering background, he applied Lean Manufacturing, Industrial Engineering principles and Six Sigma practices to find the opportunities in process flow, eliminating variability and waste reduction.
But even these excellent practices weren’t responsible for the magic Bob discovered that allowed him to immediately reduce labor costs a minimum of 10% while increasing productivity 20-25%.
The Magic of the Solution
The magic happened, according to Jim and David, when they finally let go of the current best practices of accounting for labor cost on the P&L. “We had to rethink how to build accountability into the labor management model – until we could tie how much was produced to the cost of labor we knew it wouldn’t achieve what we wanted to achieve. We ended up dusting off the method used by farmers decades earlier. Farmers would often pay their workers a flat fee for a unit of production – for example – X dollars for picking one basket of fruit. “If we could create the financial reporting to make this work, we could incentivize workers for “picking more fruit.” It was called a fixed-cost-per-unit payment.
Once David and Jim began implementing their fixed-cost-per-unit model with clients, the finance and accounting groups were also thrilled. By guaranteeing a cost per unit produced, that included labor costs which were often the largest variable, the accuracy of budgeting and forecasting were immediately increased.
Today nGROUP continues to help clients solve frustrating labor issues and achieve significant cost savings with their unique labor management model, called Labor Unit Economics. Sophisticated engineering technology and labor BI management technologies, along with powerful recruiting and Employee Engagement programs have been added to meet today’s demands, but the magic is still in the model, according to David and Jim.
Solution Meets Magic
And what happened to Bob Duron? On January 2, 2018 Bob joined nGROUP as Chief Operating Officer, and is eager to share the nGROUP Unit Labor magic with outstanding companies across the country.
For a confidential conversation about your pressing labor and productivity challenges, please contact nGROUP performance partners at 678-644-2208, learn more at nGROUP.biz, or email Bob. BDuron@nGROUP.biz.