The Food and Drink Report (BDO, Feb 2014) highlighted that food manufacturers are seeing increasing price volatility of raw materials coupled with pricing pressure from customers. For many this is impacting upon operating margin and their ability to remain competitive. According to Henley Business School, the businesses best placed to deal with these challenges are those who can remove unnecessary complexity and inefficiency not just on the production line but in every process companywide. Reaching in and fixing areas of inefficiency will create value which can be exchanged for whatever is important – profit, R&D spend, dividends…
One area of inefficiency that can be fixed is the process of managing employee absence – an issue that can dramatically impact resourcing your production line. Absence also increases the wage bill and sick pay costs; jeopardises product quality and customer satisfaction; lowers staff morale……the list goes on. In fact absence has the potential to touch every part of the business if not measured and managed as effectively and robustly as every other measure of your business.
Yet whilst every stage of the production process is tightly monitored and measured against KPIs, for many large employers the process of managing absence is still something that is largely left to chance and driven by manual effort. Generally, traditional, outdated processes involve line managers being responsible for taking calls from sick employees; informing colleagues of resourcing adjustments; completing and sending forms to let HR and Payroll know, and all whilst running the line and managing output. The reality is that these actions are often delayed (if done at all) and inconsistently managed whilst the line manager focuses on business critical tasks. This impacts the business in manifold ways:
- Employees’ absences go unreported so they are not picked up by HR or Occupational Health leading to a lack of intervention from the business, more absence and the threat of employee litigation.
- Payroll figures are inaccurate, meaning the overpayment of staff or more often a time consuming reworking of the numbers and a disgruntled employee having to pay back wages.
- A lack of accountability at a local level, which exacerbates the problem by allowing absence to go unchecked.*
Hidden levels of absence, leading to undetected sick pay costs and an over-reliance on temporary, under-trained workers on the production line.
Subsequently, this ineffective process at the front end leaves Human Resources departments overworked dealing with non-value adding tasks. Time is spent chasing forms; manually inputting data and compiling reports; or trying to get to grips with cases where they don’t have the evidence and where the effectiveness of their intervention has long since passed.
Businesses have for decades used technology to remove manual, inconsistent process work to great effect and none more so than the manufacturing sector. Outsourcing payroll, once the reserve of only the brave, is now commonplace as advancements in technology have brought about a secure, consistent and efficient way of paying staff the right amount at the right time.
The same is now true of absence management where BPaaS (business process as a service) technology is being used by pioneering employers to transform what is every business’s second biggest people process behind payroll. Needless manual administration can be removed, improving immediacy and accuracy of data and freeing up the time of HR, Payroll and the line to focus on adding value to the business. With only 6% of businesses outsourcing “record to report”*, those that are leading the way are consistently improving their true net value delivered. For low margin businesses in particular, this could be the difference between success and failure when being squeezed by suppliers and customers. The food manufacturing industry is therefore perfectly placed to reap the rewards of this new technology.
*HFS and London School of Economics Outsourcing Unit, 2011