Stretching the point

Nothing shows how the old white collar/ blue collar divide survives like school sports day. On the top floor, who really cares if you take a couple of hours off to make a fool of yourself in the parents' race? But woe betide the production operatives who screw up the day's schedules by asking for time off or taking sickies. The different rules for 'us and them' create resentment and negate any notion of fair play when management sets out to rally the troops. Unions, government and employees themselves are all pressurising for more flexible working. In April 2003, parents of young or disabled children gained a statutory right to request it and the government is currently considering extending this to those with elderly or sick relatives. There is no automatic right and employers can turn it down for a variety of reasons, including a detrimental effect on meeting demand. But 'too difficult to think about it' is not a valid reason. Remember, too, that a female may be able to claim indirect sex discrimination if she feels a request has been unfairly refused for gender-related reasons. The penalties for this can hurt. In fact, other issues may force change without legislation: companies operating strict, inflexible policies are, in many areas, finding it tough to recruit or keep their people. Historically, the UK has claimed a competitive advantage through its supposedly more flexible labour market. Recent research from Cranet, a worldwide network of business schools coordinated by Cranfield, shows this is emphatically not the case. Only 48% of UK organisations offer flexi-time to their employees compared to 90% in Germany, 94% in Sweden and 92% in Finland. The figures for manufacturing are far lower. Producers aren't being deliberately draconian. Most know that adopting family-friendly working policies brings benefits. BT reported productivity gains of £10m per year, sickness absence savings of £7m and accommodation savings of over £40m. RAC reported productivity increases of 8% and HSBC reported a 300% increase in women returning to work after maternity leave. But none of these are manufacturing companies who depend upon the presence of a predictable, fixed number of bodies on the production line to get their goods out the door. For them, job shares, term-time only contracts and variable hours play havoc with production schedules and most who offer any degree of flexibility do so by the simple expedient of temporary labour. Shifting shifts Paul Smith, northern manager for the national agency right4staff spots a growing trend for producers to move to core crews in the easy-to-fill hours while relying on temporary labour and job shares to flex in and out for the difficult ones (usually the early morning and late-night shifts). Some do try to make hours fit personal situations; he has clients with eight or nine shift patterns: "The downside is tracking what is happening in your business; we get lots of panic phone calls to balance the load." He is also seeing a move away from the traditional patterns of 6am-2pm, 2pm-10pm and 10pm-6am because they cut right across the school day. "Split shifts are becoming much more common, especially in the food and distribution industries which tend to run 24 hours. But still they are using temps at either end of the day to facilitate flexible working for their staff." Although he admits that his business is inevitably on the receiving end of squeezed margins in the client base, he sees it as "a pressure valve that allows companies to keep their best staff." Interestingly, he points out that this move towards increased flexibility would be strangled at birth without migrant workers: "In some areas there is a serious candidate shortage and the migrant workers have helped us enormously. They are part of our economy now." Reliance on temps, however, is a piecemeal solution for those companies whose future depends upon a trained, committed and knowledgeable workforce. A few companies, however, have proved it is possible to marry flexibility and stable performance. The shining, and oft-quoted example is promotional goods producer Listawood of Norfolk. Arthur and Irene Allen started the company in 1987 with one employee. It now employs some 200 and Arthur Allen says that the company's family friendly culture is an integral part of the business and vital to its profitability. Encouraging part-time working, job shares, flexi-time, team working, personal development and training more than pays off for the business in terms of loyalty and flexibility. Staff members agree their own work patterns and hours. Approximately 75% of the working patterns differ from the norm. One third of management are equipped with laptops so they can work from home. Staggered hours, compressed working weeks, job-share, annualised hours and term-time working are all in operation. Management of production and scheduling is devolved to small teams who decide between themselves how to meet production demands. "Every team has a copy of the day's production plan," explains Irene Allen. "We make sure that staff have what they need to get on with the job, that they have a role to play in how they do the work and they can take decisions. Information empowers and IT makes it easy to provide that information." Imagination Examples like these merit admiration but it would be na•ve to assume Listawood provides a model that could be replicated across industry. What works in a make-to-order environment could cause disaster in a high-volume, continuous process. That doesn't mean such companies have an excuse to shove the entire issue under the carpet. No-one is pretending it's easy; it takes imagination and, initially, perhaps some degree of risk. But those who have introduced some measure of flexibility are reaping rewards not just in a happier workforce but tangible, bottom-line benefits. Take the Edrington Group which produces some of the best known Scotch brands in the world, including The Famous Grouse and The Macallan. Edrington's Glasgow complex - which was highly commended at last month's Best Factory Awards, see p48 - blends and bottles over 85 million bottles every year, the majority for export. It also houses corporate HQ, planning and worldwide customer and technical services. On the surface, it therefore typifies the type of automated, high-speed production environment that is least fitted to flexible, varied working arrangements. Yet it has pioneered a careful blend of contract types that have allowed it to drive down its premium costs and still give its employees better control over their own work/life balance. The plant employs up to 450 people at any time. It is a seasonal business with a pronounced peak in the four-month run up to Christmas. It normally operates a two-shift system, day and twilight, which is popular with young mothers. During peak periods, however, it recruits a substantial number of temporary employees and adds in a Monday to Thursday night shift. Importantly, as part of a concerted drive for best practice, it has almost entirely eliminated overtime, weekend and bank holiday working. Over the past five years it has cut its premium costs by 90% and its peak head count has dropped from just over 500. Last year, with some funding from the DTI's Partnership at Work scheme, the company started a number of pilots aimed at a better work/life balance. While director of supply chain David Donaldson acknowledges that legislative pressure played some part, the primary motivation was the employees' own wishes, expressed via the biannual employee survey and the company-trades union partnership. Production manager Rachel Walters says each area developed its own ideas, canvassing internal suppliers and customers for feedback, thinking through issues like holiday and absence cover, engineering and supervisory support, and coming up with proposals that would give the same amount of work in new formats: "It was a real motivator, particularly for our shopfloor team. We had them writing and giving presentations to the management team to sell their own ideas." The most radical proposal came from one of the bottling lines for a compressed hours scheme for the day shift. It still works a 38-hour week but spread over four days rather than five. "There have been no negative effects - quite the opposite - in terms of productivity," says Donaldson. "People are more 'up' and we have agreed to continue the process." The crew still contractually works a five-day week but with an implicit agreement that the new arrangements will be left alone as long as they work. Pivotal roles like team co-ordinators and line engineers now organise cover themselves instead of passing it on to management. Walters says it marks a noticeable and welcome improvement in personal accountability. Non-production departments like purchasing and customer service also flex. Within controlled limits, they can now take pre-arranged absences for personal reasons and pay them back later. This has the advantage of making it easier to give the skeleton cover outside hours that a global business needs. But it has produced a pronounced difference in attitude; the survey rating for work/life balance has risen from 47 to 81%. Donaldson says it's the kind of freedom that most managers can take for granted, but the fact that the company was open to this on a controlled basis for 'other ranks' was a revelation. The new schemes complement another company initiative in annualised hours that started some four years ago. Edrington used to balance supply and demand with around 50 operatives who were generally not employed during the quiet months of January to March. "We had a group of skilled, worthwhile people who worked for us year after year but always got laid off at Christmas," explains Walters. "Because they didn't have a permanent contract, they had problems getting mortgages." They noticed they were beginning to lose the really good people who opted for stability elsewhere, even though it carried a lower hourly rate. The new scheme gave them that permanent contract. "When we don't want them to work, we still pay them. They accumulate a bank of hours and work it off during the year," explains Donaldson. Most are on 38-hour contracts but there are also 32 and 26-hour schemes. "It reflects our business need but also their personal choice," says Walters. "Parents with young families quite like the short-week option. When we get busy and there is the option of extra hours, they can choose to say no. We are asking for flexibility at the back end of the year but they get the benefits of permanent employment in return." Having run this system for four years, Edrington is now able to bring in a greater element of work/life balance. In busy times, the week can be extended to 43 hours but they can choose to take that extra time back with notice or even accrue extra holiday. Many manufacturers side-step the issue of more flexible employment because they can see an extra administrative load with no balancing benefit for the business. So it's worth emphasising that Edrington sees it as a definite two-way process with real payback in training and retention. "Since we gave permanent flexi-contracts, only two people have moved on," explains Donaldson. "And what it is giving us in offset training costs is significant." The company has also managed the process to complement its general improvement programme. It has recently invested in some high-speed production lines: "It suits us best to run these as much as we can. Others only need to run 2-3 days a week." So the new arrangements let Edrington extend its working hours at no extra cost. Donaldson admits it's not always easy to manage. The company also runs a limited number of part-time contracts to fit in with school hours, purely because Edrington recognises a duty to support parents with under-fives. "When you have a business to run you can't be all things to all people. But with part-time contracts, flexi-contracts and trials in work/life balance, we are doing a lot to help the individual. And it's going well. It's a fast moving plant but our customer service levels are 99% OTIF and we have driven our costs down dramatically over the years." And it's worth noting that Edrington's profits are up by 8.6% this year. What price flexibility now?