(x-post) Production management issues - $600K annual/9 full time employees

[msturtle]

Hello all. I currently run a local service based business that has 9 full time employees and will generate $600K top line with a profit of roughly $90K this calendar year. I conservatively expect us to hit $900K-$1.1MM next year (if I can solve our production issues). Sales have been great this season and we are unfortunately turning down work left right and center because we are having issues producing our work. Our employee turnover is high (1-3 new employees per month consistently) and production quality has been slipping. I am starting to get frustrated with our lack of consistent production, lack of consistent quality, and the overall day to day stress caused by our production issues. I am not an operations style of person, I well prefer marketing and sales and if I could focus on that solely, I feel we could grow much quicker. As we are a seasonal business, income drops substantially through the winter, and moving into the winter, hiring an Operations Manager does not seem feasible this season. That is the plan for late winter/early spring of 2020, however. With all of this being said, and I know that it's fairly vague, does anyone have any experience/recommendations on how to effectively manage production better? I will go more in depth for whoever asks if it helps to give advice. I understand this is relatively vague. Just looking to start a dialogue, I guess, in hopes something can spark some ideas! Thanks!

 

[cedd660]

@msturtle I’m in hospitality and have a similar churn in employees. Have you considered piece rate pay? It was originally invented for manufacturing, paying employees by the piece produced. I use it in hospitality paying by the unit cleaned, and it is a natural controller to off-season payroll. It promotes greater production too because the only limit to income production is how many pieces you can produce in a work day. I would try piece-rate and assign a lead to inspect the manufactured parts as they get completed or randomly. For flawed pieces in my state at least you can exclude piece rate payment on it as long as you’re still paying above minimum wage for the work day. My workers make ~18.50 per hour and we have a lower housekeeping payroll than companies 1/5 my size on hourly. Love piece-rate.

 

[igrace]

@cedd660 Safety is a bigger concern with piece-rate in the manufacturing realm. 100% a bad idea when you have people making $12-$15 an hour operating equipment that costs $250,000. They will try to take shortcuts, they will rush, they will forget something, they will cost you money before they make you money.

 

[msturtle]

@cedd660 Yes, I am considering implementing it at the start of next season. How did you go about implementing it? Were your staff hourly before?

 

[audreyl]

@msturtle Perhaps you are paying too many people too little?

Could you consolidate the crews and raise wages, or do you just have to have laborers to do the job?

Anyone you would consider promoting from within to handle the ops?

 

[akidomaster]

@msturtle Problem right now is that the job market is too hot. Turn over is the problem and the majority of the labor pool are the worst employees that keep getting recycled into it.

Try to get a core team on 3 guy

 

[dave987]

@msturtle Obviously an operations manager should be priority number one once you hit the busy season. It sounds like not having such a person is costing you money.

It's hard to offer any specific advice, but a few questions:

1. What do you think is causing the employee turnover? Have you asked them through an (informal) exit interview?
2. Who is responsible for training these new employees? I once ran into a situation at my company where we had repeated turnover in one department and it was like a game of telephone. One guy who left had taught someone else who had left who had taught someone else, etc but at no point were there specific operating procedures and the way work was being done had significantly degraded since the original person left because the new people weren't properly trained.
3. You mention lack of consistent production and lack of consistent quality. Having up to a third of your staff turn-over is going to cause some of these issues, particularly if there's not a senior person managing production, but what are the specific issues slowing down production?

Do you have all the raw ingredients in stock, does all the equipment work, do your employees have specific tasks they are assigned each day, and if so which tasks are causing the problem? You don't need to answer these ones, but that's the way I would think about it.

 

[msturtle]

@dave987

1. Lack of training, small labour market, lower wages? Most of them don't have exit interviews. For example, had two employees get in a fight this week. One quit on the spot (we were ready to fire him anyways), but he never came back, so no option for an exit interview. Now, that was an anomaly, but most seem to leave and never be heard from again. They work a shift or two and then no show, no call. After three days we assume they quit and they are issued an RoE.
2. That is an area that I am realizing I am severely lacking in. I send them out with an experienced crew and the crew is expected to train them and go over the training checklist, but it is very informal. I feel like I have that game of telephone going on here now as well. How did you correct it?
3. Lack of training, lack of care?

 

[kurbatskiy]

@msturtle Sounds like an issue of low morale and probably compensation too low.... With higher compensation you will get better people or at least incentive the ones you've got. Higher compensation also helps with morale.