Flexible working is working

Posted on 10 Aug 2009 by The Manufacturer

Flexible working, and its recession-enforced sibling short-time working, has become firmly embedded in the national consciousness. Companies in every sector of industry are rushing to introduce schemes that allow their employees to opt out of the traditional five day, 40-hour week. Edward Machin explores this modern phenomenon.

A recent survey of working practices among FTSE 100 companies by telecoms company ntl:Telewest Business revealed that 69% of businesses have already taken steps to implement flexible working. in many cases maternity and part-time schemes often extend far beyond the statutory requirements. “The common perception of flexible working is still focused around public sector and ‘white collar’ office-based jobs, when, as this research shows, it is an issue affecting a far wider spread of businesses,” says Andrew McGrath, commercial director at ntl:Telewest Business.

More blue chip companies such as BT and accountancy firm KPMG — the latter widely praised for its dedication to employee relations, and winner of the Opportunity Now ‘City Award’ in 2007 — are implementing flexible working schemes as a means of increasing productivity, morale and staff retention, and not as an alternative to culling large numbers of its employees.

Conversely, the manufacturing sector is seeing more companies introducing short-time working schemes to avoid having to effect mass redundancies of its skilled staff, which would further lower both employee morale and public opinion towards an industry battered by the recession.

Vauxhall’s model runs well

In line with the strategies of UK-based automotive firms such as Honda and Toyota, in January Vauxhall Motors, the subsidiary of General Motors Corporation and one of the UK’s most storied vehicle manufacturers, implemented a raft of short-time working arrangements.

Faced with the dilemma, choosing between redundancies and cost saving measures in the form of reduced working hours, Vauxhall decided on the latter. Staff at its Ellesmere Port and Luton plants were required to take an initial 5% pay cut. Coupled with a 10% reduction in hours, employees effectively worked a four day week, with the plant “dark” on Fridays.

Similarly, the firm implemented working time reduction days at both plants, whereby staff were permitted to take two extra holiday days per month. Together with its down days, which employees are entitled to take off upon agreement, with the plant banking the hours for a future date, Vauxhall had implemented a comprehensive scheme to offset the threat of worker redundancies.

Central to the company’s decision was to retain the technical and highly specialised skill sets of its production line workforce. The car industry’s experience of past recessions — where the time and cost of re-training staff when the market bounced back was held as highly counterproductive — ensured that Vauxhall were anathema to making widespread staff culls. “As long as these agreements are in place, we will not go into forced redundancies,” assured Hans Demant, managing director and vice president of engineering at GM Europe at the time.

Vauxhall maintains that these implementations have been met with praise by factory staff. Given that the only viable alternative to a reduced hours scheme is to make redundancies, that seems reasonable. Faced with the option of unemployment on the one hand, and a reduced shift pattern on the other, many staff may feel fortunate to have work at all, given the climate.

Due to the success of its initial cost saving measures, Vauxhall floated the idea of a staff sabbatical, whereby plant workers were offered a six month period of holiday on two thirds pay. The scheme was met with widespread disinterest. To its credit however, the firm did not pursue the strategy in the face of staff apathy, continuing instead with its agreed programme for effective cost savings.

Such foresight has proven beneficial for Vauxhall, with production due to begin at Ellesmere Port — which employs 4,000 staff — on the next-generation Astra later this year. Crucially, staff will revert to full a three shift working model, validating the company’s decision to retain its workforce in challenging economic conditions, a lesson UK industry would be foolish to ignore.

Beyond car makers

Businesses across the manufacturing sector are employing flexible working arrangements, regardless of size or turnover. Those firms with a smaller revenue and staff base are arguably more in need of schemes to retain their core, highly-specific workforce.

One such example is Alexander Binzel UK, the Warrington-based subsidiary of Abicor Binzel, which provides dynamic welding and cutting technologies for automotive manufacturers, with clients including Ford and GM Vauxhall. Predictably, given the precarious state of the whole industry, managing director Steve Hallows was forced to decide upon a strategy of cost reduction, with one option being the implementation of a redundancy package for a number of the firm’s thirty staff.

However, consultation with David Readman, a specialist with Employment Practice & Law, an employment consultancy firm, led the company to retain its staff, but with the implementation of shorttime working arrangements. Hallows and Readman devised a proposal to enable Binzel to retain all its highly specialised staff, while concurrently making the needed budgetary reductions.

The proposal — a 10% decrease in both hours and remuneration — was put to employees in an open forum, with Hallows producing monthly reports thereafter, keeping workers aware of the company’s intentions at all times. Some months later, the required savings have been made and, coupled with – the seemingly requisite – high levels of staff morale, the short-time working implementations have ultimately proven successful.

With a big increase in flexible and short-time working models among UK manufacturers, a niche market for IT systems which facilitate altered and/or nontraditional shift patterns has emerged. One company catering to this need is Manchester-based K3 Business Technology Group, an SME which supplies Microsoft based business solutions for the manufacturing supply chain. In April, the firm released the latest version of its Equator human resource management system, designed to enable manufacturing and distribution companies with shrinking order books to maintain the nucleus of their skilled staff.

Equator’s Time & Attendance module allows for a plethora of shift patterns, including standard, rotational, flexi, continental, and night shifts. The software also supports flexible pay methods, annualised hours, time banking options, and flexi time.

“Businesses realise the value of the skills, knowledge, and experience of a local workforce, and that without them they will not be able to react fully to an economic upturn,” says Kevin O’Donnell, K3 HR development director. “With companies scrutinising their workforces to identify potential savings while balancing the need to retain skilled people, it is critical that they act on upto- date and detailed information.”

Flexible working – the future

Given the recession’s unforgiving global reach, flexible working is not a British phenomenon alone. Indeed, manufacturers across Europe have implemented reduced shifts. BMW has extended short-time working at its Dingolfing, Munich, Berlin, and Landshut plants, and the global technology and process partner Adval Tech Group has introduced similar patterns in the three manufacturing plants of its subsidiary Styner+Bienz FormTech in Niederwangen, Bern- Bümpliz, and Uetendorf.

While numerous UK firms have not yet embraced flexible working schemes — Corus, Gowrings, and Johnnie Walker, to name three large manufacturers that might have a case to do so — there remains a trend in the market towards such strategies, according to research conducted by the CBI Business Group and Harvey Nash.

But in direct contrast to the IT, accountancy, and financial services sectors, manufacturing implemented short-time working largely as a protective measure borne out of financial necessity, and not an esoteric exercise in blue sky corporate thinking. Forcing flexible working mandates on certain manufacturing processes would often be counterproductive, or impossible – workers on factory production line simply cannot work remotely. It would be incorrect, nonetheless, to say that that manufacturing cannot use many of the advances in flexible working being made in other sectors.

“Remote working, improved collaboration, and richer communication networks in the supply chain will feature centrally in the strategies of manufacturers seeking to protect their companies from the effects of future recessions,” says Brian Condron, business development manager at communications systems integrator, Affiniti. By highlighting manufacturers’ research and development processes, Condron asserts that the application of general flexible working principles can be used to minimise the product development cycle. And although the necessity for short-time working patterns indicates, in the clearest possible terms, just how hard Britain’s manufacturing sector has been hit by the global downturn, those firms that implement flexible working directives in more office based parts of the business like R&D will be placed at a distinct advantage, once the green shoots of recovery finally emerge.

While for many an imperfect compromise, flexible working has a future in manufacturing. “While pay and recruitment freezes should disappear as the economy recovers,” says John Cridland, deputy director-general, CBI Business Group. “The spirit of flexibility and the willingness of many staff to engage positively with employers on these issues will hopefully be a more permanent benefit of the UK economy.”