The allure of annualised hours

Posted on 17 Jun 2013

Annualised hours have come back into fashion somewhat, with the flexibility of the system becoming attractive to companies again. And its not just seasonal business that are seeing the benefits.

Neville Henderson, senior consultant at Pasfield Curran, and upcoming speaker at the Flexible Workforce Conference 2013 explains why a range of companies are utilising an annualised hours system.

Henderson says that the premise of annualised hours is to create a flexible system, planned well in advance, that is moulded to the demands of the business.

“You match the true demand of the business rather than trying to manipulate holidays all the time. You’re doing a lot of upfront planning to match the knowns in advance, at the start of the year, where as normally people do firefighting or not matching the seasonality at all by having too many people when you don’t need them or not enough when you do.”

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Used all over

Henderson is keen to note that he has implemented annualised hours across a range of industries dispelling the misconception that the system is just for certain sectors.

“It works in most industries, even industries which aren’t seen as seasonal to start with because it allows for flexibility which you don’t have to immediately have to payback.

“You don’t roster all the hours, you keep some in a bank called ‘reserve hours’, it changes the pulls on individuals because a traditional system almost incentivises people to work slower so they get the pay back at the end of the week, or whenever it is, in overtime payments.

“If you’re keeping some hours back and productivity isn’t up to scratch, people will work more hours out of reserve hours, which are paid in advance.

Neville Henderson, Senior Consultant, Pasfield Curran

“What it’s doing is incentivising people to get out higher productivity levels. Obviously you need quality measures there as well, but you actually make the pulls on the individuals the same as pulls on the business. Get product out for the lowest amount of time, to the right quality.”

Henderson adds that all the annualised hours schemes he has put in place have basically eliminated overtime.

This is a big selling point to companies and whilst there is the option of buying additional reserve hours (effectively overtime) when a company gets a surge in demand, this rarely happens and is more of a backup measure than a regular feature.

Working with employees

The senior consultant admits it took time to iron out the problems in annualised hours systems especially as early systems were not planned properly.

Now Henderson believes that if you can get workers to understand and contribute to an annualised hours system, you can start reaping the rewards.

“All businesses are wary of change, and it’s been in favour, gone out of favour and come back into favour, the annualised hours approach. There were systems put in earlier on in its life where they weren’t planned correctly.

“If it’s done properly and it’s implemented in the right way, by working with the workforce so they fully understand the reasons behind it. If they understand the incentives and are actually involved in coming up with the patterns themselves and how flexible the system is, and businesses are up front and actually let people know, I think they’ll get a much better scheme at the end of the day.”

Henderson acknowledges that there will always be resistance to change in any company but if teams can embrace the system then they make it work for them.

“You’ll get some individuals with whatever change won’t agree and there’s nothing you can do about that.

“There was somebody on a producing line where somebody didn’t want to work Saturdays because he was following Nottingham Forest at the time. The deal he came up within his team was that he would work more nights but fewer Saturdays and that worked well for that team. Because you’re planning a full year in advance, you can do that.”