Examine your labor efficiency

May 28, 2009

Hello northeast Ohio dairy farmers.

With the financial crunch being experienced in the dairy industry, many farms are analyzing every aspect of their business to see where money can be saved.

Labor efficiency

One area farm managers are examining is their labor efficiency. A variety of research surveys have stated the number one issue facing businesses is finding and keeping good employees.

Many employers would be shocked to learn that good wages and job security are not necessarily the ultimate motivators of employees.

A study conducted by George Mason University showed the top three motivators for employees were interesting work, appreciation and feeling in on things.

Surprisingly, good wages only ranked fifth. It is not unusual for a farming operation to experience a 25 percent turnover rate of employees.

Some turnover is actually good. No one is perfect in hiring employees. Mistakes happen and there are just some employees that you will never be able to motivate to complete job responsibilities efficiently and according to your farm’s operating procedures.

While some employees are busts, it is important for farms to develop strategies to reduce employee turnover.

Several costs

Turning over employees has several costs. These costs include: separation costs for the former employee, recruiting costs for new employees, interviewing time, administrative work associated with a new hire, training and supervisory time and overtime pay for employees who have to fill in for the departed employee.

There is also a cost for lost production associated with getting a new employee up to speed with their new job.

Sarah Smith, an organization leadership supervisor specialist at Purdue University estimates a loss of $2,000 to the business for each time you have to replace a farm employee.

Strategies

So, what are some strategies to reduce employee turnover?

– Take time to hire better qualified employees (you get what you pay for).

– Make sure to check references on prospective employees.

– Establish a training protocol for new employees.

– Develop an employee manual.

– Have job expectations clearly defined for employees.

– Develop goals with each employee.

– Use a probationary period for all new employees.

– Place employees in jobs they like.

– Have flexible employee compensation programs.

– Give employees an opportunity for time off that fits their personal obligations.

– Hold regular staff meetings to discuss farm issues, goals and operational strategies.

– Several dairy farmers could share one or more relief milkers or seasonal labor.

– Conduct periodic worker satisfaction surveys.

– Have clearly defined grievance policies.

– Conduct exit interviews to determine why employees are leaving.

– Invite your Extension educator or other key farm adviser to complete SWOT (strength, weaknesses, opportunities and threats) analysis of your farm employee management system.

Right employees

Chuck Schwartau, regional Extension educator in Minnesota shared that having the right employees (family and non-family) has several benefits including: increased operational efficiency; more owner/manager time for marketing, pricing and financial activities; an increased likelihood of completing tasks on time; more efficient use of capital and overhead; increased production for profit; more opportunities for growth; reduced stress and pressure; increased flexibility of time for leisure, health, family activities and a safer work environment created by better trained and skilled workers.

I would encourage you to take time to consider revamping your employee management plan.

Having the right employees, developing a good employee management program and keeping hold of key employees can save you money and help your business run more smoothly.