Improving Productivity Reduces a Factory’s HR, Onboarding Costs

Improving productivity throughout your operation, especially on the manufacturing floor, can have an amazing ripple effect throughout your entire organization.

A few weeks ago, I wrote about how we were able to improve productivity by measuring our results on the floor and in our accounts receivable department. We were able to save a lot of money by reducing the amount of rejects, as well as the number of erroneous invoices we were sending.

An additional benefit we found was that we were able to reduce our overall HR and onboarding costs through productivity improvement. There were two ways we were able to find it:

  1. By reducing the need to hire additional people.
  2. By changing how we onboarded people and the materials we used.

For example, by fixing the rejected conduit problem (read this), we were able to move to operators whose whole job had been to try to salvage all the rejects. By solving the initial cause, we no longer needed them in that position, so we moved them to two other open positions.

Improving productivity on your factory floor can also reduce HR and onboarding costs.That meant there were two fewer people we had to hire, which saved us two extra salaries we were going to have to fill.

But it also meant that HR could reduce its hiring load by two associates. They already had to fill a lot of open positions, and this reduced their need by two.

This also meant they had to onboard two fewer people.

If you don’t work in Human Resources, you probably don’t have any idea of the amount of paperwork that goes into hiring and onboarding someone. It’s staggering! You have to share all the organizational manuals, give them nondiscrimination and harassment training, and get pre-employment physicals and drug screenings.

That can all get expensive and time consuming — it’s especially painful if you have an employee that leaves right after they’ve been onboarded — so if you could reduce that wherever and whenever possible, you’d take the opportunity.

Just by not hiring people because we moved them to new positions saved us a lot of money.

But that wasn’t all HR was able to achieve: We looked for new productivity improvements there too.

What Improving Productivity in HR Looks Like

For one thing, we measured how long the onboarding process took and what resources it consumed. At that time, all organizational manuals were printed out and bound in big 3-ring binders, which we then gave to the new associates.

So we turned the whole process into a paperless one. First of all, we converted the manuals to PDFs and loaded them onto tablets for the associates to read during training. Plus, the associates had access to the company intranet to read it further. They received all the information that way, and then verified and validated that all the information was on the tablet. That was then uploaded into the HR system, so we could track that they had received everything.

You can imagine how much time and effort was saved just in doing that.

Additionally, there is a huge amount of documentation that’s required to onboard an individual. There are federal and state forms (HIPAA, EEOC), IRS forms, medical requirements to ensure they’re physically fit and are able to perform the function, education and training verification, training in the organizational culture, anti-harassment training, and so on.

There’s also getting them registered in the payroll and HR system so they can be recognized, set up on a computer, given a password, and so on.

It might take up to 8 hours to onboard somebody, and that excludes the costs of the 8 hours you’re paying them just to do it. (Probably the most frustrating thing for an HR person is when someone you’ve onboarded doesn’t show up for the first day.)

All told, the pre-automated training itself took nearly 8 hours, but it took almost five or six times that amount just to prepare and do the actual onboarding — the preparation, the printing, signing, and filing. We were able to cut our prep time down to 20% of the original time, which was 8 hours. Any time you can reduce your operations time and overhead by 80 percent, you take it!

By going paperless, we were able to get consistency and accuracy in the information we collected from new associates. We could have them fill out one main form with all of their information, have them electronically sign all the individual forms, and never have to print a single piece of paper. And by automating everything, we eliminated the chances of forms being misfiled and mislaid.

We were also able to reduce a lot of errors in the documentation because the associates themselves were responsible for typing in their own names, social security numbers, and so on. We had problems with typos and transposition in the past, and this eliminated all those problems as well.

We saved countless hours and several hundred thousand dollars per year by switching to a paperless onboarding method.

I’ve been a manufacturing executive, as well as a sales and marketing professional, for a few decades. Now I help companies turn around their own business. If you would like more information, please visit my website and connect with me on Twitter, Facebook, or LinkedIn.

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Author: David Marshall
I’ve been a manufacturing executive, as well as a sales and marketing professional, for a few decades. Now I help companies turn around their own business. If you would like more information, please visit my website and connect with me on Twitter or LinkedIn.