Executive Insights - October 2007

Ambrose Linn
Treasurer
HKCCA

Work-Life Balance Initiative -

Minimising the Need for Overtime

OVERVIEW
Ok, here’s the deal. Obliterate overtime for 90 per cent of your workforce, reduce them to a 48-hour week, ensure those employees are earning about the same for fewer hours, and come out smiling as a business. It’s feasible. One year ago the Hong Kong wing of express firm TNT Hong Kong achieved SA8000 certification, a global social accountability standard for decent working conditions, developed and overseen by Social Accountability International. In this city, fewer than 20 firms have SA8000 certification, which is seen as a quality standard by clients but has stringent standards for its members including a set number of working hours for employees. TNT Hong Kong committed itself to minimising the need for overtime by increasing efficiency and producing incentive schemes for its staff. It wasn’t cheap to implement but the
payoff is that when bidding for contracts, clients value the SA8000 standard.

“The sound corporate spirit, company health and staff productivity all start with the right work-life balance.”

Ambrose Linn
Managing Director

ACTION
The Programme Features:
*Maintaining SA8000 certification.

*Computer hardware and software to implement programme to minimise overtime, implement roster and monitor staff.
*Effective allocation of resources.
*Incentive scheme for employees to achieve maximum efficiency and compensate for loss of *overtime pay.

Work-Life Balance in Hong Kong
Reducing Working Time
Case Study
Critical Success Factors

The programme was driven by first and second line management who showed a commitment to pursue the target within the general guideline of 48 hours per week. Logistics staff also going for the incentive scheme to make up for no longer getting paid for overtime.

CHALLENGES & LEARNINGS
A hindsight factor in terms of learnings is that senior management at TNT Hong Kong would have spent more time on planning and ensuring resources were more cost-efficient. Having to revise a budget involving part-timers, resources for the incentive scheme and software and hardware acquisition has been challenging for the bosses. In Hong Kong, fewer than 10 operations personnel made adverse comments about the new working conditions. Concerns about a negative impact on earnings were alleviated once the new incentive scheme was up and running.

IMPACT
*Clients value SA8000 when TNT Hong Kong bids for business.
*Better work-life balance for employees and more time for training and outside activities.
*Employees take it as enhanced benefit and feel that management is taking better care of them. *Sick leave and absenteeism reduced by half as a result of this initiative.

TNT Hong Kong has more than 400 employees in Hong Kong, two thirds of whom work on the operations side. In 2006, TNT Hong Kong decided to standardise normal working hours within the general guideline of 48 hours per week. This programme took six months to implement. It involved purchasing computer hardware and software, including a monitoring system for operations staff on shifts, to ensure that they worked within their hours. The hardware and software bill came to just under HK$1 million. The long-term cost impact is significant and for this year was estimated at just under three per cent of EBIT.

Costs also include part-time staff to ensure the full-timers get to go home. The average working day for office staff is now 9am to 6pm with the office largely empty by 6.30pm. Office workers are issued with staff cards to log them in and out. If a worker feels there is a need to do overtime to finish a task, it needs to be discussed in advance with a supervisor and in if the circumstances require it, the overtime is allowed.

On the operations side, it has been more difficult. It’s a 24-hour operation, so managers have to assess how to make shift times more effective, with a lot of commitment from managers on how to ensure that the work could be done with maximum efficiency in a shorter time. So that operations staff would not feel the pinch of lost overtime earnings a series of incentive schemes were introduced with target incentives to push for high productivity. The net result has been that the incomes of operations staff members are largely the same as they were, but for fewer hours.

At the end of the 6 month implementation process, TNT Hong Kong then held a launch event inviting all customers, to ensure that they knew that the firm was SA8000 compliant.