Annualised hours are the default setting on our software.
Staff Scheduling & Staff Rostering Software: VisualrotaX
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C-Desk Technology
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Forecasting Labour Requirements
All organisations need a manpower plan and the essential prerequisite for any manpower planning is a statement of demand for the products of the organisation. Whether it is a Call Centre, a Maintenance department, a hospital providing surgery or a factory producing cars, they all need to know the demand for their service or product. This can be a known demand based on the orders received from customers or an estimated, forecast or expected demand. Sometimes, it is the ability to provide a service which creates the demand, or the demand for a service which creates the service. It is often the establishment of a delivery date and schedule that turns the demand into orders.The more accurate we can get in the forecast for demand, the more accurate the delivery date and schedule. There are many methods of forecasting the demand for a product and this is an area for mathematicians, statisticians, econometricians, marketing and operational research personnel. The more effort that can be spent on the subject of accurate forecasting, the more chance the organisation has of surviving and prospering. There are basically two types of product for most organisations, the first being a standard product produced in large quantities to satisfy a large reasonably stable demand, the 'bread and butter' side of the business. The other type of product is produced in fewer quantities to satisfy specific customers. These could be few in number but make a significant contribution to the total profitability. They could be a new market for the organisation. Forecasting demand for these is difficult. Forecasting for the first type, the standard product, is not easy, but various means have been devised, and the most obvious methods involve the assumption of persistence, that what is happening will continue to happen. Most mathematical methods involve looking at past data and making decisions based on the data and a measure of personal opinion to forecast the demand in the future.
The future can be any valid period of time, a day, a week, a month, a quarter or a year, or more. Having decided on setting the future demand for, say, a year, it makes sense to determine staffing levels for the same period. Hence, annual hours, which is a very efficient method of using manpower in production.
Annualised hours, what are they?. Why don't we quote them in our contracts?
We usually hire staff to work so many hours per week because
it's traditional,
it's comparable between companies,
we can 'visualise' the hours,
we can keep track of the hours worked in a week fairly easily.
C-DESK
Annualised Hours
Annual hours are a very efficient method of using labour, when the numbers are awkward. For instance, it is easy to visualise staff employed to work 40 hours a week when you want them to work 8 hour shifts. This averages out at 5 shifts per week, or 10 shifts/2 weeks, or 20 shifts/4 weeks, etc. Nice easy numbers to work with. However, pay negotiations often end in awkward numbers of hours per week, such as 39 hours, or 37.5 hours, or 36 hours. Or, you might need the staff to work 7 hour shifts, or 8.5 hour shifts. The length of the shifts should be those that maximise some element of the organisation, such as profit. The changeover period between shifts can also be important, so that the shifts on either side of the changeover are of different length, e.g. a night shift of 9 hours is followed by a morning shift of 8 hours and preceded by an evening shift of 7 hours. If all the staff share the shifts equally, the average shift length will be 8 hours, however if some of the staff prefer, say, the night shift, then the average shift length is not going to be 8 hours. This can cause problems! Why would you want unequal shift lengths? The usual reason is to have different staffing levels at different times and to be able to match the labour to the work load. e.g. a call centre operating 24 hrs/day might have most calls during the day and requires most of the staff to be available then, but still requires a minimum staffing level at other times. If you had equal numbers of staff on each shift but unequal work loads in each shift, then you are basically paying staff to do nothing.
If we look at a few examples, then we can assess the situation.
Example 1. Staff contract hours = 37 hours/week and you require the staff to work 8 hour shifts. This equates to having 37 shifts every 8 weeks. There is no exact equivalent for annual hours, the closest is 241 shifts of 8 hours.
Example 2. Staff contract hours = 37 hours/week and you require the staff to work 7.5 hour shifts. This equates to 72 shifts every 15 weeks. There is no exact equivalent for annual hours, the closest is 257 shifts of 7.5 hours.
In the above examples we have the staff hours expressed in hours/week and we require the staff to work shift lengths which are not exactly divisible into the contract hours. The reason we need to have this inequality is for efficiency and to maximise profit. If we have a look at the relative efficiencies, then we can assess the situation in terms of cash. If we assume in example one that the staff work 4x8hrs + 1x5hrs (which = 37hrs) each week, we lose 3 hrs productive labour per person per week, which is around 7%. In addition there can be the losses from idle production equipment during holiday periods. We also have the problem of continuity of staffing if there is a 3 hr gap every 5 shifts., We could have this covered by having other staff cover this period with another 5 hour shift and have a 2 hour overlap. This can minimise the production loss by only losing 2 hours for 2 staff each week, which is about 3% lost production. However, we have a problem devising a staffing schedule that will do this. The best schedule would be to have 10 staff operating 9 machines, but here we are allowing the staffing to dictate our production. From a pragmatic viewpoint, we would choose to close production early on one day. However, we could not do that if the production process had to be continuous, such as a chemical plant which could not be closed down, in which case, there would probably be an overtime payment of 3 hours per week to all the staff.
The problem with weekly hours is the inconvenience of having nothing but prime numbers to deal with when you are trying to deal with shifts. That is: 1-the number of shifts a person works per day, 2-is the number of daytime shifts, 3-is the number of shifts per 24 hours, 5-is the number of shifts worked per week, 7- is the number of days in a week, 9-is the number of days off whenever someone books a weeks holiday, 11-is the number of night shift hours, 13-is the number of day shift hours, 17-is the number of days off whenever someone books 2 weeks holiday, 19 & 23 minimum & maximum days worked per month, 29-is the awkward leap year problem, 31-is the number of days in most months. The problem of prime numbers is that nothing will divide into them. Solutions to staffing on a week by week basis are far from ideal. One answer is to organise staff over a larger length of time, hence staff are required to work an annual number of hours, but spread unevenly over smaller periods of time. But, you do need a computer to keep track of staff over longer periods.
Annualised hours would be the contract hours per week summed over the year. i.e.. 40 hours per week equals 2080 hours per year, ignoring leap years and that there are 52 weeks and one day in a real year. Take off the annual holidays and any state (bank) holidays, i.e. 5 weeks (25 days, or 200 hours). The annual hours to be worked will be 1880 (2080-200) hours. Now, you have to change the hours into shifts, i.e. 1880= 235 8hour shifts, or 188 10hour shifts, etc. A part-timer working 30 hours per week would have figures proportional to those above, but with a significant difference. This is the time allowance for holidays. These are individual to each organisation.
Let's go back to the full time employee, often they would like to negotiate a reduction in the working week, say to 37.5 hours. The problem of trying to incorporate a reduction in the hours of a shift from 8 hours to 7.5 hours is huge, but reducing the annual number of shifts by the equivalent is simple, we arrive at 220 8hour shifts, a reduce of 15 shifts over the year.
How to use annualised hours. Set up Visual Rota for the year (12 files covering a month each), assume the same staff stay for the year. Ask the staff for the next years holiday requests, or use the previous years holidays as a template. Allocate shifts to the staff ignoring the holidays. Use an average for each month of 21 or 22 shifts for a person working 40 hours per week in 8 hour shifts. Check the staffing levels for cover, and if certain times are overstaffed, concentrate these in the peak holiday times. Insert the holiday requests by overwriting the shifts. Check staffing levels and then start to move staff shifts to give the desired cover. In periods of serious staff shortages, either refuse to allow the staff to go on holiday or use agency staff or recruit new staff on special contracts.
If we look at a few examples, then we can assess the situation.
Example 1. Staff contract hours = 37 hours/week and you require the staff to work 8 hour shifts. This equates to having 37 shifts every 8 weeks. There is no exact equivalent for annual hours, the closest is 241 shifts of 8 hours.
Example 2. Staff contract hours = 37 hours/week and you require the staff to work 7.5 hour shifts. This equates to 72 shifts every 15 weeks. There is no exact equivalent for annual hours, the closest is 257 shifts of 7.5 hours.
In the above examples we have the staff hours expressed in hours/week and we require the staff to work shift lengths which are not exactly divisible into the contract hours. The reason we need to have this inequality is for efficiency and to maximise profit. If we have a look at the relative efficiencies, then we can assess the situation in terms of cash. If we assume in example one that the staff work 4x8hrs + 1x5hrs (which = 37hrs) each week, we lose 3 hrs productive labour per person per week, which is around 7%. In addition there can be the losses from idle production equipment during holiday periods. We also have the problem of continuity of staffing if there is a 3 hr gap every 5 shifts., We could have this covered by having other staff cover this period with another 5 hour shift and have a 2 hour overlap. This can minimise the production loss by only losing 2 hours for 2 staff each week, which is about 3% lost production. However, we have a problem devising a staffing schedule that will do this. The best schedule would be to have 10 staff operating 9 machines, but here we are allowing the staffing to dictate our production. From a pragmatic viewpoint, we would choose to close production early on one day. However, we could not do that if the production process had to be continuous, such as a chemical plant which could not be closed down, in which case, there would probably be an overtime payment of 3 hours per week to all the staff.
The problem with weekly hours is the inconvenience of having nothing but prime numbers to deal with when you are trying to deal with shifts. That is: 1-the number of shifts a person works per day, 2-is the number of daytime shifts, 3-is the number of shifts per 24 hours, 5-is the number of shifts worked per week, 7- is the number of days in a week, 9-is the number of days off whenever someone books a weeks holiday, 11-is the number of night shift hours, 13-is the number of day shift hours, 17-is the number of days off whenever someone books 2 weeks holiday, 19 & 23 minimum & maximum days worked per month, 29-is the awkward leap year problem, 31-is the number of days in most months. The problem of prime numbers is that nothing will divide into them. Solutions to staffing on a week by week basis are far from ideal. One answer is to organise staff over a larger length of time, hence staff are required to work an annual number of hours, but spread unevenly over smaller periods of time. But, you do need a computer to keep track of staff over longer periods.
Annualised hours would be the contract hours per week summed over the year. i.e.. 40 hours per week equals 2080 hours per year, ignoring leap years and that there are 52 weeks and one day in a real year. Take off the annual holidays and any state (bank) holidays, i.e. 5 weeks (25 days, or 200 hours). The annual hours to be worked will be 1880 (2080-200) hours. Now, you have to change the hours into shifts, i.e. 1880= 235 8hour shifts, or 188 10hour shifts, etc. A part-timer working 30 hours per week would have figures proportional to those above, but with a significant difference. This is the time allowance for holidays. These are individual to each organisation.
Let's go back to the full time employee, often they would like to negotiate a reduction in the working week, say to 37.5 hours. The problem of trying to incorporate a reduction in the hours of a shift from 8 hours to 7.5 hours is huge, but reducing the annual number of shifts by the equivalent is simple, we arrive at 220 8hour shifts, a reduce of 15 shifts over the year.
How to use annualised hours. Set up Visual Rota for the year (12 files covering a month each), assume the same staff stay for the year. Ask the staff for the next years holiday requests, or use the previous years holidays as a template. Allocate shifts to the staff ignoring the holidays. Use an average for each month of 21 or 22 shifts for a person working 40 hours per week in 8 hour shifts. Check the staffing levels for cover, and if certain times are overstaffed, concentrate these in the peak holiday times. Insert the holiday requests by overwriting the shifts. Check staffing levels and then start to move staff shifts to give the desired cover. In periods of serious staff shortages, either refuse to allow the staff to go on holiday or use agency staff or recruit new staff on special contracts.
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