L Cornish road haulier's Iroductivity challenge
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CORNWALL last week I had the lite experience of "sitting in" on a proivity deal as it was put to the staff of Falmouth Transport Co. Ltd. Joumaspecializing in industrial relations topics often called upon to describe fully ked out productivity bonus plans. se of large companies are sometimes ten up in glossy brochures; smoothly uasive public relations men shield e most intimately concerned—the niating managers and the grass roots ■ iir force—from the inquisitive aions of reporters.
.t Falmouth I was present at the crucial ting when the productivity plan pee d by consultants was put to the work e. For some hours before and after the ting I was able to discuss the backid with directors of the company and Mr_ Ian Howard (of Howard Pack and Associates Ltd.).
Io one can guarantee the success of a luctivity deal at its inception. There are ty pitfalls to surmount in the coming iths. Reasonable give and take must be Arn by both sides. I shall be very ppointed if in six months' time, when I e to renew acquaintance with the corny, the results have not equalled the !ctations of all concerned_
alrnouth Transport Co. Ltd., of Pon-den, is almost an institution in Corn. Mr. Owen G. Richards, tbe managing ctor and fleet engineer, gave me a Mating insight into the operating probs of the past and the present. He is soon etire, after 47 years service; the recollecs of such men deserve to be recorded in Iii.
iallenge
)ne thing that stood out from my talk Mr. Richards was the close inter-action 'alnaouth Transport with the local indusand community. Cornwall is a county has known many vicissitudes. Tin ing occupied some vehicles in the :Mies when the company operated bsidy" Dennis vehicles equipped with tyres and weighing as much (5 tons) heir payload. Four-masted schooners in Richards' lifetime contributed to the sperity of the port of Fahnoutlt—now Ly depressed. Changed patterns of clistrion continually challenge the company. song established as warehousemen offera stock holding and re-delivery facility, many nationally known products have, over the years, been dealt with. The increase in population from 341,750 to around 14 million during the holiday season indicates the scale of the distribution and transport problem that firms such as Falmouth Transport take in their stride.
Currently, Schweppes products are held and distributed from Ponsharden. Cattle foods and fertilizers are handled for national firms. Market produce and sea foods are taken to London markets. The company operates a smalls delivery service in conjunction with the Packham delivery service. A small tipper fleet is operated. Quite evidently, if Falmouth Transport disappeared its necessary work would have to be performed by others.
Shot in the arm
Coast-based road hauliers in areas remote from large industrial centres have not found it easy to find profitable work in recent years. Although Cornwall is flooded with summer visitors, congesting the narrow roads and markedly affecting the food distribution pattern, industrial customers are thin on the ground_ Cornwall sadly needs the shot in the arm that thriving industries would give it. Tipping rates, especially council rates, are very low. Return-load traffic from London and the Midlands to Cornwall is erratic; by no means all returning vehicles are loaded.
It can be seen that Cornwall is not an ideal environment for a road haulage business. Profit margins are low or non-existent. A business such as Falmouth Transport may be quite indispensable in its local context. It does not follow that its management automatically derives from it a reasonable margin of profit. The prolonged illness of one or two key figures in the business in recent years—a feature of the situation at Falmouth—produeed a serious situation.
The twenty-odd drivers of Falmouth Transport have not been able to inflate their basic pay with substantial overtime. Working hours of from 48 to 53 have yielded take-home pay of around £14. Little enough, you will agree, in present circumstances.
Their patience—or their wives' patience —was not inexhaustible. Employee / management relations have been exceptionally friendly for many years. The drivers knew that a strike might produce a little more money; it would be just as likely to force a close-down. The management accepted that the f14 take-home pay on average was inadequate. What was to be done?
The company has had a long association with A. Packham Ltd., the Highbury-based company with depots in the South and West. Mr. Philip Packham was an external director of the company, carrying on a connection started by his father. When the board of Falmouth Transport realized that Ian Howard, chief executive of A. Packham Ltd., planned to set up a consultancy with Philip Packham and some former colleagues, the directors decided to face the unwelcome but probably justified expense of consultants' fees.
When I visited Falmouth Transport Ian Howard had been researching for rather more than a week. He had produced two reports giving his detailed analysis and recommendations for the board's consideration. That so much could be accomplished so quickly surprised me when I read the principal report—packed with closely reasoned argument supported by figures. One is familiar with the constant assertion that productivity planning is a very slow job—and in the sense that it is a continuing process this is, of course, true. It must, I think, be accepted that the typical small haulage concern does look for rapid results within months and not years—which is why the consultants' proposals for Falmouth Transport are so exciting and relevant to such a large proportion of our industry.
Schemes 'nursed'
Most productivity schemes are "nursed" by a representative committee of employees and management. When Falmouth Transport directors had decided in principle to proceed with a productivity plan they encouraged the establishment of a committee. At the same time all employees were advised by letter signed by Mr. 0. G. Richards, the managing director, that HPA had been engaged "to see if a good productivity scheme can be worked out which will have the enthusiastic support of all concerned".
The letter was accompanied by a questionnaire and the recipients were urged to complete this frankly on the assurance that the replies would be destroyed after analysis by the consultant. Any employee wishing to talk personally with Mr. Howard was invited to do so. The staff were left in no doubt that the management were fully in sympathy with the method of approach proposed by the consultants. The last sentence of Mr. Richards' letter said: "As this is very important to us all will you please give the answers your most careful attention."
The questionnaire called for information of a fundamental nature relating to name, take-home pay and job description. It asked recipients: "Besides the introduction of an incentive scheme what else could be done to make your work easier or help you do it better?" It queried whether other possible improvements could have a bearing on the company's efficiency. It asked the positive question: "Do you personally think that by paying more for results at least half the staff concerned could do more drops or more miles per day or make second journeys if their vehicles and paper work were ready?" And the final question: "Do you gets orders from more than one person? If so who?" was obviously designed to reveal operating deficiencies.
Mr. Howard's examination of the performance of the drivers had convinced him that there was great scope for more effective organization and greater effort. In some examples of work performed it appeared that the operating efficiency was as low as 60 per cent. Clearly, when virtually all the customer rates were marginal, immediate action was called for to put the situation to rights.
The analysis of the questionnaires was most revealing. It says much for the good sense of the management that they were not afraid to have their past actions and policies probed by the questionnaire. It was apparent that vehicles were sometimes incorrectly scheduled—there were instances of two or more vehicles being sent to the same collection point. Some drivers admitted frankly that some "passengers" needed to be weeded out. Delay in waiting for loading tickets was noted. The absence of the storeman at critical times was stressed. There was a call for more authoritative management with more clearly defined lines of authority. A whole range of points was made touching on such matters as vehicle cleanliness, the detailed loading arrangements, drop sizes, and so on.
'Crunch' meeting We come now to the "crunch" meeting when with virtually the whole staff of the company present Mr. Howard explained the basis of the productivity scheme he had worked out.
He stressed how useful the questionnaire analysis had been in pin-pointing weak points in the company's organization. The drivers were told: "You know your car running costs—you ought to know your vehicle operating costs." The efforts put forward by the drivers could make or break any company in road haulage. Good relationships with customers, the use of common sense when on delivery rounds or long-distance work and close liaison with traffic office were called for.
The key points were hammered home by means of poster slogans: "Every driver is a branch manager." If all worked together to help produce more revenue there would be more profit out of which to pay better wages. the drivers were told categorically that their vehicle operating costs would be revealed; that their ideas for more efficient operation would be welcomed by the productivity committee; that if the same work could be done by fewer vehicles there would be a tremendous saving in overhead costs.
A detailed analysis of what constituted the firm's overheads was given. Items such as rates, water, electricity charges, fitters' and storemen's wages, staff salaries, stationery, postage, vehicle repairs, cleansing materials, advertising, bad debts, audit fees, legal and consultants' fees, claims, the standing costs of under-utilized vehicles, depreciation of furniture and fittings and so forth were illustrated.
Administration The cost of operating the company's two fork-lift trucks was discussed. Vehicle insurance costs—£63 to £180 a year and road fund taxes, £70 to f513—were mentioned. The provision made for the purchase of new vehicles ranging from £300 to £.700 per annum was stressed. Running costs were itemized, vehicles ranging from 4d to I Id a mile plus tyres and tube costs.. 1.13d to 2.66d per mile. The drivers were left in no doubt at all that their own contribution to efficiency was crucially important.
The administration of the scheme was initlined. A folder for each driver would record vehicle earnings and expenses. "At any time you can see how your account is going. When the scheme has been in operation for a few weeks you'll be able to work out at any time what you have earned."
The productivity committee was not an exclusive body, said Mr. Howard. Anyone could join in its discussions every month. At every meeting notes would be taken so that any staff not present would know what had happened.
The contribution that could be made by the clerical staff was examined. Economy in the use of phones was a big money saver. Their prompt attention to all documentation matters was essential. All the staff were reminded that some jobs were much more profitable than others. The rough must be taken with the smooth. Some drivers, because of specialist knowledge or experience might tend to get more bonus-earning jobs than others. The importance of teamwork was underlined again and again.
It was made plain that the productivity committee as such would not give orders but one slogan did evoke some very modern ideas of industrial democracy. "Management controls by giving instructions: NOW employees will guide management so that they give the RIGHT instructions."
I will return to this most interesting productivity plan in a future article, outlining the basis of the bonus sharing arrangements.