Higher Productiviti NOW
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S. BUCKLEY, ASSOC MST T, ANALYSES THE REPORT OF THE PRICES AND INCOMES BOARD AND DESCRIBES A WAGE SYSTEM WHICH MEETS SOME OF ITS RECOMMENDATIONS.
THE need for increased productivity in industry is not new. Exhortations to this effect by successive governments have been a continuing feature of postwar years. Independently, efficient organizations have seen to it that such objectives have been rigorously and persistently pursued.
Now a new situation has arisen. With the advent of the National Board for Prices and Incomes the whole approach to productivity in trade and industry could change. What previously has been an internal problem for each industry to resolve can now be subject to scrutiny and published reports by an independent committee. And as operators, customers and independent parties alike were left in no doubt by Press, radio and television coverage on June 28, road haulage was chosen as the subject for the Board's first report. But now that the dust of conflict—and possibly with some confusion added—has subsided, the down-toearth road transport operator can justifiably ask: "What can I do about my own productivity now?"
Before attempting to answer this pertinent question a brief recap of some of the comments and recommendations on the scope for increased productivity within the haulage industry made by the Prices Board in its report are relevant. Throughout the eight paragraphs comprising the section of this report dealing with internal productivity, it is significant that drivers' hours and the closely associated subject of running times are the main topics.
Thus paragraphs 43 and 44 read: "The average lorry driver works longer hours than most other industrial employees, with an average of just under 57 hours a week, whilst in particular cases the number of hours can rise to between 60 and 70 a week. The reasons for this are not hard to seek. His rates of pay are below the average in industry and the lorry driver aims to make up in overtime what he fails to get out of his basic wage.
"There is a statutory limit of 11 hours on the amount of time that the driver can spend at the wheel each day, but the industry's standard working week is only 42 hours. The lorry driver tries therefore to secure schedules which will enable him to work 11 hours a day for five or six days a week, thus earning overtime at the rate of time and a quarter for the first two hours beyond 42 and time and a half for the rest. This was referred to by one spokesman as the '11-hour complex' in the industry.
"No one pretends that the driver is at the wheel for 11 hours a day; the actual travelling time is a good deal less, and everyone is agreed that there is a considerable disparity between real working time and apparent working time . . . we regard it as having serious economic and social implications. It leads to the under-utilization of capital equipment. By the same token it makes for the greater employment of capital in the road haulage industry than is really needed, thus bringing down the rate of profit expressed as a return on the capital employed. Finally, as far as the driver is concerned, it places a premium on spinning out time rather than on rapidly accomplising a job, and is a deprivation of leisure."
c.16 The Board, however, recognizes that it will take time to reach a national solution. Meanwhile, it considers the urgent need for reform presents an overwhelming case for immediate action. The only way to early results, the report continues, is for individual companies to negotiate agreements which would finance increased wages out of higher productivity.
So, for the time being at least, the problem of increasing productivity, despite any adverse prevailing conditions, remains where it has always been—with the individual provider of transport at day-to-day operational level.
Bone of Contention
Drivers' hours have been a long-standing bone of contention within the haulage industry. The former wellworn Section 19 of the Road Traffic Act 1930 (now Section 73 of the consolidated 1960 Act) added a legal twist, and the machinery of the associated statutory Wages Council —unrelated to productivity as the Prices Board ruefully observed—has not helped towards higher efficiency. Moreover, there has been a double disparity—first, between a basic haulage wage rate barely two-thirds the current national average wage packet, and, second, between actual and apparent working time.
At the outset, therefore, there is a background of unreality facing any attempt to follow up the Board's recommendations on productivity. Even given that rare combination when not only are responsible operators and drivers resolved to work within legal requirements governing hours at the wheel, but—equally important today— congestion on the roads and the delays at terminal points do not nullify this intention, the present system of wages payment still does not engender efficiency.
The greater experience of localities and customers which, for example, many long-service drivers have, should benefit both employer and employee alike. In practice, such benefit can be lost if this greater experience and possibly effort leads only to a smaller pay packet when earnings are reckoned solely with regard to hours worked.
Admittedly in some retail delivery work drivers' pay packets can reflect the level of sales as well as hours. But in a far greater proportion of road transport operation such a policy cannot be applied. As a result it can happen that a conscientious driver finds that genuine effort is not truly reflected in the weekly pay packet.
At the same time the experienced operator, with the laudible intention of achieving high vehicle utilization, will devise schedules to reduce to a minimum the incidence of standing costs as a proportion of the total cost of operation. Apart from pruning (if still possible) the individual items which comprise standing costs, the fulfilment of this intention is more likely to lead to higher average vehicle mileages. Moreover, with working hours having close, though not necessarily direct, relation to mileage run, driver co-operation in this exercise could be expected if only in self-interest.
Unfortunately, this is only one more example of the
fallacy of concentrating on only one aspect of vehicle Operation, albeit of importance in its own right. No one will dispute that the reduction of operating costs to a minimum is a necessary and justifiable objective. Seemingly this would be achieved if the operating cost per mile was itself reduced.. This, however, is not an objective in itself. Where ancillary transport is concerned, the cost of providing such a service only has meaning in relation to the standard of service provided and the extent to which it meets the particular demands made on it,
Likewise, whilst the professional haulier is very much concerned with a low cost of operation, the final objective is the amount of earnings per vehicle. Admittedly, the less there is to deduct from total revenue on account, of operating costs, so much the better. But additional mileage run is not necessarily reflected in earnings. Obviously this applies where a high mileage is achieved only at the expense of a proportion of • empty running, but less obviously such mileage could also only be achieved by the doubtful practice of moving traffics at only marginal profit levels.
Just such a situation confronted a Derbyshire operator in 1958. As the man concerned—Mr. Reg Knowles, of Tansley, near Matlock --declared, when one starts to lose money, any business man worth his salt is determined to find out why. At that time some of his vehicles were averaging welLin excess of 1,000 miles a week, but when all expenditure had been accounted for the actual earnings proved to be derisory. As a side effect of this unhealthy situation, Mr. Knowles •noted that one effect of the carriers' licensing system was to virtually compel a man to continue operating.even at a loss to justify the terms of his licence, bearing in mind that the goodwill of a haulier is involved when the time for licence renewal comes round.
Beneficial System Evolved
After a thorough examination of all aspects of his vehicle operation, a system has been evolved -which Mr. Knowles claims to be of benefit both to the operator and the driver by way of increased earnings in relation to mileage run. Since the implementation of the new system. average weekly vehicle mileage has been reduced from 1.200 to 600; but very few miles of the 600 are now operated empty.
The basis of this system of operating commercial vehicles is first recognizing that payment of drivers' wages purely on the basis of total hours unrelated to useful work done by the vehicle is fundamentally inefficient. Also, any method of payment provided as a substitute must he so devised that both employer and driver have joint objectives. In other words, that fatal " we-and-they " complex which bedevils so much of Britain's industrial life today must be replaced by genuine joint action in which improved productivity benefits both parties equally.
However, any new system of remuneration of road haulage drivers must nevertheless still recognize the continuing existence of the minimum bernuneration laid down as a statutory requirement by the Road Haulage Wages Council. Accordingly, there is built into this system a provision whereby a driver will be paid at least this amount should the unlikely occasion arise where, because of some exceptional circumstances, his actual earnings calculated according to the new system are in fact lower than the statutory minimum.
Wages in Proportion to Earnings
Under this system a driver's weekly wages are paid in direct proportion to the vehicle's earnings with the
minimum proviso just mentioned. The implications to this relatively simple formula are considerable. With the natural endeavour of a driver to earn higher wages he will now be personally concerned, as his employer is always -concerned, with both a low cost of operation and a high revenue from traffic carried.
In the former ease a driver who is determined to achieve high earnings will be concerned with all aspects of operating costs. This overall approach will be beneficial in contrast with partial bonus schemes where • improvement might be achieved only at the expense of higher expenditure in other directions. Thus it is not unknown for fuel costs to be reduced where a fuel bonus scheme is in operation, but only, for example, at the expense of more frequently replaced brake linings. Under this system a: driver would have regard to all aspects, including ultimate vehicle replacement.
But because ultimate vehicle earnings and overall profitability are dependent on both income and expenditure, the driver will also personally be concerned under this system with vehicle earnings which in other circumstances would be solely the employer's concern. At this juncture it may be surprising to a layman, but not to the professional operator, to learn that it is already common practice for many drivers of haulage vehicles to determine themselves to a considerable extent the loads and rates at which they are carried on the return journey. For this practice to operate successfully, it obviously necessitates a policy of employing only throughly experienced drivers on such work, and Mr. Knowles himself considers that a minimum age of 35 is advisable for such drivers when employed on maximum load vehicles.
With this practice applying whereby a long-distance driver is himself responsible for canvassing traffic, there is an added incentive for this to be done to commercial advantage when a wages payment system is based on vehicle earnings. But to forestall any possible excess of zeal in this respect and to remain consistent with the basic. requirements of the system that all operation should be within the legal requirements, a penalty clause is applied for breaches of maximum legally permitted hours of work.
A prerequisite of this system is that there should be a policy of one driver to onc. vehicle, in order that earnings and wage calculation can readily be reconciled and calculated. However, as such practice is commonly applied in road haulage basically with the object of facilitating maintenance and ensuring so far as possible a roadworthy condition of vehicles, this prerequisite should not be unduly i
'restrictive as to the types of operation to which the system can be applied. As in other special circumstances, if slack periods are experienced in particular trades with reflection on their transport requirements, then the stipulation that in any event the minimum current Wages Council rate of pay for the hours worked would still apply.
Management at Fault
• Mr. Knowles considers that management is at fault if, because of the system employed, an attitude is encouraged whereby time—not effort—is the factor which is rewarded. Thus in a driver's working day he may well spend the first hour earning nothing, merely getting to the first point for collection and possibly a further two hours waiting his turn to load and finally actually loading. Accordingly, three hours may already have been spent through no fault of either employer or employee before the vehicle can truly be said to be earning its keep moving goods.
From that point onwards, however, the manner in which the vehicle is then operated is, to a large extent, at the discretion of the driver. It is just at this point that Mr. Knowles considers it is the responsibility of management to provide a system which encourages the driver, by the positiveness of the pay packet, to drive efficiently having regard to all circumstances.
Because of the overall concern which a system of wage payment based on vehicle earnings engenders, this system could be claimed to provide some of the advantages available to an owner-driver—namely, some independence of action balanced by responsibility for seeing that the vehicle earns its keep—but without responsibility for maintenance and capital outlay which are often a stumbling block to entry into the industry. Incidentally, because of recent events relative to annual tests of commercial vehicles and higher standards of fitness likely to be imposed, the problem of adequate but economic maintenance is likely to be an increasingly difficult one for the owner-operator or small fleet user to resolve successfully.
With a basic object of ensuring maximum output within regulated hours, the actual manner of computing a driver's wages is based on a combination of actual vehicle travelling time and ultimate earnings. In order to calculate the ■ former, a recording clock is necessary. But as the ultimate wage is paid it is not directly related to this the usual objections to its use, it is claimed, do not apply. However, in order to calculate the hourly wage rate, a totaller available in conjunction with the recording clock is necessary for a correct and easy method of checking running time.
As a result the use of time sheets (as distinct from statutory log sheets) is no longer necessary, so that a driver has no direct check on his wages by the usual methods. Consequently a paybook is included in the system, showing earnings at Road Haulage Council minimum rates as extracted from the log sheets, running time obtained from the clock card, the rate per hour paid by the system and gross wage on a detachable slip which is then included in the driver's pay packet. Should a driver ask to see his recorder card he is allowed to do so.
Because of the varying weather and other conditions in which commercial vehicles must continue to operate—such as fog, snow and the like—the system must be sufficiently flexible to make allowance for such exceptional conditions. The immediate result of these would be that a driver operating under this system would show a very low earning rate. In such cases he must show on his log sheet the cause of this special delay and the hours involved. Then be must be paid directly for this time at no less than the minimum current RH rate. Otherwise the chart covering rates per hour, which is an integral part of the system, takes c18 into account all standing time, loading time and so on, and also all overtime—quarter, half and double time.
This chart—termed the Pay Way chart—is a form of calculator which is set according to instructions printed on it. The actual vehicle running time for the week is extracted from the time-recording clock card and this figure is then related to the extreme left-hand column of the chart which contains an hours scale. Actually this is set out in even hours-46, 48, 50 and so on—and should the actual clock reading show odd hours or half hours the next highest even figure is chosen.
The computer which forms the main portion of the Pay Way chart gives a full range of vehicles' earnings on any scale chosen and looking across the schedule will be found the amount earned by the vehicle. Should the actual amount not be shown then the next highest figure is used. According to the type of work involved the scale is arranged to vary. Thus A-licensed flat traffic, where the driver finds his own return load, is rated on the slide computer at scale 9, whilst work involving pre-arranged collection times and scheduled delivery, with a correspond ing higher earning range, has a slide computer scale of 12. Vehicles with dead mileage return are scheduled to scale 14. The procedure is to select the correct starting scale run for a 13-week period and then from the cost book reset the scale according to profit earned.
To calculate the wage rate an imaginary line is struck down from the amount earned and across from the hours worked. The joining point of these gives the hourly rate payable on the system. As the method takes care of all overtime and so on, as already mentioned, the gross wage is determined by multiplying the hourly rate by the clock hours worked.
Operator's Point of View
From the operator's point of view he knows each week how his vehicles are doing profitwise and is therefore facilitated in making every effort to keep costs below earnings. As a result of this system the driver is encouraged to take advantage of any extra driving time within legal limits because such extra time can lead to extra earnings. Conversely, misuse of a vehicle through excessive speed or for any other reason is discouraged because every item of operating costs, including undue wear or breakages, reduces the profit margin which in turn lower a driver's pay. In brief, both employer and driver are jointly costconscious.
A significant factor in this system, bearing in mind the relatively frequent changes in statutory rates of pay, is that the chart will not become out-dated for this reason because any increase in wage rates acts solely as the base figure when working out a driver's wages. Moreover, the recording clock can no longer be considered adverse to the driver's interest. Under this system it is reduced to two functions only—namely, to ensure that the driver does not exceed the legal requirements as to working hours and also to add up the actual running time.
As an integral part of this system is an up-to-date record of operating costs and earnings, a suitable sheet is drawn up for this purpose. in addition to the recognized items of operating costs such as wages, fuel, licences and depreciation, allowance is made for four per cent to be allocated to a reserve fund, in addition to an item allowing for interest on capital, whilst a 10 per cent profit margin is also included.
Immediately above the totals of weekly costs is entered the corresponding week's earnings. In order to ensure that these records are maintained up to date it is recognized that on occasion the actual rate for some return loads may not be confirmed until a later date. To meet this situation an estimate of two-thirds of the anticipated rate is entered and any necessary adjustment made in subsequent weeks. From a reduction of costs and earnings the necessary figure is derived from which to calculate the wages for the week.
As an example of the emphasis which this system gives to both employer and driver towards increased earnings, Mr. Knowles mentioned that despite the adequately equipped maintenance garage which he had (and which is a common feature with many established operators) it might be found that overa1,1 it could be cheaper for work to be done outside at a main distributor's or manufacturer's garage because of the saving of time thereby achieved, despite the higher literal cost of the maintenance undertaken. Too often the loss of earnings of a vehicle while it is undergoing maintenance or repairs is underrated.
Before installing this system -Mr. Knowles said he had instances of ah eight-wheeler operating a high mileage and earning possibly £170 during the week, but with only an ultimate profit of £2 10s, to show—entirely because 'of excessive dead mileage and compulsion to accept low rates in the bargain. Now his weekly average mileage was in the region of 500-600 per vehicle:whilst the realization had been impressed on all concerned that maximum profit was not directly dependent on miles run, time worked or even on the volume of traffic moved, but primarily on actual vehicle earnings.