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Duplicate
and distribute these activities. Students may work independently
or cooperatively.
Do
the figures add up?
Management consultant Ron Healy
is a proponent of the 30/40 work plan, which he believes increases
productivity. How does he go about deciding whether 30/40 will work
for a company? Try this scenario:
• Pretend
you are a consultant hired to make a company more productive.
Here is the data you receive about the company.
• The
company makes shoes. They make a $15 gross profit on every pair
of shoes that a worker produces. They employ 50 workers, who each
make $12 an hour. The average worker works 40 regular and 20 overtime
hours a week and produces 100 pairs of shoes in that time.
• Roughly
how much profit does the company make per week? (Use only the
data given to make your answer. Assume that overtime hours are
paid at time-and-a-half—150% of normal hourly pay.)
• Now
think: In order for the company to profit equally using the 30/40
plan, how many pairs of shoes would each worker have to produce
per hour during their 30 hours of work? Remember to take into
account that workers are being
Would 30/40 be a good idea for this
company? Offer a written analysis of the situation. Remember to
present these facts:
• The
computations on the situation above don't take into account the
loss of productivity caused by worker turnover.
• Workers
typically are happier and more willing to stay with a company
on the 30/40 plan.
Do
the figures add up? Sample Worksheet
Each worker works 60 hours a
week. Each worker produces 100 pairs of shoes a week. So, each worker
produces 1.67 pairs of shoes per hour. (100 pairs of shoes per week
¸ 60 hours per week.)
• Each
worker works and gets paid for 40 regular hours each week.
•
At $12/hr., that is $480/wk.
• Each
worker works and gets paid for 20 overtime hours each week.
• At
$18/hr., that is $360/wk.
• So,
each worker is paid $840/wk.
• That
amount times 50 workers is $42,000/wk.
• The
workers each produce 100 pairs of shoes a week.
• That
amount times 50 workers is 5,000 pairs of shoes.
• Each
pair of shoes yields $15 gross profit.
• So,
on 5,000 pairs of shoes the company makes $75,000
• Subtract
labor cost from above - $42,000
• That
leaves a net profit of $33,000
30/40
Plan
• Each
worker gets paid for 40 regular hours each week
• At
$12/hr., that is $480/wk.
• That
amount times 50 workers is the labor expense, which is $24,000/wk.
• Net profit to be matched
is $33,000/wk.
• So, for the plan to work,
the company must have gross profit of $57,000/wk.
• Each pair of shoes yields
$15 gross profit.
• So to earn a gross profit
of $57,000, the company must make 3,800 pairs of shoes
($57,000 ¸ $15 = 3,800)
• Each worker works 30 hours
a week.
• That amount times 50 workers
is 1,500 hrs/wk.
• In order to produce 3,800
pairs of shoes in 1,500 hours, each worker must average 2.53 pairs
of shoes per hour. (3,800 ¸ 1,500)
• So, the hourly output of
shoes per worker must increase from 1.67 pairs to 2.53 pairs for
the 30/40 plan to yield the same profit as the current operation.
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