Hours Worked Versus Hours on the Clock

Thoughts on measuring how much of an employee's workday consists of actual work in the real world of the shop floor. November 5, 2013

Question
Can anyone, in easy to understand lingo, explain how they got to 45-55 or 65 an hour? I used the monthly numbers of everything together and divided it by 4 shop guys at 160 hours per month and came up with 46.75. Does this seem right?

Forum Responses
(Business and Management Forum)
From contributor T:
Is that your billing rate for each, individual employee? (All 4 on a job together would be $187 per hour?)



From contributor O:
Sounds reasonable - your wages and overhead may be on the lower end of the spectrum. Did you include profit?


From contributor P:
Make sure that you put in every little thing it cost you in overhead, even replacement cost of your equipment, shop and office supplies. Also things like what your financial goals are for future expansion.

Plus you get 5.5 hrs of work from an 8 hour day from an average employee, so you have to adjust for that loss. The area that you are in and your competition may also make you adjust your overhead. If your area will pay out an average of $45.00 per hour and you're at $65.00 doing the same type of work, good luck getting it.




From contributor J:
Contributor P, I'm not debating it, but I'm curious where you get the figure for actual hours of work from an employee.


From contributor L:
I don't know how he got there, but I do know you won't get 40 hours work out of 40 hours pay! Cleanup, maintenance, head scratching, training... Do you charge the same rate for bench work as CNC, bander, etc.? A router can eat up $100 a day in tooling easily. Cutting pre-lam? There goes $200/day (3 piece $70 tools + periodic boring bits, etc.) Life of numerical controlled machines? 8-10 years?


From contributor P:
I got those figures from the SBA here in IL for manufacturing. The 5.5 is just an average and can vary depending on your employees. This is why big companies watch their time so close, because it can multiply into large loss of revenue. Try tracking your guys and see how close it comes to 8 hours. You have to do this for a month to get a good average.


From contributor L:
Try using this form. The grid lines didn't come through, but you can tell where they go. The columns are: operator, working, idle, missing, talking, other, notes.

Summation is at bottom of page:
Total
% Of Total
Date _______________ Time: _______________ By: _______________
Work Sampling Study
Procedure: Walk through the plant. Looking at the floor, look up and observe what is happening at that instant at that work station, record it (check mark). Do this over a 20-sample exercise in 2 or 3 days. Compile the % of time each employee is engaged in each activity. Very revealing and a good tool to use for evaluations especially if itís done over several months.