Budgeting
Chapter 8
Direct labor costs

Direct labor is (generally speaking) wages or salaries paid to employees who work directly in the line.

Indirect labor are the     support staff of line: (Custodians, tool makers, repair Personnel,etc.)

There are 2 primary issues with regards to DL:

1.How many hours are needed to compete each task?
    This is an important because of over time.
    Overtime wages are part of direct labor.
           
There are several ways to determine the# of hours that are needed :
    A. Time and Motion
    B. Standard Costs
    C. Est. from the supervisor
    D. Statistical (engineering


Learning curves:
The aver. time to perform a task. Time will decrease as the employee becomes more skilled.

This is a argument for spec. of labor.

2. What is the wage rate?
How are wages determined?
1. Going wage (Industry)
2. Union Contracts
3. Superior workers!!!


SETTING WAGES
1. Similar firms (geographical)
2. Salary history
3. Factors to consider:
    A. Skill level of the employee
    B. Amount of experience
    C. Number of candidates
    D. What do similar jobs pay within your organization
    E. Special working conditions
    F. Fringe benefits
4. Bonuses
5. Commissions


6. Pay your employees well
    -The employees are assets
    -Employees that are treated well are more motivated
7. Experience vs. Education
           
Benefits
    1. Sick time
    2. Paid vacations
    3. Health benefits
    4. Retirement plans
    5. Education reimbursements
    6. Maternity leave
    7. Short term disability


How do we control the DLH?
1. MBWA
2. Leadership
3. Reports

EMPLOYEES

Employees are the most valuable asset.

You have several goals as the     employer:
1. You must be fair and consistent with all employees in the company.
2. You must challenge people. Employees do not like repetitive mindless work. They should be assigned different tasks that will help them be satisfied as employees. You should try to develop them by giving more responsibilities.

3. Successful employers listen to their employees. Listen to them!!!
It also empowers the employee when the boss listens to and implements the employees ideas.

4. Employers should organize parties, etc.
5. Employers must learn to celebrate victories. This is positive reinforcement.
6. The employer MUST praise employees frequently
“You did a great job!!!”


        The Hiring Process:
1. Advertise the position
2. Receive applications or resumes
3. Review applications and ‘weed out’
4. Interviews
5. Review notes and call references
6. Second round (if necessary)
7. Make a decision
8. Job offer letter
9. Orientation

       
PERFORMANCE APPRAISALS

Performance appraisals must be completed.
They are to benefit the employee. They should be positive in nature. The goal is employee development.
   
PROBLEM EMPLOYEES
1. You want to support your employees.
2. It is more useful to have frank discussions then yelling
3. You are a coach and counselor
4. Most employee problems arise out of poor training. It is OUR fault!!
5. Never discipline in public
6. Never embarrass employees
7. The ‘big stick’ approach does not work for every problem
8. Some problems are personal
    problems



TERMINATING EMPLOYEES
Things to consider:
        -Years of service
        -Severity of the action
    -Firing long term employees causes low morale
    -Firing cause headaches if not done properly


PROGRESSIVE DISCIPLINE
    1. Oral warnings
    2. Written warnings
    3. Minor Suspensions
    4. Major Suspensions
    5. Major/ Major Suspensions
    6. Termination

Employees must be aware of the disciplinary procedure.
    Write every thing .

POLICY MANUALS
Policies help the employee know what is expected:
1. Sexual harassment
2. Dress Codes
3. Hours
4. Phone Calls
5. Romance
6. Smoking
       
MOTIVATION
Employers must learn motivation

How do you motivate employees?
1. Positive reinforcement is better then negative reinforcement
2. Treat people with respect
3. Treat people fairly
4. Treat people equally
5. Money
6. Praise
7. Non-financial rewards
8. Flextime
9. Counseling them
10. Lower level needs must be     satisfied
                   
Morale           
    What is morale? An employee’s general feeling about the work place. (High Morale, Low Morale)
Symptoms of low morale- Turn over, absenteeism, tardiness, poor work quality, disruptive behavior, customer complaints etc.

Morale must be high before any motivational techniques can work.


CHAPTER 8
DIRECT LABOR
KEY POINTS


1. WHAT IS DL?
2. HOW ARE DIRECT LABOR HOURS DETERMINED?
3. WAGES RATES?
4. THE HIRING PROCESS
5. P A’S
6. MORALE
7. MOTIVATION
8. PROBLEM EMPLOYEES