and distribute these activities. Students may work independently
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:
you are a consultant hired to make a company more productive.
Here is the data you receive about the company.
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.
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-half150% of normal hourly pay.)
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:
computations on the situation above don't take into account the
loss of productivity caused by worker turnover.
typically are happier and more willing to stay with a company
on the 30/40 plan.
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.)
worker works and gets paid for 40 regular hours each week.
At $12/hr., that is $480/wk.
worker works and gets paid for 20 overtime hours each week.
$18/hr., that is $360/wk.
each worker is paid $840/wk.
amount times 50 workers is $42,000/wk.
workers each produce 100 pairs of shoes a week.
amount times 50 workers is 5,000 pairs of shoes.
pair of shoes yields $15 gross profit.
on 5,000 pairs of shoes the company makes $75,000
labor cost from above - $42,000
leaves a net profit of $33,000
worker gets paid for 40 regular hours each week
$12/hr., that is $480/wk.
amount times 50 workers is the labor expense, which is $24,000/wk.
Net profit to be matched
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
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.