October, 2008

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Article Index

Paid Time-off Plans - Risks and Rewards
Article by: Mick Hannafin
Paid leave, or paid time-off (PTO) plans, generally provide employees with a single bank of hours to be used as they see fit. PTO combines sick, vacation, personal time and sometimes holidays. There are both risks and rewards for employers to consider before moving to a PTO policy where all time-off is combined into a single bucket.
Lean Leader of the Month
Article by: Kirby Sneen
Alisha Cowell is part of the Lean Program Staff at the MN Department of Administration in St. Paul, MN. The Department of Administration provides leadership for the State's Drive to Excellence program, which seeks to increase quality and reduce costs in state government.
Book Review - Transforming Office Operations Into A Strategic Competitive Advantage
Article by: John Hehre
Most books on office improvement techniques (also known as Lean Office) take the traditional Lean Manufacturing tools and change them slightly to fit an office environment. Although Lean Manufacturing and Lean Office are both improvement techniques focused on the elimination of waste, the successful approaches to office and manufacturing improvement effort are different.
MN Econmic Report
Article by: Dr. Ernest Goss
For the month of October 2008, reported November 3, 2008. For the seventh time in 2008, Minnesota's Business Conditions Index plunged below growth neutral.
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Paid Time-off Plans - Risks and Rewards
Paid leave, or paid time-off (PTO) plans, generally provide employees with a single bank of hours to be used as they see fit. PTO combines sick, vacation, personal time and sometimes holidays. There are both risks and rewards for employers to consider before moving to a PTO policy where all time-off is combined into a single bucket.

Keep in mind that paid time-off is only part of the picture - employers should also consider other work time issues including flex scheduling and telecommuting.

When considering a PTO policy for your firm, it is worth asking a few basic questions:
  • Does the flexibility of PTO fit your company culture?

  • Are employees forced to lie about the reason for their absence in order to use time off benefits?

  • Are employees coming to work sick? When sick employees show up for work, known as "presenteeism," there is a significant and costly impact on an organization, not only in terms of risking the spread of disease, but also in terms of diminished productivity, quality and attention to safety.

  • Is unscheduled absence a problem? While it isn't possible to completely eliminate unscheduled absence, a recent Harris (1) study confirmed that PTO banks are the most effective tool available to help control unplanned absenteeism. The 2007 CCH Unscheduled Absence Survey (2) also found that paid leave banks (also known as PTO) continue to be the most effective absence control program.

  • If unscheduled absence is a problem, what are the reasons your employees are calling in an absence? According to the 2007 CCH Unscheduled Absence Survey, most unscheduled absences are for reasons other than illness and the cost of unscheduled absences can cost companies hundreds of thousands of dollars annually in direct payroll costs. The survey found that while 34 percent of people call in due to "personal illness," 66 percent are taking time off to deal with personal or family issues.

Rewards
  • A PTO plan is easy to implement and easy to track - all days-off fall into the same category.

  • Employees gain flexibility and privacy. They are not generally required to tell their employer how they are going to spend their time-off. They don't need to lie about being sick when they want a personal day.

  • Employees who seldom use sick days under the previous sick time policy can use all of their PTO on vacation if they wish.

  • Fewer unscheduled absences. Employers have reported fewer last-minute no-shows.

Risks
  • A PTO plan can make it difficult to determine when an employee is taking time off for a serious illness that is covered by the Family and Medical Leave Act (FMLA).

  • It is possible that employees who don't normally use all of their sick time in a year will use all of their PTO.

  • Sick employees may still come to work to save their PTO so they can take more vacation.

  • Employers should determine if they will be required by state law to pay out all earned but unused PTO days at termination. In many states, only vacation days are required to be paid out, not sick days.

According to the U.S. Chamber of Commerce 2007 Employee Benefits Study, paid leave benefits such as holiday, sick time and vacation accounted for 9.8 percent of payroll and averaged $4,734 per employee. Making sure that your paid leave benefits are meeting employee needs and are an appreciated benefit is worth the time and effort to review your current programs.

The Manufacturers Alliance will be offering the 11th Annual Manufacturing Compensation and Benefits survey. It will incorporate an expanded benefits and PTO section including premium and co-pay information. Learn More


(1) Harris Interactive is the 12th largest and fastest-growing market research firm in the world. More information about Harris Interactive may be obtained at www.harrisinteractive.com

(2) CCH is a leading provider of human resources and employment law information and services and part of Wolters Kluwer Law & Business (hr.cch.com).
Mick Hannafin is an employee benefits consultant with David Martin Agency and has over 20 years of experience in employee benefits. He can be reached either at mhannafin@davidmartinagency.com or 952.848.1305.

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Lean Leader of the Month
Alisha Cowell is part of the Lean Program Staff at the MN Department of Administration in St. Paul, MN. The Department of Administration provides leadership for the State's Drive to Excellence program, which seeks to increase quality and reduce costs in state government.

Lean Enterprise is one initiative under the State's Drive to Excellence program. More specifically, Lean Enterprise is a coordinated state government initiative for improving the organizational performance and results in Minnesota's state government agencies. Using a time-tested Lean process approach, while also embracing Six Sigma tools and total quality management philosophies, Lean Enterprise has a simple goal of helping state government work better for its customers and employees.


Why did you decide to enroll in the Lean Leader Certification?
The objective of the State of Minnesota's Lean Continuous Improvement Program is to initiate, develop, and support a continuous improvement program within all cabinet-level state agencies, and sustain the continuous improvement culture throughout the State of Minnesota's executive branch by 2010 and beyond. To get started, the Department of Administration initiated a 6-month contract with consultants to help us launch the Lean effort. Although I learned a lot about Lean through working with the consultants, I knew that they would not be around forever and that I needed to dive deeper into learning how to effectively lead a Lean transformation.

What were the lessons learned from leading or training your team on a Lean manufacturing project?
What I have learned, and what I think speaks to the success of Lean in state government, is the overwhelming interest and participation from all levels of the organization.

More generally, we met some resistance when we tried to launch the Lean effort in January 2007. We really struggled to find agencies that were willing to participate in a pilot Kaizen. However, after a big first success with the birth certificates unit of the Department of Health, several agencies started dabbling lightly with Lean and many more have now dove in head first.

How would you describe training offered by the Manufacturers Alliance?
Although I do not work in manufacturing, I left each Manufacturers' Alliance training session excited about the new tools and techniques I learned, which I've found to be applicable to government operations, as well as manufacturing. I would recommend Manufacturers Alliance Lean Leader Certification to anyone looking to be a more effective leader and trainer.
Kirby Sneen is the Vice President of the Manufacturers Alliance - an association of over 400 manufacturers in the greater Twin City area. This industrial association specializes in sharing education and resources peer-to-peer. Kirby may be reached at (763) 557-8007, kirbys@mfrall.com, or www.linkedin.com/in/kirbysneen/

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Book Review - Transforming Office Operations Into A Strategic Competitive Advantage
Most books on office improvement techniques (also known as Lean Office) take the traditional Lean Manufacturing tools and change them slightly to fit an office environment. Although Lean Manufacturing and Lean Office are both improvement techniques focused on the elimination of waste, the successful approaches to office and manufacturing improvement effort are different.

Office Kaizen provides a framework that is well suited to improving office operations. Furthermore, where most books give little more than lip service to change management, typically a chapter at the end of the book, Lareau integrates the actions and techniques necessary for cultural change throughout the framework presented.

The book is well organized with a logical flow. After a few introductory chapters, the book tackles the subject of waste. The usual types of waste found in office environments are discussed and include subjects like people, process and information waste. Beyond that, however, is a chapter on leadership waste with some excellent ideas for how executives can avoid being part of the problem. The book provides clear direction for the type of action needed from executives and managers and the roles they should play in leading the activities and supporting cultural changes throughout the organization. About half the book is devoted to the framework the author provides along with tools and techniques for implementation including a daily management system, a list of twenty specific factors to watch, and an in depth discussion of measurements. There is a very useful chapter on integrating the typical "Lean" tools like Value Stream Mapping, Six Sigma, and the Balanced Scorecard into the overall Lean Office implementation. There are also examples of typical mistakes made in implementations and suggestions for alternatives.

This book provides a comprehensive approach to improving office operations. The approach is sound, the examples are useful and, despite the depth of content, the book is generally an easy read. Although aimed at upper level executives charged with leading improvement efforts, there is a lot of solid content for all levels in the organization. If your organization is looking for guidance for, or struggling with office improvement efforts, this would be a very good place to start.

* Lareau, William: Office Kaizen. Milwaukee, WI: Quality Press, 2003
John Hehre is a senior operations executive and provides interim management and project based consulting to mid-sized private companies in need of transformative change. He can be reached at jhehre@cprocess.com.

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MN Econmic Report
For the month of October 2008, reported November 3, 2008. For the seventh time in 2008, Minnesota's Business Conditions Index plunged below growth neutral.


The October index from a survey of supply managers declined to 39.1 from 43.4 in September. Components of the overall index for October were new orders at 32.9, production at 39.1, delivery lead time at 52.1, inventories at 50.0, and employment at 37.3. "Minnesota manufacturers, both durable and nondurable, detailed much weaker business conditions for October. I expect Minnesota's unemployment rate to expand to 6.5 percent in early 2009. Minnesota tends to more closely mirror the national economy than other states in the region, and the U.S. economy has been significantly weaker than that of Mid-America in 2008," said Goss.
Dr. Ernest Goss of Creighton University, used the same methodology as The National Association of Purchasing Management to compile this information. An index number greater than 50 percent indicates an expansionary economy, and an index under 50 percent forecast a sluggish economy, for the next three to six months.

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