Manpower utilisation refers to the hours of productive work as a percentage of the total work paid for. For example, in a production company, break time or time spent cleaning up a work station rather than actually producing goods for sale would not be counted towards manpower utilisation. Manpower utilisation is a good measure of the efficiency of your workforce. If manpower utilisation is low, you may need to find ways to eliminate downtime or motivate employees more effectively.
- Skill level:
- Moderately Easy
Define productive hours for your business. Before you can find the ratio of productive to nonproductive hours, you must first clearly determine what elements of paid hours you consider productive work. Some distinctions are obvious. For example, paid vacation time or paid sick time would not be counted towards productive hours.
Some elements of paid hours are more difficult to distinguish, however. For example, would the time spent cleaning up a work station be counted towards productive hours? What about the time spent in a safety meeting? Generally, these two items would probably not be considered productive uses of time. Typically, only time spent actually in the process of directly contributing to revenue is counted. A good rule of thumb is to consider whether or not an activity is essential to the process. For example, depending on how a shop is set up, it may be necessary for an employee to spend roughly .5 hours of each day walking to and from two machines he operates. However, this is not necessary in the sense that the process requires the walking time. If the machines were moved closer together, for example, this time could be reduced or eliminated without affecting the success of the process.
Calculate the number of hours that fit into your definition of productive work hours. This can be done on an individual employee basis, by department or unit or across the entire organisation. To the extent you feel your results will be accurate, you can have employees keep track of their own time. Alternatively, you can designate someone to monitor the activities of the employees and keep track. This can be done on a daily, weekly, yearly or another regular basis.
Divide the total productive works hours by the total paid hours. Be sure that the units are consistent. For example, if you measure Bill Johnson's productive work hours for the month of June, be sure that you divide that into Bill Johnson's paid hours for the month of June. If you are measuring Department A's productive work hours for Financial Year '07, be sure to divide that figure into Department A's work hours for Financial Year '07. The percentage you arrive at after completing this calculation is your manpower utilisation.
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