The year 2021 will witness a significant regulatory overhaul in India, with the new labor codes coming into force. In a labor surplus country like ours, safeguarding the rights of the labor community, generating employment opportunities, improving daily operational efficiency while upholding the overall health of organizations are critical to drive higher economic growth in the long run. The Economic survey of 2018 – 2019, highlighted that India was dominated by ‘dwarfs’ – small firms, older than 10 years that never grow beyond their size, thereby holding back job creation and productivity. The new labor codes will help drive growth for such firms by allowing them greater flexibility to hire a larger workforce whether it is regarding how standing orders may be framed or the procedural aspects of downsizing within the organisation. This in turn will allow SMEs and entrepreneurs the opportunity to leverage economies of scale and participate in competitive markets, thereby driving industrial and economic growth for the country.
However, to reach and sustain higher levels of economic growth, organizations need to pay close attention to employee productivity. On the occasion of National Productivity Day, it is even more important to assess how workforce productivity in India is poised for improvement since it is a critical determinant of overall growth and bottom line. The new labor codes have brought both consistency and flexibility in managing the workforce. Overtime working has become easier with larger quarterly limits and the increased flexibility to offer overtime has been quite welcome by the industry.
While overtime has been a common solution for organizations looking to increase production quickly, it actually has a negative impact on the overall workforce productivity according to a study by Thomas and Raynar. Productivity gets further impacted when the same set of workers continue to work longer hours for continued periods of time due to factors like stress and fatigue setting in. Furthermore, overtime not just impacts individual productivity but also increases workforce costs and hence overtime becomes an expensive proposition for organizations that are looking to improve their productivity long term. In order to solve this issue, organizations should look at different ways to add capacity and increase productivity.
Identify hidden capacity
Rather than approach a one size fits all solution by increasing hour worked through overtime, organizations need to instead look for hidden capacity in their workforce. Excess capacity could be in the form of under-scheduling or overstaffing and is usually very difficult to pinpoint or identify, which is where data becomes a great starting point. Workforce management solutions today allow for organizations to use a metrics-based approach to identify capacity variations within the organization which can further uncover areas where hidden capacity could exist.
Matching demand to availability
Another area organizations can benefit from, is to minimize known productivity issues. For instance, in case of labor intensive industries like manufacturing, first hour productivity is a common issue most manufacturers face and is largely caused by unplanned absenteeism. While many organizations have tried to solve this problem by increasing the pool of buffer resources, this is an expensive solution. The time taken to identify the shortage and augment the workforce with the right skilled resources is a big contributing factor to first hour productivity loss. Again, over here workforce management data can help organizations quickly identify critical positions that are understaffed and within minutes identify suitable available resources thereby minimizing the overall productivity loss during the start of a shift. Understanding seasonal patterns and factors that impact absenteeism can also help organizations plan well in advance.
Reduce burnout and fatigue
The recent labor code changes, while having maintained the number of working hours at 8 hours a day, have provided for a greater spread in these working hours so as to allow organizations to factor in adequate breaks and rest for its workforce and minimize the impact of stress and fatigue. By carefully utilizing the right amount of break and rest time, organizations can support their workforce with enough time to disconnect, replenish their energies and resume their activities with renewed levels of enthusiasm. A well-rested and motivated workforce is naturally more productive.
Identify New Norms of productivity
The workforce as we know it is rapidly changing, a fact acknowledged by the labor code 2020 with the inclusion of new categories like ‘home-based’ workers, platform and gig workers etc. These changing workplace and work patterns make it even more important to identify new norms of productivity and reset existing benchmarks, to raise or lower them as the case maybe. For example, outliers in productivity on the lower end of the spectrum could indicate either skill or motivational issues that organizations need to grapple with. Sometimes they could also be indicative of constraints in the work environment outside that need to be resolved. On the other hand outliers of higher productivity could result in breakthroughs for the organization and introduce innovative work practices. This requires not just extensive data but the ability to identify and isolate patterns in data.
To truly leverage the new codes for improving organizational health, employers will need to be compliant with the changing regulations. Implementing the new codes through a data driven approach will allow firms to maintain higher productivity levels for their hybrid workforce. Real time visibility into employee data through intelligent workforce solutions can allow firms to closely assess metrics such as working hours, overtime hours, absenteeism and productivity levels and accordingly make the requisite payments and accrue leave. Data will allow firms to remain compliant with the changing labor laws. These metrics, critical in maintaining the health of organizations, will prove to be a necessity going forward as both employers and employees move to a more tech enabled workplace.