Improving Working Time Arrangements in SMEs Working Time Demonstration An Assessment of the Working Time Demonstration: A research-oriented pilot project in SMEs in Indonesia Jon C. Messenger Team Leader, Working Conditions Group ILO/WORKQUALITY/INWORK

 How working time is organized—called either “working-time arrangements” or “work schedules”—can have important effects on productivity and firm performance  Specifically, working time arrangements can (Golden, 2012):  Enhance individual and/or organizational productivity, and thus directly restrain unit labour costs of production  Improve employee health and well-being and satisfaction with the job or life, without raising current labour costs, and thus reduce costs due to job dissatisfaction & human capital investment Background: Effects of Working Time Arrangements on Firm Performance

“Action Research” in SMEs to show how changes in working time arrangements (work schedules) can balance workers’ needs with business requirements, by:  Improving firm performance, and  Improving workers’ satisfaction with their jobs and their work-life balance Objective of the Working Time Demonstration

 1. Not possible to know a priori what types of working time arrangements (work schedules) are most likely to produce desired results  2. Work with managers and workers to develop customized working time arrangements in each participating enterprise based on their needs  3. Build on key features of the ILO Sustaining Competitive and Responsible Enterprises (SCORE) Programme  Participating enterprises completed SCORE training (workplace cooperation)  Participating enterprises established Enterprise Improvement Teams (EITs) Some Key Assumptions

Implementation (I) Seven SCORE Programme factories in Greater Jakarta, Indonesia volunteered to participate in the Demonstration o Automotive parts and accessories (4) o Medical equipment o Printing and tool bags o Garment manufacturing 5

 1. Informal focus group discussions conducted with managers and workers in participating enterprises  2. Customized training materials prepared based on the identified needs  3. Training Workshops conducted on designing and managing working time  Workshops for enterprises (managers & workers) and SCORE consultants  4. “Kick-off Meetings” conducted with EITs in each participating enterprise  5. EITs in each enterprise developed working time arrangement/schedule  SCORE business consultants visited firms monthly to assist the EITs  6. Enterprises implemented the new working time arrangement/schedule Implementation (II)

 Qualitative assessment of the processes used by firms to develop and implement working time adjustments, based on site visits  Quantitative assessment of key business and worker outcomes Simple before-and-after comparison of outcomes Based on survey data collected from managers and selected workers at beginning and end of the Demonstration  IMPAQ international, a Washington, DC-based evaluation firm, assessed both the process and outcomes and prepared a report Assessment Methodology (I)

 Limitations of this Assessment:  Small number of firms participating in the Demonstration  Participating firms volunteered for the Demonstration (i.e., they were self-selected)  The small sample of workers and managers interviewed Assessment Methodology (II)

 Some firms tested various small changes in work schedules  Starting work 30 minutes earlier (to finish earlier)  Starting work 30 minutes later  Some firms tested adjusting overtime hours  Reducing daily overtime  Reducing Saturday hours  Some firms tested adjusting break times  Providing short breaks (e.g., 10 minutes)  One firm enforced a one-hour lunch break  However, no firms implemented major changes in working time arrangements (e.g., adding a shift) despite planning to do so Observations from Site Visits (I)

 Frequent changes in Enterprise Improvement Team (EIT) membership affected design and implementation of new WTAs/work schedules  Lack of HR support created serious limitations at some firms  Inadequate HR units/functions to support hiring and WTA implementation  Frequent turnover in HR staff  Heavy customer demands was a major constraint to making working time changes  Firms could not reduce daily overtime due to heavy and often unpredictable workloads  One firm could not cut Saturday hours because customers insisted on Saturday deliveries  Shortages of skilled workers was a constraint for some firms  High turnover among skilled workers, due in part to dissatisfaction with long hours  Competition for skilled workers made it hard to find enough workers to add an extra shift; this would have enabled these firms to reduce long hours Observations from Site Visits (II)

Manager and Worker Surveys  IMPAQ International developed two survey instruments:  (a) Manager survey and (b) Worker Survey  IMPAQ collected Baseline Survey Data (April - May 2013)  20 managers and 21 workers  IMPAQ collected Follow-up Survey Data (February – March 2014)  19 managers and 22 workers

Manager Survey Responses C11a. How many worker accidents were recorded last year? BaselineFollow-up None accidents 6 2

Manager Survey Responses

Worker Survey Responses

 Few changes in working time arrangements were implemented during the demonstration  While efforts were made to develop and implement new working time arrangements, only small adjustments in work schedules were successful  Efforts to make major changes in work schedules did not succeed due to a variety of obstacles  E.g., lack of HR support, inadequate infrastructure, etc.  Both managers and workers believed that working time adjustments improve productivity  Managers became increasingly aware of the need to measure productivity; however they were unable to measure it correctly  During the project, managers asked for support in measuring productivity  SCORE business consultants tried to assist them, but firms were still unable to measure productivity accurately  Enterprise profitability did not change as a result of the demonstration  There does not appear to be a consistent change in revenue or profitability across enterprises Conclusions (I)

 The demonstration appears to have reduced the number of accidents at participating firms  At follow-up, workers felt substantially more positive about their job and work-life balance than they did at baseline despite few changes in working time arrangements  One possible explanation of this finding is that workers appreciated management’s concern about their work-life balance  Moreover, workers' involvement in the process of developing new work schedules may have indicated a level of respect from managers that contributed to workers feeling more positive about their job and work-life balance  This finding could be interpreted as an effect of worker voice Conclusions (II)

 SMEs have significant limitations in implementing new WTAs/work schedules  Limited HR staff and weak HR support  Weak (or no) infrastructure to measure the effects of working time changes  Other business distractions (e.g., heavy customer demands, inadequate space)  The range of WTA options offered to participating SMEs was too broad  Some enterprises attempted schedule changes that were not feasible for them  Less ambitious changes in work schedules might have been more successful  SMEs lack the necessary infrastructure to implement new WTAs/work schedules  Firms could benefit from practical tools (manuals, software) to help them:  Develop and implement new WTAs/work schedules  Measure the effects of WTA/schedule changes on productivity and profitability  These tools could enhance development & sustainability of new WTAs/schedules Lessons Learned

Thank you for your attention! Jon C. Messenger Team Leader, Working Conditions Group ILO/WORKQUALITY/INWORK