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How labor management technology can help bring a company into the 21st century
Next week: Using labor date to increase retail sales

by Stephen Hawley Martin
for Virginia Business
Oct. 24, 2006

When was the last time a secretary took a memo in shorthand?

Okay, maybe there's someone out there still working that way. My guess is he's pushing 90.

Really, what do you suppose it's been on average, 30 years? Communications and technology in the workplace have come a long way.

How did payroll get done 30 years ago? How did companies collect information on workers' time tabulate it?

Manually, and on paper, right?

How is it done in your company, today?

Chances are things haven't changed much in this area.

Be aware that when I say things haven't changed, I mean much more than the physical process of collecting workers' time. Maybe your company has an up-to-date time and attendance collection system. Nevertheless, chances are things may not have evolved a great deal in what is done with all the information that's being collected. It could well represent a gold mine of data that management could use in ways that could make things run significantly more smoothly and efficiently.

Allow me to tell a little story. I went to work for an advertising agency in Baltimore right out of college. Like others, the firm developed and produced ads for its clients, some of which ran on TV, others in magazines or newspapers, some on radio, and of course there was the occasional outdoor billboard. Each job, whether it was a TV or radio spot or a print ad or billboard, had a job docket that traveled from one person who worked on it to the next. Everything to do with a job, which might have included briefing documents, background material, the copy and the layout once these were developed, traveled with this job docket. Also inside was a time sheet in triplicate, complete with carbon paper.

Remember carbon paper? "Press hard, you're making three copies."

It was up to each person who worked on a job to record his or her time on that card along with what was done and the date. This meant people had to record time twice: once for the job and again on a time sheet that was turned into accounting and was used to calculate a person's pay. That's because the time card in the job docket remained in the docket until the job was completed and closed. Eventually, layout time would be billed at one rate, copy time at another, and production time at yet another, even though the same person might be responsible for all three and be getting paid one hourly rate.

At any given time, there were probably several hundred of these job dockets floating around the agency in one place or another that represented what in manufacturing might be called work-in-progress (WIP). As would also be the case in a factory, this WIP was worth many thousands, if not hundreds of thousands of dollars. The accounting system at this firm considered time which had been posted to a job to be earned income even though it hadn't yet been billed. The rationale was the work had been done and earned. It would be billed and become income unless some part of it had to be written off. Of course, no one really knew how much WIP there was at any given time. The best anyone could do was guess.

This being the case, what do you suppose happened at the end of each year? The controller of the company needed a tally of this work in progress in order to put it on the balance sheet as an asset. So a mad and frantic dash would take place to round up all the job dockets and total up all the time cards.

Just imagine how much easier it would be to have all that data entered into a central database. Not only would there be less chance of loss or error, all the totaling, and all the billing could be automated and immediately available. In addition, the controller of the firm would be able to know how much work-in-progress existed at any given moment simply by consulting the computer on his desk.

What would you think of a company that still had secretaries taking down memos in shorthand and typing them up on an IBM Selectric?

Okay, now, what would you think of a company that still processed payroll the way it did 30 or 40 years ago?

You might think a lot of people in such a company would be doing work that could easily be eliminated, given the technology that exists today, work that could be spent in more productive ways. You might also think the people who run that company are probably missing out on a great deal of good valuable information they could literally have at their fingertips if only they brought the way the company processes time and attendance and manages labor activity into the 21st century. This has happened in other departments, even in advertising agencies. Art directors no longer use t-squares and drawing tables. They use computers. Copy writers no longer use manual Underwoods.

And it's a pretty good bet the general ledger isn't handwritten in ink and totaled by an adding machine. Human Resources probably uses up-to-date software and computer power to store and access and the records it needs. And computers have done more than just make typing or compiling and storing records easier.

They have assumed other functions as well that used to be done by hand or with a slide rule or an adding machine. For example, engineers don't simply draw on a computer, they input variables and extrapolate results, make projections about viability and performance. CAD (computer aided design) software replaced the draftsman and the manual process of making mechanical drawings, but engineering technology went further putting the computerized drawing into intelligent design applications where stresses, temperature and materials are analyzed, giving engineers visibility as to where a plan could be prone to failure or exceed expectations.

Finance departments and investors use data not as simply data points plotted on a line but analytical tools that demonstrate trends and deliver buy or sell signals. Procurement and logistics departments use systems that evaluate production data and supply needs and enable companies to operate "just-in-time," increasing efficiency and reducing costs.

Why should payroll be different? Instead of just getting checks written, why shouldn't a time and attendance system deliver valuable information management can use to run things better? Why shouldn't it provide actionable data?

The fact of the matter is, it can. Over the next few weeks, we'll be looking at time and attendance systems enhanced to provide data that can help management control costs and run businesses a whole lot better and more efficiently.

The days when secretaries took shorthand are long gone. And you know what? The days when management only got a look at labor costs every couple of weeks -- after the fact, and without a chance to do anything about those costs -- will soon be gone, too.

Stay tuned.

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Stephen Hawley Martin is a former principal of The Martin Agency in Richmond and the author of more than half a dozen books including his newest, Lean Enterprise Leader: How to Get Things Done Without Doing It All Yourself. He is editor and publisher of The Oaklea Press, a book publishing business dedicated primarily to helping business executives increase productivity.