Setting Correct Allowances

For purposes of this answer, we first need to review the topic of "correct" allowances. Observed, "normal" times do not contain any allowances they are merely the time that a qualified worker needs to perform a job without interruptions. However, workers do take time out for personal needs, rest and for reasons under or beyond their control (Delays). We, therefore, must somehow compensate workers for these happenings whether we observed them or not during the time we observed the worker perform the job. That compensation is called "Allowances".

Understand that allowances should never be etched in stone. Reduction of allowance through cause elimination is a fruitful labor cost reduction area. Compensation can change due to new machinery, better working conditions, improved training and supervision, etc. If you can adjust piece rates you can also adjust allowances.

Allowance factors fall into three basic categories: Miscellaneous Delays, (both avoidable and unavoidable), Personal Time, and Fatigue.

Miscellaneous Delays are used to pay for random interruptions of the worker caused by influences outside his or her control. Interruptions by supervisors, material irregularities, or malfunctioning equipment are examples. These "lost" times must be accounted for in the standard. Not allowed are interruptions and delays that are the fault of the worker, such as: excessive personal time or rework because of poor workmanship.

Any action which the worker normally does not contribute to, but which results in a loss of production, is a "Delay". Delays may be avoidable or unavoidable. Any allowances should be determined by all-day ratio delay/sampling studies, where a large number of random observations are made over a period of time of one or a group of workers, operations or machines.

No percentage guideline can be given for delay allowances. The reason is that the percentage is always proportionate to management’s interest and ability to reduce delays. For example, I caution you not to use arbitrary or "built in" 15 minute allowances for machine delay or waiting time when you do not know where those allowances came from. It has been determined that delays usually account for the biggest single reason workers cannot "make the rate" when the rate appears to be fair.

Personal Delays include the perceived time necessary for maintaining the general well being of the employee. This includes, for example; trips to the rest room and water cooler. Working conditions, temperature at the workplace, a person’s physical health, etc. all effect personal time needs.

Any action which the worker has control over that results in a production loss is called a "Personal" loss, and (provided the action results in a personal benefit) it should carry a "Personal Allowance" as compensation for the loss.

Fatigue is closely associated with personal time needs and the types of work being done. Throughout the years, as heavy or undesirable work became mechanized, fatigue allowances have been reduced proportionately. This trend is good because fatigue is hard to validate and is subject to much argument.

Fatigue allowance is given because of the assumption that a worker loses a certain amount of physical ability from energy loss, mental and nervous strain. It is a lessening in the will to work.

The major fatigue factor in today’s industry is not physical but psychological. However, with scientific selection programs, putting the right people in the right jobs appears to substantially reduce fatigue. Characteristics normally considered in employee selection include the ability to sustain monotonous work, emotional stability, and physical stature.

In addition to the "P.F.D." allowances described above, allowances are often given for machine set-up time, small production lot sizes, extreme weather conditions and spoilage and rework beyond the operator’s control. You could also consider different, special or additional allowances for things like multiple machine assignments or specific tasks that are unique to your company.

Having said the above, let’s now discuss how much time to grant for the various allowances using the most basic of examples. Allowances do not represent a gift. An inaccurate allowance effects a standard in the same manner as an error in reading the watch, or a bad performance rating.

My experiences in establishing allowances has shown that the most effective allowances are set by computing allowance factors based on sound time study or work sampling data and coupling that information to what the supervisors feel is fair and controllable – by them.

For example, let us say that formal random-sample allowance studies made by engineering in a . . .

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