Case Study: Thomas Sanderson - Annualised Hours 

 

An annualised hours scheme was introduced to 150 employees at Thomas Sanderson's Waterlooville production facility at the beginning of 2004

 

Prior to 2004 the company was employing most of its staff on fixed-hours contracts, with full-time and part-time staff on 43-hour and 21-hour weeks, regardless of demand. This resulted in significant differences in productivity - with staff typically being under-occupied during quieter periods while the company were paying overtime at premium rates during busy periods.

 

Nigel Campkin, Executive Director at Thomas Sanderson says:

 

“I attended a seminar where we discussed the concept of annualised hours. After speaking with the consultants it became clear that the seasonality we experienced could be managed better by implementing an annualised hours scheme."

 

In accepting an annualised hours scheme, employees agree a specific number of working hours per year in exchange for a fixed salary - paid in equal instalments over the year regardless of the hours worked in each period.  Staff are able to choose an annual hours contract which suits them based on an average of between 20 and 48-hours per week.

 

The annualised hours scheme enables Thomas Sanderson to control its labour costs while offering the staff a fixed monthly income. As Nigel explains:

 

"We were able to say to the staff – how would you like to work less hours, earn more money and have more time off?  It wasn’t too tough to sell – once we convinced everyone we were serious. In conjunction with the consultants, we estimated our savings and were able to distribute some of these among the workforce; a benefit that was really appreciated by our staff.""

 

 

A win-win with annualised hours

 

The new annualised hours programme has already provided real benefits to the staff at Thomas Sanderson.  As well as the financial benefits, staff have also seen an improvement in their work-life balance since the scheme gives them the opportunity to work fewer hours in certain periods, as it suits them, in line with the manufacturing programme.  Morale and staff satisfaction levels have improved.

 

Productivity is now monitored and forecast at department level throughout the factory rather than across the company as a whole. This enables Thomas Sanderson to control productivity levels and keep its labour costs constant and predictable. Nigel explains:

 

"This year we’ve seen an improvement in productivity of 25% and our labour costs are lower than they were two years ago."

 

By getting labour costs under control, Thomas Sanderson has been able to put an end to costly overtime.  There have also been reductions in staff turnover and improved staff retention.

 

 

Alan Bishop, Manufacturing Manager for Thomas Sanderson says:

 

"We ’ve managed to match our rosters to the business needs and cover all our hours, and so far we haven ’t worked any overtime at all, which is very good news for the business."

 

"There’s no way we’d go back to the old system. The annualised hours scheme enables us to match our rosters to the sales forecasts every year. This year has been absolutely superb, we’re already seeing cost savings just from controlling our hours."