Day 510

In Human Resources, we finally finished off legal background by quickly comparing “equal pay for equal work” with “equal pay for work of equal value”. Both phrases sound similar and both are found in Ontario law, but they mean two different things.

“Equal pay for work of equal value” simply means that jobs within the same company that are substantially the same have to be paid the same. So, for instance, if Person A is getting $400 per week for a particular job, you can’t pay Person B $50 more for doing the same job except that he also has to lock the doors at night before he leaves–the jobs are essentially the same, so they should be paid the same.

On the other hand, “equal pay for work of equal value” compares two jobs at the same company that have nothing in common, like a delivery driver and an administrator. First each job has to be rated or scored on

  • the skill required (mental and physical)
  • effort (both mental and physical)
  • responsibility (that can include being responsible for money, process, equipment and people)
  • working conditions (unusual conditions that vary significantly from say, your home–hazards, long hours on the road, extreme heat or cold, etc.)

Each company will have a different way of scoring, but perhaps at the A2Z Brewing Company, the delivery dude’s position might receive a score of 1 out of 5 for mental skill required (drive truck, deliver beer), 1 out of 5 for physical skill required (know how to lift heavy kegs), 1 out of 5 for mental effort (find way to bar without getting lost), 5 out of 5 for physical effort (lifting a 50-litre keg out of the truck and into the bar), 2 out of 20 for responsibility (0 for money, 0 for process, 2 for equipment–the truck and the kegs– and 0 for people), 1 for working conditions (seasonal conditions) for a total of 11. In comparison, the administrator might receive 3 and 0 for mental & physical skills, 3 and 0 for mental & physical effort, 5 out of 20 for responsibility (1 for petty cash, 3 for office processes, 1 for computer/photocopier, 0 for people), and 0 for working conditions, also for a total of 11. Two very different jobs, but in this company’s view, the two people do work of equal value and get paid the same.

That actually segued nicely into the next segment, job analysis. The cornerstone of job analysis is:

  • the job description: what has to be done
  • the job specification: what skills are needed

Once we know these two things, we can put together a proper job description, and use it to advertise for recruitment, training, performance review, compensation, and promotions. The rest of the class was spent in how to gather information to put together the job description.

In Beer Industry, Jason Fisher got into production planning. Suppose we have a 20-hectolitre brewery with five 20-hL fermentation tanks that makes 3 different beers:

  • Beer A takes 14 days from brewing to packaging, and spends an average of 20 days on the shelf before it is sold for $3 per litre
  • Beer B takes 30 days but is usually sold after only 10 days for $4 per litre
  • Beer C takes 45 days, and is sold after 60 days for $8 per litre

Should we draw up a brewing schedule, and if so, how far in advance? Most brewers don’t have a long-term brewing schedule, which is strange because everything naturally flows from your production schedule: when to order ingredients, when you can package and deliver, if you are meeting your production goals and other metrics, and even how much any down-time costs you and if the loss can somehow be recovered.

How to schedule will depend partially on whether you are looking for maximum sales or maximum production. There are other factors to balance as well. Although it seems like Beer C is our big money maker, in fact we can produce and sell three batches of Beer A in 102 days and make $3 x 3 batches x 2000 litres = $18,000, as opposed to one batch of Beer C in 105 days making $8 x 2,000 litres = $16,000.

“Aha,” you say. “Drop that loser called Beer C and concentrate on Beer A.” Yes, but it’s possible that Beer C–the expensive premium beer–adds value to your brand and actually helps to sell Beer A. And should you add a fourth beer?  Possibly. Customers get bored, there might be a trend you want to cash in on, your employees might want a new challenge, a new type of grain/yeast/hops/packaging has just come on the market, the season has changed, customers are coming in asking if you”re planning something new…

Whether you have one beer or sixteen, production planning will help you to weather the emergencies that happen at every brewery: ingredients don’t arrive or are of inferior quality, the yeast doesn’t ferment, employees call in sick, equipment fails, the city tears the street up outside your brewery. Jason’s rule (hereafter known as Jason’s Law) is that there is a 20% failure rate in any plan, so be prepared. If you have a brewing plan, then you have a structure you can use to figure out Plan B.

How can you solve the emergency? Can you beg or borrow a replacement? Do you know a guy who can McGyver some parts together? Can you throw it in a keg and sell it as a special Belgian one-off? Is there even a way to avoid the emergency? If you make a super-special beer using a weird yeast from a small brewery in Belgium, instead of having to put the brewing process on hold when the yeast doesn’t arrive in time, perhaps you don’t get the other ingredients and move ahead with the production process until the yeast has arrived at the brewery.

And then there is the thing that causes even more brewery failures than when things go wrong: when things go right.

Yes, more breweries have failed from too-rapid uncontrolled over-expansion caused by success. Your brilliant marketing plan worked, and suddenly everyone wants your beer. So you buy five times more equipment, hire five times more employees, and assume you will make and sell five times make more beer. The problems start to crop up. You just bodged the new equipment into your production line to get it working as fast as possible, and now your brewhouse is a hodge-podge of water, steam electrical and glycol lines. Equipment failure is a daily occurrence. You can’t run two pumps at the same time without tripping a breaker. Mistakes are starting to have an effect on production volume because your dozens of new staff haven’t had time to become as well trained as your old staff, and your old staff is spending most of their time training the new staff. Your hops merchant that used to sell you 5 kilos of Amarillo can’t get you 500 kilos so you switch hop varieties and hope no one notices the difference. Meanwhile, you’re not able to supply all the bars with the beer you promised, and some of them have filled the empty tap with another beer. And then an entire batch of beer gets infected and has to be recalled and dumped. Suddenly you have a huge cash crunch because the bill came in for the new equipment and installation plus five time as much grain, but somehow you aren’t making–or selling–five times more beer.

So plan for success as well as failure. Apparently controlling and planning your growth is as important as a production schedule or an emergency plan.

 

 

 

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One Comment on “Day 510”

  1. mark lewis Says:

    “No plan survies contact with the enemy” Field Marshall Helmuth Carl Bernard von Moltke


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