Category “Human Resources”

Balancing Employees and Contract Labor

April 17, 2013 by Jason

For many years employers of labor have struggled with the balance of maintaining efficiency and productivity with the ever changing project demands versus capacity of labor. Changes in volume of work can range from needing 50% more available labor to finding work for 50% of your already employed work force.

In order to maintain the balance of employed labor and contracted labor the employer must have a basic understanding of their current capacity and productivity.  Real capacity can only be established by understanding their current productivity.

Capacity = Total available hours employees work

Productivity = Worked Hours (time on the project clock) versus Earned Hours (hours that change the configuration of a product in a way that your customer is willing to pay for or has already paid for, Gross Profit)

Once an employer truly understands their productivity, then and only then should they make decisions of employing labor to complete projects at an efficient rate of return for the company.

Once the decision has been made that the work load over loads or under loads the current available labor, the employer must choose the most efficient and productive method to maintain productivity and in turn keep their profit margin at a point that they can maintain a healthy business.  The balance of full time employees versus contract labor plays a key role in this decision.  As an employer analyzes the deviation from capacity, using capacity and productivity, they must understand the long term goals of the company by answering the following questions:

  • Is the new work demand part of the growth path the company has chosen?
  • Is the new work demand just a high spot and not part of the long term plans of the company?

A good decision making point for bringing in contract labor is a 10% overload.  If a project or projects are going to overload an already 90% productive work force for a short period of time, overtime and extra effort from existing employees is the most economical method.  If a project or projects are going to overload a currently 90% productive work force for an extended period of time, then bringing in contract labor is necessary to keep productivity and profit at the appropriate level.

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The Balancing Act of Life

August 26, 2010 by Machel

School has started for your kids, and you.  Now what?  Juggling home, school, family, and work can be a daunting task.  But if you keep focused and stay on point, it is possible.

For the last 7 (yes seven) years I have been attending school while managing 2 kids (3 if you count my husband) and work.  I could not have done it without the support of my family and friends.

The hardest part for me has been worrying about what I wasn’t doing.  When I was with my family I was thinking about school, when I was at school I was thinking about work or what I needed to do at home.  Being a multi-tasker by nature, it was difficult to remember that I was only human.  Some days it was like working 3 full-time jobs, and only getting paid for 1.

Being organized and setting a schedule is the key.  It helped us quite a bit to sit down at the beginning of each week and go over the schedule for the family, figure out menus and shopping, and making sure the clothes the kids needed were ready at the beginning of the week and not trying to do laundry at 2 a.m. (although that has happened).  I’m not saying you should be a schedule Nazi, be flexible.  Also, start teaching the kids to do their own laundry.  Their spouses will appreciate that at a later date.

I’m hoping all this hard work will teach my kids to finish what you start.  My poor daughter doesn’t even remember me not going to school.  I feel it is important to show them that education, especially now, is vitally important to their success.  A lot of companies won’t even look at you unless you have graduated college with some kind of degree.

If you are lucky enough to work for a company that values education, take advantage of it.  Setpoint has been great to work with my ever changing schedule.  I know my family and Setpoint will be glad when I am done.  Of course, I will be ecstatic to remove a full-time unpaid job.

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Knowing When to Cross Train

July 22, 2010 by Brad

Setpoint is a small business that is agile and can adjust as quickly as the management team can move. There are not committees, boards, and endless studies that have to be approved before decisions can be made. Layers of management don’t exist in our company and overlapping job functions don’t happen very often. Everyone wears multiple hats, but in most job functions, we are only one layer deep. If that person is out of the office that job doesn’t get done.

In most cases this is ok, because it is only for a day or two. But what happens when it is a longer period that the person is unable to be at work. If it is a critical function, it can be disastrous; business can grind to a halt very quickly.

At Setpoint we decided to implement a very simple form of cross training to account for those events. We asked ourselves this question – If the person that is responsible that job were gone for two weeks, what impact would this have on the company? We then grouped those job functions or key processes into one of three buckets:

  • We would be OK
  • We would be OK as long as nothing broke
  • We have to have that job done virtually every day

We would be OK

In this category go jobs or functions that are important to the company, don’t necessarily have critical things that need to be done on a daily basis. One job that we put in this category is the management of our website. If we had to leave it alone for a couple of weeks, we would be ok.

We would be OK – as long as nothing breaks

Identify ones that if nothing breaks, life in the company can go on, but if something goes wrong – it has to be fixed. All IT functions are group in this category. If nothing breaks, the company is fine. If something does go wrong it needs to be fixed quickly.

We have to have the job done virtually every day

Jobs that we grouped under this category are:

  • Payroll
  • Invoicing
  • Procurement
  • Accounts Payable

For the first category we have done nothing to prepare, for the second one, we are working on it and haven’t quite figured out what to do, the last category we have implemented a cross training program. We started by identifying an alternate that would learn the job and be able to do it if the primary person was not here. How much training needs to happen? Setpoints view is, who ever the alternate is, has to practice enough that they can take over the job function if needed. That doesn’t mean that they know all the esoteric details of what can happen, but generally they can handle what needs to be done.

One example, we are an open books company which means that every Monday at 1:00 PM we gather together in what we call the “huddle” and review the key numbers on a big white board. Kara is our alternate for this and once a quarter she figures out the numbers and then puts them up on the white board. If there are intricate details that need to be adjusted for that week, she doesn’t do that, but she is confident enough through practice that she can deal with 95% of what it takes do the white board for our huddle. This has come in handy more than once when the primary person is out for the day.

Planning for these events in this way makes it easier for management to sleep at night.

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Review of 4-Day Work Week

October 1, 2009 by Machel

 It has been just over one year since we converted from a 5-day work week, to a 4-day work week.  My job was to analyze whether the 4-day work week brought more money to our bottom line.

 Here is what I discovered.  Just by calculating the change in percent direct labor, there was about a 1% increase of direct hours.  This 1% increase went straight to the bottom line.  There was no increase in costs, such as overtime and any additional overhead, by converting to a 4-day work week.  Also, the one thing you can’t measure, employee moral, increased as well.  

 Our employees use that day to make personal appointments, which means missing less work, plan 3-day vacations, and spend more time with their families.  When asked if we wanted to switch back, the answer was a resounding “NO!!”

 Overall, I feel this has been a great decision.  There have not been any negative comments from our customers or our employees.

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Health Savings Accounts

August 13, 2009 by Joe Knight

Setpoint Systems, like most small companies, has experienced huge increases in health care insurance.  We have had our share of health challenges in our small group.  As Setpoint System’s CFO, I have been in the middle of this.  Several years ago we went to a new Health Savings Account (HSA) type plan that really solved a lot of our problems.

I testified before the senate finance committee on the value of HSA’s to the health care consumer and the systems as a whole.  Believe me there are many opinions on these types of plans both for and against.  I am for the plans.

A HSA is a tax protected savings account connected with a high deductable low premium plan.  Most HSA’s provide for a fully covered annual physical and then a high deductable for any other medical needs.  The HSA account carries over year to year and can be used tax free to pay for any medical, dental and most alternative medicine treatments.  Upon retirement HSA funds can be withdrawn without penalty for retirement (however funds used for expenses other than medical are taxed as income).

At Setpoint we adopted HSA’s in 2004 and have had them ever since.  While this type of insurance takes some getting used to, it has been a real benefit to Setpoint.  We have had two very serious medical issues with employees and/or spouses that were dramatically driving up our medical costs.  When we went to the HSA I was worried about how this plan would affect the two employees with challenges. (One of the arguments against the HSA is that it costs less for the healthy but more for those with serious illnesses).  In our case both of our employees with serious cases found that they saved thousands of dollars when we went to the HSA.  This is the reason why.  First, Setpoint was able to save on premiums and was able to contribute those savings to the employees’ individual HSA accounts.  Second, the employee no longer had to contribute as much to insurance since the premium was down.  Third, (and this is the one that is not often mentioned but has a huge impact) in our plan once the deductable is met then you have 100% coverage – that means no co-pays on meds or visits.  When you take these three issues together the HSA saved those with health challenges thousands on an annual basis. 

So with a better deal for our employees with challenges and lower costs to those that are healthy, the HSA seemed like the right thing to do.  Since we have been on the HSA plan our premium increases have stabilized and meanwhile our healthy employees are building up saving for the future.  It’s been a win-win for us.  Now every plan is different and obviously our sample is small.

This type of plan helped solve our health care problems.  Let me illustrate with a personal experience with the HSA’s.  I have a large family and use the system quite a bit.  When we need some medical care, we let our providers know that we have a HSA plan and pay cash.  This usually leads to discounts in coverage.  Also, we always ask for and understand costs to procedures.  One of the big issues with economics of health care is transparency of costs.  Since we have relied on insurance for so long and only had to pay fixed co-pays, consumers of health care have no idea how much their care really costs.  In many cases neither do providers.  How do we control costs without anyone on the front line really knowing what they are?

In my first year with the HSA my son needed a simple surgery.  When I explained to the hospital that I had a HSA plan and asked for a cost estimate the administrator said why it matters if you have insurance.  After explaining the new HSA plan the administrator could not come up with a price and it took several calls to get the right number from the hospital.  Then I had to get costs from the doctors to put together a total costs.  It was a challenge but we were able to get to the bottom line and even got a discount when we paid cash for the procedure.

That was in 2004.  Today costs are easier to get on many procedures.  There are still issues with transparency but things appear to be getting better.  As transparency improves, costs will come down as providers innovate and find ways to deliver services at lower costs.  Some argue that the mini-clinics where a physician’s assistant can do a strep test and other simple procedures at low cost of $30-$50 that are near pharmacies are a direct connection to more users on HSA’s.

We believe that more free market based plans like the HSA’s are our best chance to control medical costs.  These types of plans do not solve the problem for the nation’s uninsured.  I believe that an expansion of the HSA plans for those who have employer provided insurance and can afford it is only part of the solution.  Providing for the uninsured should be a second part of a health care solution.  What I hope is that any plan we pursue as a nation uses market principles to control costs.  We believe that the HSA approach is a step in the right direction.


Download Joe’s testimony for the Senate Finance Committee
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Outsourcing IT Management

June 25, 2009 by Chuck

Information Technology (IT) has become a necessary component of today’s business culture.  If you own a business with more than 5 employees, it almost becomes a necessity.   In some form or fashion, you’re going to have to come up with a game plan to maintain and replace your current systems.  What works best?  Let’s talk about that.

If you’re a business with less than 100 computer using employees, you may find a lean philosophy will maximize IT efficiency as well as effectiveness.   Why?  Here are several reasons.

  1. Computer usage has become a common part of American culture.  Almost all sectors of professional life involve the use of a computer. When it comes to small IT tasks, just about any computer hobbyist at a company could manage and maintain software and hardware inventory, the ability to change a forgotten password, and add a printer to a workstation.  Depending on time availability of that employee, he or she could also handle email accounts and basic web site changes.
  2. Microsoft Windows is very stable.  I know, I know… you’ll always have a small percentage of PCs that will tend to crash.   This is more about the law of averages than the quality of Windows.  Generally speaking, a well made, properly installed Windows XP or Vista (and soon to be Windows 7) PC with up to date antivirus and antispyware software will be very solid.  The small stuff is usually easy to fix but what happens when you get a virus or spyware on your computer?  That’s when you need an IT professional.
  3. Difficult server, router, and security tasks are infrequent.   Don’t get me wrong, the need for expert IT professionals is still necessary and vital to the health of any business, but in order for an IT person to be proficient and up to date requires both constant training as well as exposure to these types of problems.
  4. Attrition of employees.  Generally speaking, good employees tend to be here today, gone tomorrow.  Just about every employee is looking to increase his or her leverage in the current job market.   Hey, if you could get a better paying job, with more benefits, and a better boss – wouldn’t you leave?  Of course you would.   Well paid professionals that outsource (in my experience) tend to stick around for much longer periods of time.
  5. The high cost of professional training and equipment.  Training and professional trouble shooting equipment range in the thousands.
  6. Managing and providing HR benefits.


What then do businesses need to outsource?

  1. File, print, email, web, and SQL server installation and maintenance
  2. Routers and firewalls
  3. Security implementation policies and procedures
  4. Remote computing access
  5. Budget planning and new business solutions
  6. Workstation hardware and software policies


After owning my own IT Company for 11+ years now, I have found that companies that outsource their top level IT needs save money.

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Virtual Companies

May 11, 2009 by Brad

You read and hear a lot about virtual companies these days. What does it take to actually try and make one work?

At Setpoint, we are in a highly cyclical business.  We used to size our business based on the busy times and then try and tough it out during the slow times with out having to lay people off.  Every time you have to lay people off, it is very painful – not only for the people you have to let go, but it is difficult for those that remain. A couple of years ago we made a strategic decision to size our company for the lean times and use outsourcing techniques to handle the busy times, we decided to try and become a small base of key people that can wear many hats and outsource some functions that we believed could be more generic with proper management.

I had read many articles about the virtualization of the work force. One book that gives great insight is The Future of Work by Thomas W. Malone.

It is hard to make a virtual company work. Reading about it is one thing, putting it into action profitably has been much more difficult.

We used to help us filter and identify technical people that fit our needs.  We then used our best mentoring VP to sort through the resumes and set up discussions to find those that might match with our culture.

One thing we did instead of flying them out to meet with us was, we set up a 20 hour project they had to complete (we paid them for this) to see how they would do. We found out a lot by seeing how they solved that project. Like all people that work for a company – not all will be a fit for you or them, the sooner you find out the better for everyone involved.

We have needed many tools to help us make this concept work. One of the main tools we use many times a day is from – it is called Basecamp. This is our main communication and file tool, it is a diary of all that is taking place and assignments given. We use concurrent licenses for our engineering software programs to give us flexibility to share licenses. helps in our concepting phase. Every engineer has a unique color they use so we can recognize who has done what. is used to host virtual meetings and share information. You will need a conferencing program so that many can join the daily conversations. Setpoint is considering IP phones so we can send phones to our virtual employees and have them just a local extension away.

As you start out with new people give them clear short work assignments to make sure you and they are a good fit with your culture. The key roles of some of your employees will have to change. They have to over communicate and not be afraid to call up and see how their distant team member is doing. One of worst things is to assume everything is going fine if you don’t hear from a virtual team member.

More than anything it is important to have frequent (at least daily) contact with your virtual people. We have done things to connect with our offsite members so they feel like they are working for a real company that cares for them. In Basecamp we have a picture of our facility. As we send messages back and forth through Basecamp we have our own pictures on the message to reinforce that there is a real person behind all of this action.

Your face to the customer has to remain with your employees. We have found that customers have to connect with employees – not virtual team members. It has to appear seamless to them.

We feel that we are making progress but it is a continual battle.  Is it better than carrying too many employees through a downtime in the cyclical nature of this business? For us, the answer is a definite yes.

We are still growing at being a company that has virtual team members and believe we still have many lessons to learn as we go down this path. We’d love to hear from any of you out there that can help Setpoint get there faster.

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Manpower Planning

April 27, 2009 by Roger

Science Meets Voodoo

One of the most daunting tasks that I’m regularly faced with is Manpower forecasting and planning for all of our various project efforts.  It seems like everyone always needs to know the facts relating to our human resources…”Do we have enough staff available to take on this new project?”  “How many calendar weeks will this project require?”  “What’s the estimated labor cost?”  “How long will this project take if we put a small team on it?”  “What kind of labor budget do we need to include in this new proposal?”  These are just a few of the staffing-related questions that tend to bubble up around here on a regular basis.  And we are not unique in that aspect.  These questions really apply to EVERY business at some point or another.  And make no mistake about this:  If you are not able to consistently answer these questions for your business within a very small margin of error, you are in big trouble!  Bids will be incorrect, projects will be late and/or over budget, personnel will be overworked, and most importantly, your company’s financial picture will quickly head to the red-ink zone.

First, let’s look at the science involved in the manpower planning process…

There are a couple of scientific tools that I use that I have found invaluable for manpower forecasting. First and most important is the use of reports from historical data. If you have access to data from previous similar jobs, it’s very easy to utilize as a guide for your current efforts. This data includes hours charged to previous jobs sorted by sub categories, calendars days required to complete tasks, as well as individual skill sets applied to the work. If you have this sort of data and can assemble it in a report format, you will find it invaluable to apply to current projects. The second tool that you must have is some sort of manpower modeling device to layout the requirements of your project. There are a number of different ways that you can model human resource requirements. One of the simplest and an old favorite of mine is a spread sheet with resource requirements and availabilities cross-linked. Microsoft Project also has the ability to load and model your resources within a project schedule. It’s a little complicated, but it does the job if you take the time to learn the software. There are also a number of other commercial software products out there that do the same thing.

And then we have the Voodoo…

While there is a large amount of science that you can apply to manpower-planning in today’s working world, the black-magic or gut-feel factor will always be present. This less-scientific side of the game often includes a project manager’s intuition, experience, instinct and occasional dumb-luck. The guys that are good at manpower-planning manage the Voodoo side of the process as well as they do the scientific side. Just don’t ask them to teach it to you, because they probably cannot. It’s just too opaque.

Adaptability is another key part of being able to accurately forecast and deliver the appropriate number of personnel to make-up a successful project team. Once things start to fall away from the plan (and it WILL fall away from the plan sooner or later) the trick is how you adjust. Some tricky projects may require adjustments every day, so a Project Manager has to literally keep a pulse on things every day. Anything less will come back to haunt you before you’re through….trust me on that one!

So if you’ve chosen Project Management as your career path (or if it chose you), then you’d better figure out a way to forecast, plan and track your manpower resources on every job, every day. And you better have a scientific process that covers all of your bases, as well as an open mind for the Voodoo side of things….Stick with this gig long enough and you’ll develop your own manpower planning process to get you through your projects. And if you don’t develop something that works, chances are you’ll be doing something else real soon!

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Work Ethics Today

January 27, 2009 by Ken

It seems like the younger people entering the work force today haven’t been taught the old ways that our fathers pounded into our heads over and over again.  If you have recently had to hire someone, you know what I am talking about.

Some of the younger workers today think they are doing you a favor by coming to work each day.  They do the bare minimum or not even that much.  They’re always looking for ways to get out of doing what has been asked of them and don’t seem to understand or care what it costs the company to employ them.

My father taught me if you start a job, no matter what job it might be, you do it better than anyone has done it before you.  At the end of the day you go home and feel good about what you have accomplished.

The company that has hired you is investing their trust and money in you.  They expect you to do what needs to be done.  Now is when your father’s teaching comes into play.

  • Do more than the company asks you to
  • Do things that might not be in your job description
  • Once you have completed your assigned tasks look around to see what needs to be done and do it.  For instance, if you’re hired as an engineer and you see the trash is full, take it out.  Don’t ask for someone to do what you are very capable of doing yourself.  It isn’t that big of a deal and it will help make a good impression.

The company you are working for is now your company; you need to represent it and its best interest.  It’s not just doing a fair days work for a fair days pay, it is one step on your way to developing your personal work ethics that will be with you for the rest of your life at work and home.  If your company fails you fail.

When you have to go out and find another job it’s in your best interest to make your company succeed.  If you do more than what is expected of you and do the best job you can do, always looking for ways to do it better and faster in most cases your boss will recognize it.

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The Four Day Work Week is Here to Stay

November 11, 2008 by Roger

A few months ago Setpoint moved to a 4 day work week.  The plan was to run it as an experiment for 90 days and see how things worked out.  I’m pleased to report the experiment has been a rousing success and that we intend to continue on with virtually our entire workforce on a 4 day, 10 hours per day schedule, Monday through Thursday.

The feedback from our team members has been extremely positive, as everyone has settled into routines of spending most Fridays with their families or enjoying their hobbies.  There are of course exceptions to this.  We have been in a busy cycle for the last 8 weeks or so and have had many people working on Fridays in order to meet our obligations to our customers.  But even with a day of overtime on Friday’s we’ve usually been able to take off Saturdays and Sundays for two-day weekends.  Morale is up, productivity is up.

We did spend some considerable time and effort upfront to alert our customers to our plans regarding the 4-day week, and I believe that helped us to set the proper expectations early on.  There have been a few customers that have needed our assistance on Fridays and we’ve been able to fill those needs by various team members volunteering to take care of those needs.  Each of our regular customers have cell phone numbers for members of the management team, and if something unforeseen comes up on Fridays, they can call and get help most of the time.  But the calls have slowed down as customers have gotten used to us being closed on Fridays and they tend to plan accordingly whenever possible.

One unexpected benefit that came about from the schedule change was an opportunity to improve our Just-in-Time (JIT) procurement process.  In the past we have ordered all parts at the start of a project, which led to them being assembled as they trickled in.  This method caused a number of inefficiencies for us: the assembly technicians wasted significant time starting a project and then stopping when they ran out of parts, we would have to pay for parts often before we really had any use for them, and there was often chaos created by people going through parts and then putting them back when they had to stop.  Sometimes parts would get put in the wrong totes or even on the wrong project rack.  With the new system we order parts as required, we do not accept early deliveries, and we ask all of our vendors to deliver parts on Thursdays.  On Fridays we have a part-time expeditor come in and receive parts and distribute them to their proper job kits.  When the assembly crew comes in on Mondays the parts are ready and waiting for them.

Overall, we’re very pleased with our 4-day work week experience and we plan on continuing with it into the foreseeable future.  If you have any thoughts about trying a four-day week at your company, my advice would be to embrace the concept and do whatever you can to make it work for you.  I know we have been pleasantly surprised by the positives!

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