Discretionary Effort

Most people have plenty of additional capacity and they decide whether they will utilise this capacity for the company or not. This is discretionary effort.

In a large mine with 1000 employees each making 20 decisions per day the impacts are massive and immediate. 20,000 opportunities each day to increase the value of the organisation or decrease it.

Let me give two examples that I have seen.

Example 1 – Employee withdraws discretionary effort

An employee works 12 hour shifts with 2 half hour breaks. Employee “clocks off” 15 minutes before and after each break as well as when commencing work slowly and wrapping up work 15 minutes before the end of work. There is a loss of 1.5 hours or 13.6% of the 11 hours work time.  For a company making 15% return on investment the investment return for this employee is effectively nothing compared to his co-workers. He has brought down the average of all of the workmates and once they see he is getting additional time off they decided to replicate his behaviour until the behaviour was addressed.

Example 2 – Employee provides discretionary effort

One employee brings his proposal to management to clean up all of the coal in ribs and floor undulations with small excavator and truck that has low utilisation. 130,000 tonnes coal added in one year for minimal additional cost. Value at $100/t – $13m per annum for an investment of say $500,000 including labour and operating costs. (at US$200 per tonne as it is now that case is even more compelling). His workmates see this behaviour and replicate it with options to maximise coal that has varied to plan or been covered with low wall failure. The positive behaviour is contagious.

Many systems have tried to access discretionary effort over the years

  1. Share option schemes
  2. Teamwork models
  3. Communication models
  4. Industrial relations models

Here is one of the best documents that I have seen to encapsulate many of the concepts (part of a presentation by Corporate Executive Board 2004)

If you want a plan to increase your employee’s discretionary effort Call David O’Rourke +61 428768981.

Leave a Reply