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Jan 1, 2004 12:00 AM
An improving economy does not “float all boats” or solve all of the problems that have materialized in this industry during the past three years. The business environment for print may be improving, but there's a convergence of three major trends affecting management. The result is a growing challenge to the great majority of graphic-arts companies.
Trend #1: In the past, many production staff welcomed overtime work. In fact, some employees became unhappy during slow periods because their take-home pay was reduced. Today, many employees, especially younger members of the work force, place great emphasis on leisure activities and spending time with their families. The opportunity to work overtime may not be viewed by these staff as a positive development. Companies can no longer assume that assembling an overtime crew is a given.
Trend #2: The Consumer Price Index and other inflation-measurement tools may be showing modest increases, but the costs of healthcare insurance and other mandated employee benefits are still virtually out of control. Increasingly, employees' decisions to stay with a company or jump ship are based primarily on the cost and coverage of health insurance. Meanwhile, companies of all sizes are exploring ways to reduce the burden of these costs, which are increasing by double digits every year.
Consequently, it is often less expensive to authorize and pay for overtime than it is to add employees. There's a head-on clash between companies' need to authorize overtime and employees' desire for more personal time.
Trend #3: The scenario just described is exacerbated by the growing peaks and valleys in print demand, especially for commercial printers. Contrary to conventional wisdom, the roller coaster ride of print demand will not go away as the general economy improves.
Today, our research indicates a difference of 2.4 to l between the average commercial printer's best and worst sales months in the course of a year. This is largely attributable to the migration of information printing, such as directories, manuals, schedules and parts lists, to the Internet — and it is information printing that occurs regularly throughout the year.
Commercial printing has become largely promotional. It is highly seasonal and erratic. As a result, cash-flow management has become at least as great a challenge as profit. “Slow” has been redefined, where it seems like all print buyers have simply left the country for a given period of time. “Busy” has similarly been redefined: During busy times, it feels like the same buyers have conspired to return to their desks at the same hour, to place orders for delivery the next day.
The decision to add staff after a couple of good sales weeks or even months involves elevated risk. There's no confidence, let alone assurance, that this improvement in sales will be permanent. It may only be a “blip” in an erratic sales pattern. History offers little guidance on the future.
As the ratio of best to worst sales months edges toward three-to-one, the risks of staffing up for the former grow greater. And the need for overtime becomes more critical, especially in production areas.
This staffing challenge isn't about to disappear in the near future. Employees' personal value systems and needs aren't likely to change. And customers' turnaround times aren't likely to change, either.
One step that may create a staff somewhat more sympathetic to working overtime: sharing information in detail about this dilemma. It's not my intention to jump into the debate on open-book management, but I am suggesting that educating staff in the basics of finance can foster an understanding of management challenges and subsequent steps. After all, basic change in behavior needs to be preceded by an understanding of the reasons for that change.
Finally, other steps, such as planning of overtime and customer service followup on “proof-out,” take on increasing importance. There will always be last-minute crises, but an extra day or two of warning about the need for overtime can benefit all parties. Planning for overtime has become one of the most important responsibilities of plant management. In a sense, it requires the management team to sell as effectively as salespeople.
Dick Gorelick is president of Gorelick & Associates and the Graphic Arts Sales Foundation. His e-mail is email@example.com.