Palfinger, Austria: Towards a balanced flexibility
Palfinger, a multinational engine construction company, has introduced a system of flexitime in its shift-operated production. Workers have greater autonomy in the arrangement of their working time, work fewer hours and receive financial bonuses; at the same time, overtime has been reduced and the workforce is able to deal with a flexible work load successfully.
Palfinger is among the leading international manufacturers of hydraulic lifting, loading and handling systems, delivering to a global market. A multinational group with its headquarters in Salzburg, Austria, Palfinger has production and assembly sites in Europe (three in Austria), North and South America as well as in Asia. Innovation, further internationalisation and diversification of products and services form the strategic pillars of the corporate strategy. The primary market is currently the building sector but product diversification with a broader focus is planned. Palfinger employs around 4,000 people worldwide, 980 of them in Austria.
The initiative outlined here was implemented at the production site of Lengau in Austria, where 540 people are employed (400 of them in production). The workforce is male dominated (around 95% are men) and relatively highly skilled: 65% are skilled workers, 10% are unskilled, 15% have school-leaving certificates and 10% are university graduates. Of the workforce, 95% works full time and 5% part time; 87% of the workforce hold permanent contracts, 10% are temporary workers and 3% are working on fixed-term contracts or in another arrangement. There is both a workers’ and an employees’ works council. Cooperation with management is described as ‘very good’, and union density is 78%.
Description of the initiative
In 2002, Palfinger shifted part of its production from Lengau, Austria, to Tenevo, Bulgaria. After this move, modernisation of the Austrian production required changing from a two-shift model to a three-shift model. Another reason for the change of the working time model was to give the company’s production processes greater flexibility, in order to assure adherence to fixed delivery dates and to stay competitive in the market. Increasing global competition in the market is another aspect: according to the company’s human resources department, retaining production in Austria can only be justified with high-quality and high-productivity output and strict adherence to deadlines. Any change in the production process should also permit continuous production, and it should be possible to address peaks in the workload with minimum use of overtime. To this end, the company negotiated a flexitime model for the shift operations.
Executive management, human resources and the works council were all involved in negotiating the working-time model. While management’s goal was the introduction of the three-shift operation, the works council had the implementation of flexitime as a priority. Initially, a company consultant was assigned to work out a basic concept; later, a representative of the trade union was involved in the negotiation process as a professional consultant and mediator. Finally, the working-time model was agreed in a joint employer/works council agreement.
The company’s flexitime model has a number of notable features.
- The working week is 38.5 hours in length; this is voluntarily reduced to 37.3 hours for those working in a rolling three-shift mode, and to 35 hours for those working night shifts, including a full compensatory wage increase.
- Those working in three-shift mode can receive a bonus on a monthly base. Long hours (up to 45 hours per week) are moved into a working-time account, but are paid an added 35% bonus in one-shift mode and a 50% bonus in two- or three-shift mode.
- All working hours that exceed nine hours per day or 45 hours per week are treated as overtime. Flexitime is collected in a working-time account, which is counted over six months; if 90 hours of flexitime are accrued in the account, these hours are counted as overtime and paid accordingly. This means that the model enables overtime to be reduced; at the same time, however, overtime is financially rewarded. Workers can view their working time account on a personal computer, and on a monthly basis the current position of the account is printed out for every worker.
- Each team is responsible for the operation during set core times; apart from that, working times are organised individually within the production teams by the workers and the team leader.
- The works council, production leaders and team leader monitor the programme on an ongoing basis and watch out for any problems that may emerge. Twice a year, management evaluates the workforce’s level of satisfaction with the initiative.
In spring 2005, the flexitime model was introduced into two-shift production. In January 2006, it was rolled out to three-shift production. This phased introduction proved useful in terms of gaining greater acceptance for the initiative among the workforce. Currently, all 400 workers in production, including around 50 temporary workers, are working on a flexitime basis.
The flexitime model was introduced together with two other measurements: the organisation of production in teams and the introduction of a bonus system, which is based on the team performance.
HR, management and the works council confirm that the new model is satisfactory for, and accepted by, both workforce and management. No major problems appear to have arisen. Minor problems, like the need for changes in such everyday arrangements as car pools have been quickly solved. The increased autonomy in working time, the financial bonuses and the reduction of working time in three-shift mode have contributed to the quality of the work environment. While management consider the model ‘certainly not cheap’, it does seem to pay off: the increased flexibility in working time allows a flexible production capacity to be maintained – a critical competitive advantage. At the same time, overtime at night and over weekends has been reduced significantly.
The negotiation process was supported by a business consultant; however, more importantly, later in the process a professional consultant from the trade union mediated, which proved to be successful for both parties.
Important indicators for the success of the model are: a) the successful handling of the flexible work capacities; b) the significant reduction in overtime; and c) workers’ satisfaction with their working conditions. The works council is satisfied with the additional financial compensations (which go beyond legal requirements) and the greater autonomy in working-time arrangements for the individual worker. This flexitime model is regarded as unique in the sector by the trade union’s representative.
At the same time as the model was introduced, production was organised in teams and a bonus system was implemented. The HR representative sees this combination of measures as an important key for the initiative’s success.
Exemplary and contextual factors
Palfinger has succeeded in introducing a flexible working time model in a production sector, an area in which such models are rarely applied. Flexitime in shift operation is uncommon, as production machinery usually requires fixed working times. At Palfinger, working time has been made flexible, while productivity has increased. The high levels of worker autonomy over working time are considered unique in the sector in Austria.
Note: Permission for publication of this case study on website has been granted by the company. If any details of this case are to be used in a press release or related publications, please contact Mr. Hannes Roither (Public Relations, Palfinger) on email@example.com or Tel.: +43 662 46 84 -2260.
Maria Klambauer, FORBA, Vienna