#112 from R&D Innovator Volume 3, Number 8         August 1994

First-Line Supervisors Save Money
by Harvey Gittler

Mr. Gittler, of Oberlin, Ohio, writes and lectures on management issues.

Many R&D organizations include people who, with little training in science or technology, perform routine tasks.  I’m not talking about technicians working in the lab.  I’m talking about groups of people, away from the lab, who run tests, care for experimental animals, or produce materials for experiments.  This work is at the lowest level of sophistication, and these people require careful supervision from a first-line supervisor--a foreman. 

It seems that whenever a company wants to cut costs, these foremen are among the first to go.  But if a company doesn’t have too many foremen, reducing their number is a false economy.  In the accounting mindset that often forms the basis for these decisions, the first-line supervisor is mere overhead, or, in the accounting euphemism, part of burden.

Burden is an unfortunate term because it denotes being carried, being a load on the "producing" employees, and thus something that, at the very least, is expendable.  Supervisors are considered burden, because, unlike the people directly involved with research progress, or those who prepare thousands of samples for testing each week, they produce nothing tangible. 

So whenever there is a drive to slash costs, supervisors become natural targets.  “Can’t you get that overhead rate down?” asks the laboratory administrator.  Or, put another way, “We have too many indirect labor people.”  Thus, there is a cutback in the number of first-line supervisors—supposedly to save money.

Nonsense!  A good first-line supervisor is anything but a burden, and should be listed, if accounting terms must be used, as producing labor, not overhead. Laying off a foreman increases costs, for a variety of reasons.

Let's take a look from a more logical direction.  Exactly what does a first-line supervisor do?  This may be difficult to assess, because although supervising is not highly ranked in the job evaluation schemes used to set salaries, it is a complex task.  Put aside for a moment the fact that a supervisor is confessor, psychologist, and perhaps even psychiatrist to many employees. 

Let's focus instead on some of the technical aspects of supervision.  He or she is responsible for seeing that the material, tools, equipment, and facilities are available; for making sure the necessary workers are available; and for ensuring that they know how to do their jobs.  Later, he or she is responsible for the quantity of production.  And above all, for ensuring that quality meets specifications.

In short, the first-line supervisor is responsible for productivity, and in that word lies the secret to lowering costs.  It's been demonstrated over and over that the more and better supervision you have in a shop-like environment, the higher the productivity. 

That isn’t to imply or say that people don’t work without a supervisor present--the vast majority of people are eager to work, to produce, and to protect their company and their jobs by raising productivity.  A first-line supervisor isn’t a policeman who lashes employees at the post to keep them working.

Many years ago when I was a manufacturing engineering manager for a business-machine maker, we were bidding on a government contract.  “We’ll never get that contract,” my boss said, “unless we can get the labor cost down.”

“Let me add three foremen to the overhead,” I told him, “and we can reduce the labor cost 15 to 20 percent.”

“How?”

“Simple.  Three more foremen will supervise the people properly and raise efficiency 15 to 20 percent.”

We were talking about a direct labor force of 100 people.  A simple increase of 10 percent would be equivalent to ten people.  But I was talking about needing 15 to 20 fewer direct-labor people.

We did add the three foremen to the overhead; we did get the contract, and we did make money on the job—proving, once again, that additional supervisors reduce costs rather than add to them.

Not Counted?  Then non-existent.

There do exist organizations where people work as a team without supervision, and I've read glowing reports about how productive these teams are.  But what is forgotten is that the team members themselves do the work of the foremen; they perform their own supervisory tasks; they don’t work without supervision.  They expedite parts, they check tools and equipment, and do hundreds of other foreman's tasks; yet they all are considered direct labor and the cost of their supervisory work is never accounted for.  I’m not against the team concept; what I oppose is not accounting for this non-production work.

To me, the failure to acknowledge that productivity increases are often due to proper supervision is one of management's blind spots, and such prejudices, in an ill-informed mind, are hazardous to productivity. 

I’m sorry, friends, but laying off a good first-line supervisor will not reduce costs.  Payroll expenses may drop momentarily, but in the long run, the costs of that service will rise.  The secret to increased productivity in these support services lies in how efficiently they are run, not on the number of first-line supervisors.