I am responding to your inquiry regarding internal blogs and its use to incentivize communication between different parts of our company. We have a global presence and we operate in different parts of the hearing aid industry. We have individuals scattered all over the world who speak different languages and have many cultural backgrounds, each with a different perspective on the industry. They will never be able to efficiently communicate with each other on daily functions. I understand you would like to use a blog on our Intranet site to connect all of these individuals in order for ideas to be shared across the company on how they tackle their daily tasks and ideas on we can be more efficient.
Like many other issues this one has its pros and cons. The biggest pro I see is that it has the potential to save many labor hours. People can openly discuss day to day issues they have resolved in their particular aspect of the business. For instance, a finance team in Denmark has figured out how to get payroll data electronically which will allow them to upload the figures instead of manually entering it, saving them 3 hrs each month. This team will be encouraged to post this new found knowledge on the blog and can be a highlight on the Intranet home page. Another example is a production manager in our Poland facility has designed his line to save 8 minutes off of each unit produced. As you may know we produce 100s of thousands of units each month and if we can shave 8 minutes off a unit produced we may be able to reduce one or two head which will make a real impact on our Gross Margin figures.
Here are some figures that can give you some perspective on how both examples can impact our bottom line. An average finance person makes $25/hr. The one blog entry regarding saving 3hrs each month can save our company $75/month per finance team. We have 15 finance teams doing this task which gives us a total savings of $13,500 each year, though this figure seems small relative to the volume we produce it is from one blog entry and one specific activity. The second example has a much bigger impact. We produced 330,000 units last year that are influenced by the activity the production manager in Poland helped shorten. It costs us $120 per unit in direct labor which takes an 1 hour to complete. 8 minutes is 13% of an hour which relates to $15.6 per unit. Our total savings from this one particular blog posted from a mid-level manger in Poland could save our company $5.148 million each year. This is real savings that has a direct impact on our bottom line.
The biggest con I see, besides the blog not being used at all, is if our employees are so motivated to come up with blogs and ideas to help the company that their work productivity is hindered. Production managers might not be as focused on what is happening that we could add 8 minutes to the production time which would increase our costs by the same $5 million. There is also the possibility of creating more work than needed. For instance, using the payroll as an example. If one of our finance teams attempts to duplicate the new payroll function and spend weeks trying to figure out if and how to integrate this in their process but in the end find out they can't. This of course would cost us money in labor hours wasted.
My recommendation would be institute the blog and give clear guidelines on how they should be used and that current work should not be affected. If we can make it convenient for managers and entry level employees to access and jot down ideas but not a time consuming task the company can really benefit. Moral would be high since those we can bring something positive to the table would be reward in some reasonable way and recognized throughout our organization.
Please let me know if you would like to sit down and walk through this recommendation to hammer out some of the details.