Annualised hours systems were first adopted in the UK in the early 1980s. Based on Scandanavian models, they were a response to the challenging market conditions and operational practices of the time and targeted as cost reduction and efficiency improvement vehicles.
Perhaps even more importantly, those organisations implementing them found that the concept had additionally provided a powerful catalyst for change in how their business operated and the relationship with their workforce.
Today, however, annualised hours seem to have developed a bad name. Organisations steering away from those principles either by way of reputation or through failed ‘local’ implementations.
However, the principles of annualisation are still sound and viable in today’s market and perhaps even more so than ever before.
Very simply, annual hours or annualised hours is the term used to describe a contract which states the agreed number of guaranteed hours the employee is contracted to work through a twelve month period. This is different from a standard weekly contract e.g. 38, 40 or 48 hour week – each week, every week. An ‘Annualised Contract’ allows the organisation to increase or reduce, in advance, the required numbers of hours to be worked at a given time to match the needs of a business.
To receive workforce planning white papers, case studies and blogs, click here to sign up for our monthly Workforce Management Bulletin.
Why use annualised hours?
There are many reasons why an annualised hours system might be appropriate for an organisation
- ‘Seasonality’ in business demand
Increased hours in peak seasons and reduced hours in low seasons but overall working within the annual hours agreed
- Flexibility – ability to react to fluctuations/volatility in demand
To cater for unpredicted peaks and troughs but working within the framework of having an agreed amount of contractual hours
- Promotes long term planning – because the organisation is tasked with forecasting/modelling demand up to a year in advance then focus is placed on the value of planning and the processes that will provide the most accurate data
- Provide flexibility to the employee
To allow employees flexibility within the design process and to be able to tailor their work hours to meet business demand within a flexible framework that supports non work activities and commitments
- Reduction in overtime dependency/overtime culture
To balance hours planned and work patterns with ‘true’ business demand profile thereby reducing the amount of unplanned spikes in labour demand and balance the hours worked evenly across the whole workforce
Introduction and management
Outlined below are some pointers and guide lines to a successful introduction. Whilst there is never certainty of ‘success’ by doing some of the below you’re giving yourself a very good chance.
- Have a clear rationale for change outlining the business case and background
- Communicate and engage. Working time change is highly emotive and therefore the involvement and engagement of key stakeholders is critical
- Don’t start with the solution ‐ have no pre‐conceived ideas that stifle creativity and create the belief that decisions have already been made
- Start with demand ‐ what is the ‘true’ business demand. Are we constraining it by our own behaviours? Is it what the customer wants and when they want it?
- Review and refine – demand and circumstances change so don’t be afraid to review. Keep it two way – how can the business improve ways of working, how can the employee benefit?
If you would like to find out how demand-led rostering techniques or annualised hours, click here to arrange a free 1-2-1 consultation at one of our Shift Planning Clinics.