Other Dimensions: Cost-Cutting Cowboys

March 30, 2009
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The worldwide financial mess leads many to the simple fix for the bottom line: reign in costs. With such a Western flavor to the term, it is understandable that people consider hiring cowboys to do the job. With due respect to real cowboys, I’m referring to those who seem to know what they’re doing-but often do not. Such individuals are found in many occupations where skill and knowledge are required. They are cheaper than the regular ranch hands, or at least appear to be.

It all starts with a cost reduction edict, and payroll is the first target. Invariably, an axe is used when a scalpel would be more appropriate. People with the highest pay and seniority are primary targets, and often a lot of expertise goes out the door. Even higher on the list are employees who don’t appear to directly help the bottom line, such as folks doing in-house calibration work. To ease their departure, many are offered the opportunity to bid on doing their old jobs as independent contractors. Many companies believe this will save money because they will only be paying for what they want done when they want it done.

Some companies may have had an accredited laboratory doing the work onsite and then decided to bring the work in-house and hire contracted personnel to do it using the company’s equipment and procedures. In this case, all they hire is a warm body, working under minimal, if any, supervision. ISO 9000 and similar standards allow a company to do this with few limitations, so any staff or contract employee can be used.

Former employees working under such a scheme are at least of a known quality, but too often people working in this way are complete unknowns with minimal training. Cowboys save the company money by not being accredited or working to any known calibration standard. They don’t have to because they’re following the company’s procedures, which, I’d assume, have been approved by its quality registrar. They don’t have to have their own equipment or masters, which means that companies employing them appear to be getting their calibration taken care of on the cheap. But these and other elements of such programs could end up costing as much or more than a staff person.

A lot of in-house calibration procedures are written around equipment the company has on hand, not necessarily what it should have. Calibration results are put at risk. Hired hands are not going to question the procedures that feed them even though they might know better. And because most quality registrars do not have calibration specialists as auditors, wonky procedures get approved all of the time.

Many companies today will not allow outsiders to work on their premises unless they can provide proof of liability insurance-usually at least a million dollars worth. If a company uses outside contractors they should have such coverage, which should be more than protection in case they damage something at the location. It also should include liability coverage to protect the company in the event product or service liability problems are traced back to their calibration work. If it doesn’t, we all know who will have to pay up.

In a similar vein, many jurisdictions have mandatory insurance requirements to cover workers injured on the job. Such agencies will usually provide a certificate of insurance so the company can be assured that any outsiders are covered while on company property. If the worker has an accident without such coverage, the law may require the company to pick up the tab by raising the rates of the plan that covers its staff.

Another issue involved in bringing in outsiders is confidentiality. Outsiders have less to lose for a breach of confidentiality than staff members.

Like anything else in life, low costs often mean high risks. If you intend on handling your calibration work in this manner, make sure you don’t end up with a bunch of cowboys in your corral. If things go wrong, you may find yourself riding off into the sunset with them.

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