Coaching Employees About Costs

by Don Tyler

Our production costs continue to increase in nearly every area, and the trend will no doubt continue for some time. Unfortunately, the youngest generation of the workforce seems more disconnected than ever from a general concept of what it costs for the inputs and supplies they use every day. As I work with production employees, I sometimes do a quick survey to see if they know the cost of the materials and equipment they are using. Whether it is an implant, a pharmaceutical, a weed killer, an insecticide or even the syringe or implant gun they are using, they rarely know the cost.

Some of this lack of knowledge is the fault of the manager for not sharing this information, but in most cases the manager has told them and the employee either forgets—or doesn’t see the importance. When an employee is using thousands of dollars of a product every day, they should be expected to know exactly what it costs. Some are shocked to find out that the small bottle of antibiotic they are using costs as much as $750, and they go through several bottles in a week, or even daily.

Since many of our younger employees did not grow up in an environment where these costs were discussed regularly, or in a situation where they had to buy these items to use with their own animals, we have to be more diligent in communicating these costs. A handful of operations that I work with do a good job of instructing their employees in this area. Here are a few of their techniques:

• For a period of time, perhaps a month or so, put prices on all the supplies they use. Buy some adhesive price tags or brightly colored round stickers to put the price on the container. This reminds the employee of the cost every time they pick it up to use it.

• Relate your costs for items to something they are familiar with, such as, “Just so you know, every time you use one of those bottles of antibiotic, it costs the same as an iPad.”

• On a regular basis, review the costs of specific items during staff meetings and training sessions. Write the costs on a whiteboard or notepad so they can visualize the number.

• Establish monthly budgets for each department for supplies, pharmaceuticals and other regularly used items. Track the use of these items every month and discuss the ability of each department to stay within those budgets.

• Talk about the cost of your various regular treatment regimens and procedures. Your employees should know the total cost of each procedure that they do, whether it is the regular treatment for processing new cattle or treatments for specific ailments and conditions. This cost should include a breakdown of labor and equipment costs as well, so they get a full appreciation for the total expense of taking an animal through a specific regimen of treatments.

• During a regular meeting, have simple prizes for the employees who can correctly state the cost for specific items. Bring four or five items in to the meeting, hold them up one at a time, and ask them to write down the cost of each item. Have a candy bar, can of soda or other treat for the person that gets individual prices right, and then an additional prize for the person that comes the closest on all the items combined.

• Include the employee’s understanding of costs in their regular performance evaluation. This emphasizes the importance of knowing these costs, and ties their understanding of costs to the assessment of their overall performance—and perhaps their compensation.

The items mentioned here are day-to-day supplies and equipment, but the same techniques can be used to emphasize other costs such as fuels, lubricants, feed ingredients, feed truck chains and four-wheeler fenders.

The more that we help employees understand our costs, the more we can hold them accountable for reducing waste and keeping those costs to a minimum—and maybe even develop ideas on how to reduce costs in their particular area of the operation.    

Don Tyler is the owner of Tyler & Associates, Clarks Hill, IN. For more information on these and other employee management topics, contact him at 765-523-3259 or don@dontyler.com

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