"Idle time" refers to periods when employees in a facility are not engaged in productive work but still get paid at the regular rate. This is, of course, a waste of money for the organization and a major contributor to elevated costs. Quantifying this loss by measuring idle time helps managers identify the scope of the problem and take the right steps to correct it.
Identify the standard work hours for each employee. This is the amount of time for which a worker has been scheduled to work and must therefore be compensated. This figure is easy to obtain, since records will be kept with such things as punch cards, electronic tags or supervisor time sheets. If you are calculating idle time for an entire department or company as opposed to a single individual, add up the standard hours for all employees in the group of interest.
Calculate the actual work hours for each employee. This is the total amount of time a worker is engaged in productive activity. Any time a worker is unable or unwilling to work on her regular tasks due to factors such as a lack of raw materials or machines that don't work, these hours must be deducted from her standard work hours to arrive at her actual work hours. Keep in mind, however, that most jobs naturally involve some wait time. For example, a worker may routinely wait five minutes after pouring molten metal into a cast to ensure it settles properly. Just because an employee appears to be doing nothing to an outsider does not mean she is not engaged in productive activity. Therefore, you should calculate actual work hours with the help of a departmental specialist to avoid making mistakes in your calculation. Once you find the actual hours for each worker, add them up for the group whose total idle time you want to calculate.
Subtract the total number of actual hours worked from the standard hours. The difference is the idle time. It represents the total work hours the company has paid for without getting anything in return. While you can't expect to have zero idle time, you can greatly reduce it through careful scheduling, training and logistics.
Hunkar Ozyasar is the former high-yield bond strategist for Deutsche Bank. He has been quoted in publications including "Financial Times" and the "Wall Street Journal." His book, "When Time Management Fails," is published in 12 countries while Ozyasar’s finance articles are featured on Nikkei, Japan’s premier financial news service. He holds a Master of Business Administration from Kellogg Graduate School.