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In part 1 of this blog series we focused on current trends in building human capital in chemical industry. If you missed Part 1 the blog post can be found here. This week I will focus on the key factors an HR manager of a chemical company will consider while building and managing human capital in his company. These factors include workforce costs, workforce productivity, and ensuring and executing safe and sustainable chemical plant operations.

Workforce Costs:

Chemical Industry operations are characterized by low margins and profitability pressures (arising due to volatile raw materials and energy prices). In Chemical industry, it is estimated that workforce / labor costs amount to 10% to 12% of total production costs. Hence to ensure and achieve a sufficient profit margin, HR Manager in a chemical company would like to ascertain workforce costs and compare / benchmark them across regions and companies operating similar


HR Manager should also be able to split total workforce costs into different workforce categories (like Support & Maintenance workers cost).

Workforce Productivity:

The chemical industry operates asset intensive plants – hence they have a huge fixed cost component in their product cost statement. The chemical industry needs to sweat their assets, to ensure that they run at optimum throughput and produce required / high quality products.

To accomplish this, chemical enterprises require skilled and trained workers. They need these workers to focus on key value adding activities in its operations. A chemical company should evaluate its material and manufacturing flow and shop floor layout to reduce unnecessary tasks, define standards for jobs / tasks, measure and report plant performance so as to evaluate overall efficiency and productivity. A chemical company can evaluate metrics (like production volumes, % of 1st Quality produced, plant on time %) to ascertain and calculate workforce productivity.

Safe and sustainable Chemical Plant Operations

Chemical plants process and handle hazardous substances and its operations are characterized by extreme process / operating conditions (e.g. Naphtha is cracked in furnaces at 800+oC). These challenging and tough shop floor operations requires skilled & competent workforce. New employees in a chemical manufacturing firm cannot be put into productive use on the first day. They need to be trained, appraised about operational complexity, assessed and evaluated for the job.

For safe plant operations, chemical companies need to assess the shop floor to ascertain hazards and risks which can impact workers (operating in the shop floor) well-being. Accordingly, they need to take adequate preventive measures to mitigate risks (which impact safe operations on the shop floor). Chemical Enterprises can design innovative training programs, periodically evaluate training needs, conduct refresher courses, streamline operating processes and keep SOPs up-to-date to ensure that workers execute safe manufacturing operations.

Additionally, in order to ensure the well-being of its workforce - chemical companies need to design an effective inspection program, which will lay down protocols / schedules for examining the health of its workforce. This inspection program should be designed based on exposure to hazardous chemical substances and operating conditions in a plant.

It is vital for chemical companies to evaluate and analyze each incident (like near-miss) to formalize corrective measures and practices that are required to be followed / implemented to ensure incident free plant operations.  These corrective measures and practices can help identify shortcomings in processes. Chemical companies can setup a culture which emphasizes incident free and productive plant operations by rewarding workers (for their proactive safety activities like suggestions to improve operating processes) and by including the safety performance of a chemical plant as a KPI in a worker’s performance appraisal framework.

These factors (related to Human Capital) are by no means all that should be considered to ensure profitable and sustainable plant operations in chemical industry. Do you make sure these key priorities are met while managing your human capital? Would you add any key factors that need to be considered?

Use the comment space below to share your thoughts or connect with us at @SAP4Chemicals

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