Collective liability: advantages and risks

Three people pick orders on the day shift and another three on the evening shift. All take stock from one zone, and everybody has a key. At the end of the month the revision shows a shortage of 6,000,000 so'm and everyone gives the same answer: "Not me, it was the other shift." That is the typical picture where responsibility is not divided: the shortage exists, but it has no owner. Can collective liability fix it? Sometimes yes, sometimes no.

What collective liability is

Several employees receive, store and issue goods together, and the limits of each person's responsibility cannot be separated. In that case the agreement is made with the whole team, a team leader is appointed, and the damage caused is shared among the members. The split usually depends on each person's time worked, pay and degree of fault.

This form is provided for in legislation under certain conditions: the work must really be inseparable, and the agreement is drawn up in writing and signed by all members. Check the exact requirements with a lawyer.

A simple example shows how the split works. Say the damage is 1,200,000 so'm, three employees are paid the same, and A and B worked 22 days in the month while C worked 11. The shares come out at 2:2:1: 480,000, 480,000 and 240,000 so'm. If one person's fault is proved separately, his share changes. This calculation alone shows how complicated the collective form is.

Advantages

• where responsibility is not divided, no shortage is left "ownerless";
• employees watch one another, and the team itself stops carelessness and quiet taking;
• work can be organised flexibly: shifts rotate and an order is easy to pick together;
• the team teaches a newcomer the routine.

Risks

• "If everyone is responsible, nobody is": each person counts on the others;
• unfairness: a conscientious employee pays for somebody else's mistake, and the best people leave because of it;
• the share is hard to prove: an argument starts over who pays how much;
• mistakes are hidden, because the team protects one of its own;
• when the membership changes (someone leaves, someone joins), a new count and a new agreement are needed, otherwise nobody knows whose shortage it is.

The middle way: a mixed model

Often the best solution is not pure collective liability but clear zones of responsibility:

1. Personal responsibility by zone. Every row of racks has its own owner.
2. Expensive and small items (the 50 most expensive positions) are kept in a lockable place under one responsible person.
3. Shift handover. At the end of a shift the expensive positions are counted and handed over against a signature, the outgoing shift to the incoming one.
4. For cheap, bulk goods, team control or loss allowances are used.
5. A key log and access control.
6. Spot checks: once or twice a month count one zone without warning.

A hypothetical example. In an online shop's order-picking warehouse, three shifts work in one shared zone, and at the end of the month the shortage is 6,000,000 so'm. The manager introduced collective liability: in the first month the shortage fell, in the second it grew again, and two experienced employees left because they did not want to pay for other people's mistakes. The warehouse was then divided into zones and shift handover was introduced for the 50 most expensive positions. Three months later the shortage dropped to 1,500,000 so'm and, most importantly, every difference now had an owner.

How to introduce it

1. First check whether separation is possible: can a separate zone be assigned to each employee? If so, personal responsibility is preferable.
2. If a collective form is needed, make a written agreement: signatures of all members, a team leader, rules for dividing shares.
3. Hold a count before introducing it and whenever the membership changes.
4. Restrict access and keep a log of keys and entries.
5. Hold revisions regularly, monthly or quarterly.
6. When a shortage appears, do not split the share at once; analyse the cause first, which is most often an error or a document.

Conclusion

Collective liability partly solves the problem of the "ownerless shortage", but it also creates unfairness and difficulty in proving fault. In most warehouses personal responsibility by zone together with shift handover works better. The Reviziya team can help review the division of responsibility and set up the structure.