We’re going to throw a stat at you that might sound ridiculous, but depending on the size of your organization you could be victim to it too: Human Services organizations, on average, end up spending nearly $1 Million dollars annually in overtime pay.
If reading that sentence makes you want to hyperventilate into a paper bag for a few minutes, you’re not alone.
While incurring employee overtime costs are sometimes unavoidable, such as when there is an unpredicted spike in demand or vacancy in a position, it can easily become a very costly liability if it isn’t managed properly. Here are some methods you can use to reduce this "silent budget killer" at your organization and manage your staff better:
An audit of your agency’s overtime is a vital first step because you must determine the root cause of the problem and where the overtime costs stem from before deciding on the best course of action to resolve or reduce it.
Some of the things you need to find out are:
- How many overtime hours does your company currently incur annually?
- What is the actual monetary cost of this overtime?
- Where does this overtime come from or why does it occur?
- When does this overtime occur? Is there a trend, or is it seasonal?
Having this kind of data is critical to managing overtime costs and it’s worth spending the time and effort to collect and analyze this information properly.
TEMPORARY STAFF, SUBCONTRACTORS, OR ADDITIONAL EMPLOYEES
After completing an audit of your staff’s overtime hours, you may find that you have a seasonal or repeating pattern of overtime. If your agency’s overtime is caused by lacking staff members to cover these periods, then employing temporary workers or subcontractors could be a viable solution. Make sure to first weigh the costs of training and paying additional workers versus the availability of your existing employees and costs of paying them overtime premiums. Sometimes, adding a new staff member for a limited period of time is enough to make all the difference.
In addition, if you find that the overtime hours in your organization are fairly consistent and significant enough, then hiring additional full-time or part-time staff may be the best option to control it. Again, as long as the calculated costs and improved employee working conditions are deemed to be beneficial this can be a favorable solution.
If hiring new staff is not an option, another effective way to reduce overtime is to train your employees to perform the tasks for multiple positions. This gives you the flexibility to easily reallocate employees when faced with an unexpected increase in demand or shortage of labor. It also reduces the dependency on certain groups of employees who are required to work overtime due to their expertise in their position.
However, depending on your agency’s particular programs or services, cross-training employees for other positions may introduce its own set of complexities. From a payroll perspective, it can be daunting to pay employees who work in multiple positions that offer different rates of compensation instead of just a flat rate per employee. And if you do offer compensation for work outside an employee’s standard position, how do you track the hours and pay if the pay scales are different from position to position? From a scheduling perspective, how can you ensure that only those employees who are trained and qualified for a position be scheduled to work them?
With the right payroll software, such as Sparkrock’s Finance and Workforce Management solution, worked hours and pay rates can be accurately recorded for any worker according to the position they worked for any given shift.
Also, the Sparkrock Advanced Online Scheduling module allows you to define the minimum skills or certifications required for a given position. This ensures that only trained and qualified employees are considered eligible for filling a vacancy or demand.
Cross-training is typically a cost-effective alternative to hiring more staff, however if you are still strained to fill positions because of employee availability, hiring additional or temporary employees may be the necessary solution.
THE RIGHT TOOLS
Depending on how you structure your organization the task of creating your staff schedule may fall on different employees, but the individual who is responsible for creating the schedules week after week is your best resource to improve overtime management. This means that it’s important to equip them with the right tools to better understand where and why overtime is occurring and how to better schedule employees to avoid these extra costs.
But with so many options on the market, how can you determine which scheduling tool or system is right for your organization? Below are some standout features that will give you advanced scheduling capabilities that allow you to minimize the administrative burden of scheduling, maximize staff resources, and eliminate unnecessary overtime hours.
1. It integrates with other systems to access smart, connected data
Investing in an integrated scheduling solution that automatically pulls data from HR files allows you to easily determine who you can schedule based on availability in order to avoid double-booking or over-booking employees. Based on the information in the system, the scheduling tool removes employees from the available pool of candidates if they are scheduled for training, are on vacation, have declared sick leave, or are at risk of being pushed into overtime hours. This is all done automatically by the solution and does not require any manual effort, which reduces the administrative burden for your staff.
2. Automated workflows and warnings
Solutions that offer automated workflows and warnings, will automatically send alerts to remind staff and managers about confirmations of shifts, timesheet approvals, and overtime warnings, making sure nothing slips through the cracks and your process is running at maximum efficiency.
3. Shift Trading and Bidding
If you have open shifts that need to be filled, Shift Trading/Bidding makes finding replacements so easy that it’s basically automated! These features expedite the replacement process and provide you with the ability to react faster to employee absences to ensure your clients are always taken care of. You can post available shifts for employees to see online, allow them to bid for open shifts, and notify supervisors to approve or decline bids. Employees who are at risk of going into overtime will not have the ability to request shifts, ensuring that you don’t begin accruing overtime costs. Once a replacement staff member has been awarded a shift, the solution will automatically capture and adjust shift time changes within the system.
There are many different ways to manage overtime costs more effectively, but it starts with knowing what your current overtime situation is. First harness the power of analytics with workforce management tools that give you data-driven insight into your operations, then weigh the costs and implications of various solutions to find the best fit or combination for your organization’s situation. By using the strategies outlined above, overtime can stop being an agonizing liability and instead be a tool harnessed to meet demand when necessary.