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How to Optimize the HR Department to Avoid Overtime

Posted by  Mark Baars

Overtime is an expense, and it needs to be estimated, budgeted, and controlled. The size of the budget will vary based on the situation, but the mere presence of one helps people focus on the fact that overtime, used inappropriately, is a significant drain on costs.

HR is at the vanguard of making sure that payroll costs do not exceed budget expectations. The following tips shed light on ways to optimize your HR solutions so you can eliminate unnecessary overtime and achieve better business results.

What Are the Drivers of Overtime?

Several overtime drivers exist. Most of these are obvious once explained; others are more abstract. Examples include:

Poor planning

Poor planning results in bottlenecks that prevent the team from completing the work within their existing capacity. Planning problems usually arise when the sales, scheduling, and recruitment functions do not work together to ensure the necessary manpower.

Poor quality

Poor quality often results in overtime because the non-conforming product or service has to be improved or remade. The solution here is obvious; staff should receive the correct training to carry out their duties without error.

Inefficiency

In some cases, workers do not work as efficiently as they could for technical or process reasons. Automating routine tasks, getting rid of multiple data entry, and introducing technology-based work management systems can boost work-day productivity.

User manipulation

Some employees create situations in which overtime is required because they want overtime pay. Data is needed to assess individual utilization rates, identify repeat offenders, and then take steps to eliminate the problem.

Now that we have identified the common causes of overtime, what can HR teams do to reduce the unnecessary overhead? The following steps should pave the way for considerable improvement.

Three-Step Optimization Plan

Step #1: Automate and enforce your pay rules

Among the most pressing HR challenges is a need to reduce the amount of spreadsheets used to gather and present information - over-reliance on spreadsheets is time-consuming and may result in data falling through the cracks. With an automated HCM solution, HR departments can log hours and attendance in real time, capture overtime rules, and gain access to real-time metrics so that managers can see where and how overtime is being used. Drilling down into the data allows managers to identify patterns of overtime against output, and take steps to eliminate any disconnect.

Step #2: Shrink the administrative overhead

HR managers lose a tremendous amount of time each week responding to administrative queries, addressing complaints, and fire-fighting. Why not let employees get the information they want themselves? A Nucleus Research study, cited in Industry Week, suggests that giving workers self-service automated access to their own payroll, vacation accrual, and work-hours data can save $210 per employee annually - and leave HR free to pursue more strategic tasks.

Step #3: Gain control over employee churn

How much is boredom costing you? According to a Mercer survey, employee absences, lost productivity, and the cost of replacement labor/overtime - the side effects of boredom - account for six percent of base payroll. This is an unnecessary overhead. One simple solution is to adopt HR software that is designed to reduce employee disengagement. Best-in-class systems let you:

  • Track employee performance
  • Give regular feedback, recognition, and rewards
  • Develop self-directed career paths
  • Offer personalized training specific to each worker's needs
  • Shine a light on workers who exhibit problematic behavior patterns

These features have been shown to boost presenteeism and productivity, reducing the need for overtime to pick up other employees' slack.

Key takeaways

By automating workforce management functions such as time and attendance, performance, scheduling, payroll, and core HR, organizations can realize meaningful bottom-line results. Taken together, these capabilities give you the means to measurably boost core productive time in your enterprise and reduce the overtime overhead. For more information visit our Office of HR website.

Mark Baars

Mark Baars

Mark is an industry data analyst spotting the latest trends in business, finance, IT and education. At Unit4 Mark delivers relevant market insights and aims to support CFOs, CIOs, controllers and business leaders to resolve their daily challenges.

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