Overtime 101

I am writing a book about Shiftwork Operations in general. The chapter on overtime is easily 4 times longer than any other.  It's a complicate topic that is often a moving target and certainly - one size does not fit all.

I am planning several posts on the subject of overtime for for now, I just want to put out a few basic principles.

There are two basic types of overtime: Scheduled and Unscheduled.  Scheduled overtime is overtime that is an integral part of a shift schedule.  For example, a typical 24/7 schedule that uses four crews will have an average of 42 hours of work per week.  Those hours, in that schedule, that are in excess of 40 per pay week will be paid at the overtime rate.  These scheduled overtime hours are such an integral part of the schedule that an employee must take vacation to miss them.

Unscheduled hours are those hours added to the schedule but are not part of the regular schedule.  These hours can be scheduled way in advance or at the last minute.  The key is that the basic day-in-day-out pattern does not include these hours.

I take the time to distinguish between these two because when people talk about overtime, it is almost always in reference to Unscheduled Overtime.

There are two ways to calculate the rate of overtime.  It is either (a) Total overtime hours divided by total hours or (b) Total overtime hours divided by total straight time hours.  I prefer the later.  So, if you have a 40-hour schedule and you work 44 hours in a week, you have 10% overtime. (4/40 = .1).

How much overtime is the right amount?  The short answer is between 5% and 15%.  There is a much, much longer answer that takes into account things such as costs, seasonality, labor availability and fatigue.  I will go over those some other time.

The number one myth associated with overtime is that it is much more expensive than straight time.  The reality is that overtime is probably less than 10% more expensive than straight time.  This is because the benefit burden on straight time is probably about twice that of overtime.  Think about it.  When an employee works overtime, they don't earn more medical benefits, do they?

As far as the typical workforce is concerned, about 20% hate overtime, 20% love overtime and 60% will work their fair share.

Overtime causes fatigue, turnover, safety problems and overall disgruntlement amongst those that are forced to work it.

Overtime offers the opportunity to make more money, control costs and move labor to where the work is.

There are good and bad points to any amount of overtime.

Companies that operate with zero overtime are overstaffed.

Companies that think they can save money by eliminating overtime are correct only so far in their current inability to manage their workforce.  If the workforce is properly managed, then eliminating overtime means bringing in more straight time hours which has a marginal savings at best.

For more on overtime, check in on this blog from time to time.

If you want to speak with me about your overtime situation (no charge), I can be reached at (415) 472-3688.  Ask for Jim Dillingham.  Or, you can email me at jim@shift-work.com

Thanks for reading.

Jim

Open Shift Management

It's finally here!

Our software partner, Shifthound, has completed work on our new Open Shift Management software. It is ready for you to use starting immediately.

Here are a few scenarios that demonstrate the software's features:

1) You are on a 4-day break and decide that you want to go into work and get a little overtime. By logging on to your personal site, you find that there are several openings available. You request the one you want. A few minutes later, you receive confirmation that the work has been given to you.

2) You are a supervisor. After you log into the software, you find there are several vacation requests. At your fingertips is the information you need to approve or turn down requests (seniority, how many are already off that day etc.). As you approve a request, the individual is notified and an opening is created on that shift. Immediately, everyone that is qualified to cover that shift is notified of the opening (Email or text message). A few minutes later, you can see who wants the shift and are able to assign the coverage to the most appropriate person. As you make your decision, all of those that requested the overtime are notified.

3) You are a plant manager, concerned about absenteeism. You log onto to the program and have instant access to an absenteeism report that can be broken down by why and when people were absent. You can look at a specific time period, a specific crew or even a specific person.

One of the best features of this program is that you have no software to install. Everything is managed from a secure server. We provide the training (at no cost). We do all of the setup (at no cost). We provide regular upgrades (at no cost).

For a free online demonstration, call us at (415) 472-3688

Covering a 12-hour vacancy

There is no doubt that shiftworkers prefer 12-hour shifts over 8-hour shifts. It's not that they like being at work for an extra four hours. They like the additional 91 days off a year.

Therein lies the problem.

With so many days off, it seems that the crew you need to get in touch with for absentee coverage is always gone.

8-hour shifts offer the following two conveniences: First, you can always ask an 8-hour person to stay over. They are already at work so contacting them simply means walking out to their work station and tapping them on the shoulder. Secondly, they are at work on 75% of the days of the year. If you need to change their schedule on a specific day, the chances are good that you just go out onto the work floor and tell them. They are probably there.

12-hour shifts have neither of these advantages. You don't want to ask a 12-hour person to stay over for 4, 8 or even 12 hours. Also, they only work 50% of the days in the year. So, if you want to go out on the floor to tell them their schedule is changed, there is a 50/50 chance that they are on a day off and not on the floor.

The single biggest reason, by far, that companies on 12-hour schedules contact us is because of problems with absentee coverage.

People are on their days off when you need them. Your supervisor makes one call after another until someone answers their phone and is willing to come in. This is a time consuming process that takes your most expensive asset and turns it into a telemarketer.

There is a solution.

Shiftwork Solutions and Shifthound have partnered together to develop software that greatly simplifies absentee coverage on 12-hour shifts. While it works with all types of shifts, 12-hour schedule tend to have the biggest problem and would thus have the biggest benefit.

The program takes advantage of the overwhelming prevalence of cell phones, text messages and the internet.
For example, if there is a last minute opening, a supervisor can send out an overtime request to an entire crew that is schedule off. Instead of making one call after another, everyone is notified in moments.

We know that about 20% of all shiftworkers will work all of the overtime they can get. If an entire crew is notified of an overtime opportunity, the positive responses should come in quickly. They can accept overtime via text messages, email or online through the Open Shift Management program.

For more information about this product, call our office at (415) 472-3688 or visit our website at www.shift-work.com.

Overtime Management Software

Every company struggles with the issue of overtime.

• How much is the right amount?  
• How should it be distributed? 
• How can you find volunteers or determine who gets mandatory overtime?  
• What options do you have beyond using overtime? 
• What do overtime laws say?
• What does your union contract or employee handbook say?
• Who worked it last and who will work it tomorrow?

Now there is software that enables you to manage your overtime accurately and efficiency.  All of the tools you need to make decisions are at your fingertips.  This software takes advantages provided by the widespread use of the internet and cell phones.  Your employees can see what overtime is available from anywhere they have a cell or internet connection.  They can request overtime or find out if their requests have been approved.  All without resorting to the old fashioned method of having to travel to the work and check a bulletin board at work.

Automated emailing makes notifying the workforce of changes to their schedule a breeze.  Communicate with an entire shift or just a few select individuals.

For more information about this product, go to www.shift-work.com.

Jim