Labor can be the largest cost in any organization, and one that is controllable, especially when you utilize industry leading technology to manage employee leave and absences, both planned and unplanned, in employee schedules. Efficient allocation and management of labor hours positively impacts revenues. Inefficiencies can increase costs, decrease profits and create dissatisfaction to both employees and customers.
The Labor Management Institute (“LMI”), a leading research, education and consulting organization, specializes in time and labor management, productivity optimization and automation. The Labor Management Institute has worked with organizations of all sizes in many industries over the last 30 years to analyze time and labor management practices. It finds correlations in both worked and non-worked time that contribute to the abuse of labor hours in the form of extra and unnecessary overtime, conflicts in practice and policies, cost overruns to budget and adverse outcomes to employees and customers.
LMI identifies 8 critical time and labor management best practices to help you control labor costs and align staffing with budgets more efficiently and effectively.
The 8 Critical Time and Labor Management Best Practices
No. 1: Limit overtime – Less than 5% of total worked hours.
No. 2: Automate and integrate Time and Attendance and Scheduling systems to prevent redundant data entry, errors and omissions.
No. 3: Optimize responses deficit demands through planned full-time/part-time employee ratios – 70% full time; 30% part-time. Every department needs some committed part-time employees in their workforce management strategies to provide a source of labor at non-overtime or premium rates to accommodate fluctuating workload and replace employees for both planned and unplanned absences. This ratio may vary depending on weekend requirements, but should avoid reducing number of full-time staff to less than 50% of total employee positions.
No. 4: Limit planned absences greater than 10% of total hours worked. Department leaders may want to approve all requests for vacation or planned time off however, when they approve more than 10% of total worked hours for vacation or planned time off, it often exceeds the department’s ability to operate without overtime.
No. 5: Limit unexpected absences greater than 5% of total hours worked. An “unexpected” absence is any absence from a scheduled shift for any reason other than planned vacation or annual leave. The source of these absences can have myriad reasons and may be early warning indicators for unit-based incivility or bullying which should be addressed by leadership.
No. 6: Implement strategies to replace Leave of Absences (LOA) greater than 10% of total hours worked. LOA protections for maternity leave, extended sick leave and other reasons are well documented by human resources in all organizations. Every department can cope with some amount of LOA, however, when it rises above 10%, it often exceeds the department’s ability to operate without overtime and requires thoughtful strategies to replace these vacant shifts until the employee returns to work.
For example, strategies may include the use of extra worked hours from part-time staff, an internal resource pool, or an external source such as an outside agency or temporary workers.
No. 7: Implement strategies to prevent vacancy greater than 10% of total employees. Every department budget allocates hours and dollars for the total positions needed for the forecasted workload. When vacancy rises above this threshold, it often exceeds the department’s ability to operate without overtime.
No. 8: Limit supplemental or non-core staff greater than 15% of total employees. Core staff includes all full-time and committed part-time employees assigned to the home department.
Supplemental staff includes all unit-based contingent/per-diem/temporary employees as well as all non-core employees from any source (e.g., floating from other units in the organization, outside agency/temporary or travelers). Often the supplemental staff is less familiar with policies, procedures, co-workers, and supervisors and are considered “strangers in the department”.
Managing a workforce sounds pretty simple, when in reality it’s anything but. You’re tasked with boosting productivity and controlling costs, while juggling HR-related compliance. There’s no doubt that time & labor management is a complex undertaking — and one misstep can cost you.
Automating and implementing these best practices in your organization can help you make better decisions related to variable workload, labor shortages, employee competencies and skill shortages while adhering to organizational budgets.