We’re all currently facing the fact that the coronavirus pandemic is transforming how our businesses operate. For many companies, a steady supply of products, materials, and labor is becoming more difficult to obtain. The spread of COVID-19 is leading to fewer workers available due to illness, quarantine, or taking care of someone who’s ill. On top of that, those employees that are able to work are working around the clock to meet demands, contributing to a rise in overtime.
In this kind of environment, how can organizations balance minimizing the financial impact of overtime on their business with keeping their employees safe and avoiding burnout? These four practical tips can help you get there.
1. Determine or revise your labor budget
First things first, you need to understand your budget, whether that means taking another look at what you already have or building something new. An up-to-date labor budget can help you evaluate your current situation and better arrive at your desired outcomes.
You’ll want to include the number of overtime hours you expect for each position you’re staffing to cover the labor needed and calculate the hourly overtime pay for different roles. It will be important to also add any payroll taxes to this number. Having this information will help you compare your labor budget with your master budget to see where you stand and areas where you can scale back. Remember to focus on what’s absolutely essential to keep your doors open while also minimizing risk for your employees.
Regardless of if you’re looking to cut down on overtime to meet payroll or you need to manage necessary overtime, this budget comparison will be critical. Paying more overtime than projected can have negative effects on your bottom line – which is especially troublesome when margins are as thin as they are right now – and can overtax the employees you still have, causing secondary impacts on productivity and flight risk and potentially leaving you with even fewer resources.
2. Review and evolve your business continuity plan
Most employers have a business continuity plan in place in the event of a disaster, and many companies feeling COVID-19’s impacts are using this time to evaluate their plans and make any necessary adjustments. If you decide to revisit your plan, you may want to consider how the changes will impact your current situation and how your new practices will impact future processes.
One area that often gets overlooked in a business continuity plan is payroll. Payroll plays a key role in keeping your organization stable and should be considered in any revisions you make. You’ll want to ensure that especially during a disaster your employees are being paid on time and accurately.
For example, you may now have remote workers to consider or different ways you need to allocate pay rates for different jobs. In addition, you may have changes to your policies around accruals and sick time. Whether you have remote employees or not, keeping track of all hours worked will be critical. Having that insight helps ensure your payroll is accurate and helps you manage overtime.
3. Cross-train and reskill your employees
Now more than ever, employees are having to adjust to new demands, types of work being performed, how they perform that work, and the skills needed for those tasks. For a lot of people this can be a real challenge. Many companies are looking at their workload and the amount of people that they have staffed to find flexible ways to reallocate and reskill employees.
Implementing a plan to cross-train employees to work in multiple roles can help reduce overtime, spread out workloads, manage increased demands, and ride out labor shortages. Using a skills matrix allows employers to quickly see who can cover which role and where short-term training might be needed. This ideally would be handled by HCM software that can automate the process of finding employees that have the skillset and/or certifications to fill open positions, as well as looking at performance and succession planning information to see who’s likely to be effective working in multiple roles.
Another major benefit is that if you have employees who are out sick and unable to perform their job, cross-training will help employees who are working fill necessary gaps – and even in some cases help them stay on your payroll when the hours or need for other kinds of positions are reduced. Not only will you be able to gain greater control around overtime cost, you’ll relieve staffing concerns and help employees feel secure in their jobs.
4. Establish and monitor schedules
As workloads escalate, companies should pay close attention to the number of hours employees are working and ensure they are aligning staffing and scheduling to the actual demand. You will want to match employee availability, skillsets, and preferences as your business demands change. The last thing you want during this time of crisis is to not have enough staff or the wrong staff scheduled.
Managing absences through your schedules will give you insight into the number of employees needed to cover the workload left behind. Companies will also want to ensure that employees still working receive breaks. As I already mentioned, burnout during this time can be significant and can lead to additional complications. Closely monitoring schedules, providing breaks, and paying attention to hours worked can help balance the workload and reduce the risk of employees burning out.
Failure to align your schedule accurately with your company’s needs can increase your amount of overtime costs. The key here is to have real-time insight into your employees’ schedules so you can better estimate workloads and manage your active workforce accordingly.
Conclusion: Make sure you're making the right budget and overtime decisions
Today more than ever, companies are monitoring their budgets to ensure that they can pay their employees accurately and on time. Whether overtime is necessary or not, making a few adjustments can go a long way during this time of uncertainty. Your business could be affected by COVID-19 for a long time to come, so start your plan of action now and look for ways to mitigate the impact.