The trouble with overtime

Internal audits across government entities are revealing more about employee overtime practices than ever before—both good and bad. The media’s attention to misuse of overtime and its cost to taxpayers is causing governments to take an axe to overtime budgets. But this doesn’t solve the problem.

Taking a step back and looking at the overtime data—and using that data to make better decisions and to take proactive measures against potential fraud and abuse—can have far better results.

The absence of a clear overtime policy or lack of adherence to overtime policies are both examples of “uncontrolled overtime.” Often the people managing these policies are not payroll experts and are not equipped to interpret the rules. The issue is not “how much you are spending on overtime?” Rather, the question we should be asking is, “how you are managing it?”

In a recent report written by Barrett and Greene (B&G), titled, “The Great Overtime Dilemma,” the duo addresses concerns from public organizations across the country about getting their overtime under control. B&G write: “Although overtime may be expensive, it is critical to distinguish the instances where it is both necessary and useful from those where it is unnecessary and possibly even risky.”

Unfortunately, the inability to change this mindset is often what stands in an organization’s way. The word “overtime” has a negative connotation. The fact that it’s sometimes essential – and if used appropriately can actually save money – gets lost. But if municipal leaders can manage to distinguish the necessary from the unnecessary, the useful from the risky, and the good from the bad, then overtime can be seen and leveraged as a way to solve budget issues.

According to Barrett and Greene’s research, there are three areas to explore under this concept:

Data and Documentation – Governments are under increased pressures to respond to overtime inquiries both internally and externally. The ability to obtain overtime data quickly and analyze it is crucial—it holds many answers to questions about when, why, and how overtime was used. Analyzing the data strategically—and frequently—can even alert managers to trends and patterns that could be corrected ahead of a problem.  For instance, in Georgia’s Department of Corrections, B&G found that HR leadership has a goal of monitoring overtime data on a daily or weekly basis. This, B&G have found, is an important step in making use of the data at hand.

Approval and Monitoring Process – Without oversight into who gives and gets overtime, the door is open for misuse and abuse. As one example from B&G’s research shows, leadership in Rockingham County, New Hampshire, found that an increased emphasis on overtime monitoring has helped their managers properly code overtime use within the county’s long-term care facility. By determining how overtime was being used by their nursing and support staff, the county was able to make a more accurate comparison of costs between in-house staffing and outsourced agency staffing.

Analysis of Staffing and Scheduling Needs – Labor distribution is tricky. Governments are expected to deliver a set level of services, regardless of the number of employees they have on staff to perform the work. So naturally, in situations where departments are understaffed, this is frequently where overtime comes into play. But automated scheduling systems can help distribute overtime in a more equitable way. According to B&G, “This corrects a common overtime issue in which a disproportionate amount of overtime dollars goes to a handful of employees, and others, who would like to earn extra dollars, get left out.” They point to an example from the Arlington County (VA) police department, where, with the purchase of a new scheduling system, managers have been able to exert more control over the distribution of overtime. According to Michael Quigley, tactical operations commander at Arlington County Police: “We’ve been successful in demonstrating to newer employees that, across the board, every employee is important to us.”

When used strategically, overtime is a tool to help governments keep costs down. As leaders continue to deal with mounting budget pressures, it is important to not slash overtime, but rather look for solutions to effectively manage it.

Jennifer Dowd is senior manager, public sector, at UKG (Ultimate Kronos Group), a global provider of HCM, payroll, HR service delivery, and workforce management cloud software solutions.