Break it Down – Managing Labor Expense

Break it Down – Managing Labor Expense

What we know:

  1. Labor is typically a community’s largest expense.
  2. More often than not, labor is not proactively managed resulting in budget overages month to month.
  3. When you have people caring for people, managing overtime can be a nightmare.

Here’s a way to breakdown labor management that can provide labor savings throughout the year.

Managing the Schedule

  • Balance Staffing Levels – For many communities, overtime is a result of not matching staffing levels to resident need and work demand. There are times of the day that are slower than others, and residents that require more time and attention. Knowing your acuity level and understanding how that translates to a staffing model can dramatically reduce overtime and improve efficiency, productivity and safety of your associates. A great tool to measure acuity is Illumination Analytics. Illumination Analytics revolutionizes the way we look at resident care. Based on chronic health conditions and medications prescribed to residents Illumination Analytics calculates the Health Care Burden of individuals and across the entire community, which can then translate to an appropriate staffing level.
  • Schedule for Resident Needs not Staff Convenience – It’s important to be flexible when hiring and scheduling an associate, but not to the point where the schedule becomes driven by staff need versus resident need. The more consistent the schedule is the better outcomes for the residents, and the easier it is to manage vacations, call-outs, etc.
  • Send Out the Schedule in Advance – At a minimum, the schedule should be published two weeks in advance. This will give employees time to make arrangements if there are “life moments” i.e. dentist, day care, etc. that will impact their work schedule.
  • Don’t Schedule Double Shifts – Double shifts, making for a 16-hour day, whether scheduled or volunteer are a bad practice. No one can provide the best care in a 16-hour day – regardless of which shifts they are working.

Overtime Management

  • Understand the Causes of Overtime – There are typically 3 scenarios where you will enter into an overtime situation.
    • Incremental Overtime, which is when your staff punch in early and punch out late. This can be a significant expense if not addressed. Make sure you communicate the expectations and policies in punching in and out. Monitor time clock punches on a weekly basis and address variances immediately.
    • Regularly Scheduled Overtime, this is overtime that is actually scheduled in the workweek. This can happen when the scheduler is not tracking scheduled hours or when, over the course of time an employee morphs into a scheduled overtime situation.
    • Irregular Overtime, this is overtime accrued when the scheduler needs to cover vacations, call-outs, resignations and provide additional coverage for emergency situations (i.e. flu breakout, inclement weather). This is part of doing business in senior living and the situation cannot be avoided – but the impact on labor expense can. When this situation occurs, typically the scheduler will first call employees who they know will be willing to pick up shifts – “overtime hogs”. It’s not uncommon to have 80% of the overtime covered by 20% of their employees. What can you do?
      • Implement a staff notification system that will alert employees of an open shift. An inexpensive solution is Voicefriend that will alert your employees of openings in the manner that they prefer (text, call, email). It will also allow you to contact per diem and part time staff prior to full-time resulting in less overtime. Benchmark, Brightview and Wingate Healthcare all implemented VoiceFriend to successfully reduce overtime by up to 25% and take the coverage for staff call out process from 2-3 hours to 5-10 minutes.
      • Don’t try to solve the overtime-hog problem overnight. People who work a lot of overtime quickly become accustomed to the larger paychecks they receive and often adjust their lifestyles accordingly. Make sure workers understand the basis for policy changes, and build in steps that reduce overtime gradually.
      • Develop a comprehensive overtime policy that is communicated to staff and address issues immediately.

Own your labor expense – don’t let it own you.

Does your community breakdown of labor management differently? Please Share!  

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