## 20 Metrics in 20 Days- Day 13: Overtime Pay Rate

Day 13 in our series of 20 consecutive posts on HR metrics: Overtime Pay Rate

## Definition

Overtime Pay Rate is the percentage of total direct compensation from overtime pay in a given period.

## Formula

$latex {Overtime\ Pay\ Rate\ = \frac{Total\ Overtime\ Direct\ Compensation}{Total\ Direct\ Compensation}\ * 100\%}&s=2$

## Why You Should Care

• Excessive overtime pay is costly. The bottom line is that it hurts the bottom line.
• Elevated use of overtime may indicate consistently poor anticipation of labor needs or simply poor hiring and development practices that lead to chronic shortages of appropriate staff.
• Elevated use of overtime may also be a consequence of frequent worker absences or low worker productivity from high turnover.
• Non-exempt employees are particularly subject to supervisor pressures and often hesitant to say that finishing a job will require overtime. Workers may therefore simply not record the hours because they fear a reprimand. This is bad for individuals…and it’s illegal.
• In other cases, employees are “asked” to work overtime even they would prefer not to. Again, not a practice that leads to happy employees or a healthy work culture.

## Actions

• Look for underlying causes of elevated overtime pay such a worker absences or high employee turnover.
• Plot your overtime pay over time including times of the day, days of the week, and months of the year. Do you see any patterns?
• Analyze the specific areas or even individuals that are requiring overtime compensation. Is there something particular about those roles or individuals?