20 Metrics in 20 Days- Day 14: Overtime Hours Ratio

Day 14 in our series of 20 consecutive posts on HR metrics: Overtime Hours Ratio

Definition

Overtime Hours Ratio is the ratio of overtime hours to regular hours in a given time period.

Formula

Additional Considerations

In this measure we are getting a ratio of overtime hours to regular hours. This provides a slightly different angle on overtime hours than if we instead looked at overtime hours as a percentage of the total hours worked.

Both are perfectly acceptable metrics.

Why You Should Care

Note to the Reader: The general issues at play for overtime hours are a repeat of those in an earlier post about overtime pay. I am reproducing those observations here to make this a self-contained post for convenience.

• 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, poor planning, or simply poor hiring and development practices that lead to chronic shortages of staff.
• Elevated use of overtime may also be a consequence of frequent worker abscences or low worker productivity from high turnover.
• Non-exempt employees are particularly subject to supervisor pressures and often hesitant to inform them that task completion will require them to work 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?

Reading

• Overtime: How to Lose Your Employees and Kill Your Business
• Why Overtime is Killing Your Business
  • This is also where I got the following links
• Why Crunch Mode Doesn’t Work
• Classic article about EA gaming and overtime