Does your OT rate need a trim?
Q I'm told my employee overtime (OT) levels are too high. What should I look at to improve my salary budget performance?
There are many factors to consider when constructing a salary budget, but one of the most important aspects is the cost of OT. According to a 2011 report, 78% of the RNs surveyed worked an average of 4 hours of OT a week.1 Most organizations pay OT at 1.5 times a person's base salary. If the average salary of an RN is $31.84 an hour, then his or her OT rate is $47.76. This can add up and quickly throw off your budget.
Improving your salary budget requires you to be objective in assessing the reasons for OT. First, look for trends. Is OT the same across pay periods or does it fluctuate? After you determine the trends for your area, evaluate and analyze the reasons, such as vacant positions. This seems like an easy fix if you post the positions. However, if you only post for full-time staff, you miss the opportunity for part-time employees who don't convert to OT by simply picking up one more shift. A lack of flexibility in your recruiting efforts for a specific area may pose a challenge.
Look for opportunities to compromise; for example, if you lead an oncology clinic, you may need to be flexible and hire an employee with limited oncology experience. If your unit has been running high OT for a sustained period due to vacant positions, you may use supplemental staffing within your organization. In the event that your organization has limited internal resources for staffing, contracting may be an option. This is yet another salary budget concern but, remember, staff members in your area can only sustain the increased workload for a certain period before becoming burned out or increasing the chances of errors.
If your year-to-date OT is high and all of your positions are filled, consider increasing the number of full-time equivalents (FTEs). Evaluate the increase in demand by assessing patient acuity or a sustained rise in volume. Reaching the conclusion that more FTEs are needed should be broached cautiously; an elevated number of FTEs can adversely affect the overall budget.
Another area to pay particular attention to is census instability. Does your volume increase during the summer, winter, or holidays? If it's evident that you do have a peak season, you may hire seasonal staff to meet the needs of your patients during the particular increase. The fluctuation in census may be something that occurs throughout the week or even over a 24-hour period. Review your average daily census (ADC) by day and even by hour. This can give you a clearer picture of how to staff your area.
For example, if you work in a postsurgery area and you know that Monday is the highest surgery day and your ADC on Tuesday is always highest, shift your staff from other low census days to cover the increase. This doesn't lessen your overall productive hours, but can decrease your OT. If your unit starts a shift with a lower volume, delay staff member start times or consider changing your shifts. Lastly, if your census drops and it doesn't appear that it will rebound, cancel the OT staff member first.
Other opportunities for trimming OT relate to “nonproductive” time. Nurse leaders rarely want to say “no” to staff requests, but you must balance how many staff members can be away from the unit at one time. Bring this topic to your shared governance council to develop staffing guidelines. If you have assistance with building your schedule, verify that the scheduler is meeting the guidelines. Nonadherence can raise your OT by increasing the amount of positions backfilled for nonproductive time.
Finally, you may have to evaluate staff member behaviors in clocking in and out. Incremental OT can add up over one pay period. Look for the person who consistently clocks in early or clocks out late. Depending on the size of your unit, this can add up to 0.5 FTE in OT a pay period. When you evaluate the trends of incremental OT, assess if you have the same offender(s) routinely. This can lead to a crucial conversation or time management training. Incremental OT is one of the last things nurse leaders tend to evaluate. It can be time consuming and not as easy to fix.
When you start to investigate your OT as it relates to your salary budget performance, find out what the OT percentage goals are for your organization. If your organization doesn't have a goal, aim for a 2% to 3% OT rate to cover sick calls and other nonproductive demands.