Thursday, 13 November 2014 15:07

Lean Staffing: 3 Unfortunate Realities

In most 24/7 operations, there are a fixed number of positions to be filled on each shift. Because of this, staffing levels greatly impact overtime rates for employees.

Understaffing an operation requires employees to work additional hours originally allocated for off-duty activities, such as: rest, recovery, family activities, social events, and personal responsibilities.

While machines operate linearly, people do not. These off-duty activities are crucial for the emotional and physical well-being of the workers AND the bottom line of an operation.

Here are three reasons why lean staffing can be dangerous...

1. Staffing Levels are Related to Absenteeism Rates

Based on CIRCADIAN's 2014 Shiftwork Practices data, we found that the "leaner" operations (i.e. reduced staffing levels) reported higher absenteeism rates (Figure 1).

Interestingly, over 50% of all unscheduled absences are due to either: personal needs, stress, or an entitlement mentality (i.e. “I’ve earned it”) (Shiftwork Practices, 2014).

Figure 1. Staffing Levels & Absenteeism Rate

Absenteeism Rates & Staffing Levels


2. Fatigued Workers Cost More in Worker’s Compensation

As workers reallocate their off-duty time towards work, their fatigue levels often rise due to the additional labor and reduced sleep opportunity (Figure 2).

Figure 2. Overtime Levels & Fatigue Problems

 Shift Work Overtime & Fatigue

Fatigued workers exhibit up to 4x the worker’s compensation costs as compared to non-fatigued workers (Figure 3). A recent meta-analysis of 27 observational studies found that sleep problems increase the risk of workplace injuries by 62 percent (Uehli et al., 2014).

Figure 3. Fatigue Levels & Worker’s Compensation

shift workers compensation and fatigue levels

3. Stress & Fatigue are Productivity Killers

Severe stress and fatigue problems have been found to reduce worker productivity by up to 10% (Figure 4).

Stress and fatigue can be influenced by a variety of factors; however, operations with leaner staffing levels more frequently reported problems with severe stress and fatigue among shift workers than operations that were adequately staffed (Shiftwork Practices, 2014).

Figure 4. Reduction in Productivity as a Function of Stress & Fatigue*

Shift work stress fatigue productivity
The Conclusion…

It’s clear through this body of research that workload-staffing imbalances need to be addressed to reduce excess costs, safety incidents, and worker fatigue.

To learn more about analyzing your staffing level, download our free white paper:

Staffing Levels
Managing Risk in 24/7 Operations

24/7 operations staffing level white paper shift work white paper download
About CIRCADIAN®

CIRCADIAN® is the global leader in providing 24/7 workforce performance and safety solutions for businesses that operate around the clock. Through a unique combination of consulting expertise, research and technology, software tools and informative publications, CIRCADIAN helps organizations in the 24-hour economy optimize employee performance and reduce the inherent risks and costs of their extended hours operations.




Friday, 26 September 2014 19:32

5 Shift Work Tips: How to Reduce Overtime

Overtime is an issue that has recently cause quite a stir in the news. It seems like many 24/7 operations are struggling to reduce the soaring costs associated with excess overtime levels. Below are five tips for managing and reducing excessive overtime levels within your 24/7 operation.

Having trouble viewing our infographic? View it at: https://magic.piktochart.com/output/2863581-untitled-infographic

 
 

"How do I reduce employee overtime?"

The question "How do I reduce employee overtime?" is one of the most commonly asked questions when the subject of overtime is presented. To tackle the costs and associated problems of excessive overtime, managers must first understand why and where overtime arises in their operations.

Figure 1. Causes of Overtime from a Human Capital Perspective


Causes of Overtime

There are four potential scenarios (Figure 1 - from left to right) that cause overtime from a human capital perspective (overtime may also be caused by delivery backlogs, malfunctioning machines, etc.):

1. If overtime is high and the absence rate (a combination of absenteeism, vacancy due to turnover, and absences due to accidents and injuries) is low, then a facility/company either does not have a large enough staff to meet demand or the existing staff is not productive enough (perhaps due to presenteeism, low morale, working conditions or fatigue).

In some instances, the total staffing level may be appropriate, but the distribution of staff throughout the day, week or year may be incorrect, causing overcapacity at some points and overtime at others (a situation seen in many service industries). A flexible workforce management approach allows for a headcount to more efficiently match ever-changing demand levels.

2. If overtime and absence rates are high, then the excess overtime is increased by the absence rate. Reducing the absence rate may result in:

a) Finding that overtime is acceptable and that a facility is correctly staffed;

b) Finding that overtime is still too high and more employees (or more productive staff) are required;

c) Finding that overtime is very low and that a facility may be overstaffed.

3. If absence and overtime rates are low, then facility managers should ensure that staffing meets demand at all times of the day, week, and year. A detailed look at demand, minimum headcount, and vacation and absence policies can determine optimized staffing levels.

4. If overtime is low, but the absence rate is high, then it is likely that a facility is overstaffed to account for the absent employees—some companies must overstaff by 10% to 15% to account for absences on weekends.

Learn More about Overtime

Want to learn more about overtime? Interested in the ways in which overtime may be impacting your workers? Visit CIRCADIAN to download a free white paper that details optimal staffing levels in 24/7 operations.

About CIRCADIAN

CIRCADIAN® is the global leader in providing 24/7 workforce performance and safety solutions for businesses that operate around the clock.  Through a unique combination of consulting expertise, research and technology, software tools and informative publications, CIRCADIAN helps organizations with traditional and/or extended operating hours optimize employee performance and reduce the inherent risks and costs of sleep deprivation and fatigue.

Thursday, 07 August 2014 21:12

Overtime and the U.S. Work Week

Employees in the U.S. work the highest number of work hours per year compared to the rest of the world—about 70 more hours per year than workers in Japan, and 350 hours more than in Europe. Longer workweeks and fewer weeks of vacation in the U.S. combine to produce this discrepancy.

America is one of the few industrialized nations that does not mandate a minimum number of paid vacation days per year. No U.S. federal laws limit the number of hours that people can work or can be asked to work, except in a few select safety sensitive occupations (e.g. the transportation industry). This, combined with the lack of mandated vacation time, contributes to the high annual work hours of the average U.S. employee.

Average Hours of Work per Week

The traditional workweek in an office or other discrete operation in the U.S. is generally considered to be 9 a.m. to 5 p.m., Monday to Friday—40 hours of work. However, 40 hours per week did not become the standard until the early 1930s with the introduction of the National Industrial Recovery Act, the forebear of the Fair Labor Standards Act (FLSA).

In 2013, the Bureau of Labor & Statistics reported that the average hours of work per week in nonagricultural industries is 38.5 hours, with full time workers averaging 42.5 hour workweeks. Figure 1 shows the average hours worked each week by employees as broken down by industry.

Figure 1. Hours Worked Per Week Based on Industry

 

BLS Average Work HoursOvertime & Employees

Naturally, overtime is most applicable to employees who earn wages based on an hourly rate. Though the standard workweek as defined by the Fair Labor Standards Act is 40 hours of work, many hourly employees work in “extended hours” facilities that require at least some level of overtime from employees in order to run operations continuously.

The definition of overtime is not limited to hourly employees who, in the U.S., must be paid a premium for hours worked over 40 in a week. The definition also applies to salaried employees who are not required to receive extra compensation for the length of time they spend at work. These salaried workers are just as likely to work overtime, and are equally susceptible to the issues relating to overtime.

Scheduled vs Actual Hours Worked

Many managers attempt to reduce overtime as much as possible; however, unforeseen absenteeism often causes increases in overtime among shift workers. According to the Shift Work Practices 2014 report, which represents data from 341 industrial shift work operations, shift workers on average are scheduled for one hour of overtime per week; however, each shift worker tends to work five extra hours of overtime per week. Figure 2 graphically depicts the weekly scheduled versus actual number of hours work on average per shift worker.

Figure 2: Weekly Scheduled vs Actual Hours Worked per Shift Worker

 SWP 2014 - Weekly Work Hours Per Shift Worker

The discrepancy between scheduled vs actual hours worked is not surprising, especially among understaffed workforces. Operations that had ‘just enough’ or ‘not enough’ workers covering permanent positions had significantly higher absenteeism rates which results in unwanted increases in overtime for the rest of the workforce (Figure 3).

Figure 3: Absenteeism Rates of Operations based on Staffing Levels
Staffing Levels and Employee AbsenteeismDistribution of Overtime

If overtime is equally distributed across employees, up to approximately 12 percent overtime is an acceptable overtime rate for a workforce, based on Circadian’s research. Overtime varies not only by industry and company, but also by employee. For instance, our research indicates that, in many industries, 20 percent of the employees work 60 percent or more of the overtime (Figure 4).

As accidents and safety problems can be caused by one fatigued employee, the risk can increase as the distribution of overtime becomes more skewed. The imbalance exposes the pool of high overtime employees to extra health risks, and exposes the company to increased health care costs, absenteeism costs, safety issues, and legal liability.

Figure 4. Actual distribution of overtime at an extended hours facility.

  distribution of overtime at an extended hours facility.

Want to learn more about how to reduce overtime?

Interested in learning more about overtime levels across industries? Want to determine if your operation is functioning at an efficient staffing level?

Visit CIRCADIAN.com to learn more about reducing overtime, proportional staffing, and shift schedule optimization. Also, make sure to download a complimentary white paper from CIRCADIAN that focuses on optimal staffing levels.

About CIRCADIAN

CIRCADIAN® is the global leader in providing 24/7 workforce performance and safety solutions for businesses that operate around the clock.  Through a unique combination of consulting expertise, research and technology, software tools and informative publications, CIRCADIAN helps organizations with traditional and/or extended operating hours optimize employee performance and reduce the inherent risks and costs of sleep deprivation and fatigue.

The use of mandatory overtime often causes contention, but there are no federal rulings that prohibit its use, nor do laws prevent an employer from firing a person who refuses to work mandatory overtime. However, several states have outlawed mandatory overtime in health care professions.

How do shift work operations assign overtime?

Data from 341 North American shift work operations shows that:

  • 73% first asked for volunteers, and then used mandatory overtime if needed because of lack of volunteers.
  • 20% of facilities reported relying exclusively on voluntary overtime
  • 7% reported relying exclusively on mandatory overtime. 

Many workers, both salaried and hourly, who feel the pressure to deliver results or impress management end up working overtime voluntarily. Though this overtime is voluntary, it can often take a large toll on workers if it becomes a chronic work pattern, resulting in many of the same issues associate with mandated overtime.

A study at Cornell University revealed that employees who experience high levels of supervisory pressure to work overtime are 66% more likely to experience depression than those who have moderate to low supervisory pressure. In combination with the higher depression comes higher levels of stress, job-escape drinking problems, absenteeism, and multiple occurrences of injuries at work (only 9% of employees with no supervisory pressure to work overtime reported multiple occurrences of injuries, compared to 16% with high supervisory pressure).

Learn More about Overtime

Want to learn more about overtime? Interested in the ways in which overtime may be impacting your workers? Visit CIRCADIAN to download a free white paper that details optimal staffing levels in 24/7 operations.

About CIRCADIAN

CIRCADIAN® is the global leader in providing 24/7 workforce performance and safety solutions for businesses that operate around the clock.  Through a unique combination of consulting expertise, research and technology, software tools and informative publications, CIRCADIAN helps organizations with traditional and/or extended operating hours optimize employee performance and reduce the inherent risks and costs of sleep deprivation and fatigue.



Overtime can be beneficial for both employees and companies. It provides the company with the flexibility to cover unexpected absences and changes in demand without hiring more staff and it gives employees extra income at a premium rate.

However, overtime has its downsides too. While many employees will happily take as much overtime as is available, there is growing scientific evidence that relying too much on overtime can lead to numerous problems for an operation.

Below are five consequences to relying on excessive amounts of overtime:

#1 - Increased Health Problems

A considerable body of scientific work has explored the health problems associated with working excessive overtime. Some health problems that have been linked to long working hours include: 7-11

• Lower-back injury in jobs with a lot of manual lifting

• Higher blood pressure among white-collar workers

• Increased mental health issues

• Increase in total and lost workday injury rates

• Lower birth weight or gestational age in women

• Heavy alcohol consumption among men

• Higher suicide rates

A study by Cornell University shows that approximately 10% of employees who work 50 to 60 hours per week report severe work-family conflicts.12 This number jumps to 30% for those who work more than 60 hours. The divorce rate also increases as weekly hours increase. These factors contribute in turn to mental health and alcohol problems.

A Canadian study showed that workers who increased their work hours from 40 hours or less per week to over 40 hours per week experienced an increase in tobacco and alcohol consumption, an unhealthy weight increase among men, and an increase in depression among women. 13

These health problems contribute to the indirect costs of allowing excessive overtime to occur. Health care costs, absenteeism, and turnover will increase, while productivity will decrease.

#2 - Increased Safety Risk

Long work hours have been linked to increased safety risk in several studies (reviewed by

Rosa), including: 11

  • Safety and performance at nuclear plants
  • Impaired performance and lowered attention
  • An increase in errors in medical facilities
  • A threefold increase in accident rates after 16 hours of work

These additional safety problems are likely due to worker fatigue, which could be from a single long day or from the cumulative effect of multiple days of long hours. A German study showed that doctors who worked over 48 hours a week were five times more likely to have a driving accident (either while traveling to a call, or while commuting). 14

While working at night and during the early morning has been linked to an increased risk of transportation accidents, research also suggests that long work hours in themselves contribute to accident rates.15 As they become more fatigued, drivers become less cautious, execute more dangerous maneuvers, and exhibit more erratic driving patterns.

Circadian data from shift work operations (not just transportation operations) shows that companies with more fatigue-related problems are also likely to have higher rates of overtime (Figure 6), emphasizing the effect that longer work hours can have on sleep quantity and quality.

Figure 1. Level of fatigue-related workplace problems versus overtime level 3
Overtime  Fatigue

#3 - Decreased Productivity

Studies and reports suggest that productivity can suffer with increased overtime hours. In white-collar jobs, performance decreases by as much as 25% when 60 or more hours are worked in a week. 16 Any job not governed by a continuous process can be affected by decreased productivity, and even process-driven work can suffer if reject rates and customer dissatisfaction increase due to diminished quality and performance linked to long hours.

This performance decline is confirmed by the work of J. Nevison of Oak Associates. In his white paper, Nevison brings together scientific, business, and government data to demonstrate that little productive work takes place over and above 50 hours per week (Figure 2). Two other studies, also examined in the white paper, show that productive hours drop by an additional 10 hours when the number of consecutive long workweeks increases from four to 12, highlighting the cumulative effects that overtime can have.

Figure 2. Productive vs. actual work hours, from a collection of four studies16

 Overtime  Productivity

 

Data from 18 manufacturing industries in the U.S. shows that for most of these industries, productivity (measured as output per hour) declines when overtime is used.17 On average, a 10% increase in overtime results in a 2.4% decrease in productivity (more output is achieved, but the number of hours worked increases as well—not as much output per hour is realized).

The scientific literature gives the following reasons for the productivity limitations of longer and longer workweeks:

  • Fatigue—employees simply being too physically and mentally tired to perform at their best ability
  • As more time is provided or available to complete a task, work rate slows and unproductive time increases
  • Concerns over work/family balance and health problems may lead to presenteeism— where the employee is physically at work, but his or her mind is not on the job
  • If employees are working long workweeks simply to be seen “putting in the hours,” it is likely that these hours are less productive

In shift work operations, morale is lower in industries with higher overtime—companies with excellent to fair morale had overtime levels of 11.5% versus 15.5% in those with poor or very poor morale (Figure 3).3

Figure 3. Overtime and morale in a facility.3

Overtime  Morale 

#4 - Increased Absenteeism

Excessive overtime can lead to absenteeism as a result of poor health, fatigue, or people simply needing to take time off. Absences often need to be covered by replacement employees, often working overtime themselves, making the problem self-perpetuating.

Excessive overtime can also result in morale problems, which can be manifested as low productivity, absenteeism, turnover and labor issues. In Circadian’s Shiftwork Practices 2004, 31% of shift work companies with very high overtime levels (more than 10 hours per employee per week) had poor morale. Conversely, only 13% of companies with normal overtime amounts had poor morale. Morale was reflected in absenteeism levels: 54% of operations with high overtime also had absenteeism levels above 9%, compared with only 23% of operations with normal levels of overtime.

This is not to say that all absenteeism is a result of employee response to overtime—companies with high absenteeism will often use overtime to fill vacancies. However, it is likely that the problem is self-perpetuating to some degree.

#5 - Increased Turnover Rates

It follows that another adverse effect of excessive absenteeism will be increased turnover, as the lack of work-life balance and fatigue resulting from excessive overtime finally catch up with some employees. Again, as with absenteeism, companies with high turnover are also likely to have high overtime, as employees must work to make up for vacant positions if demand is to be met.

Turnover as a direct result of working excessive hours is more likely in non-hourly positions, where the employees are not being paid a premium to work the extra hours.

Solutions

While there are clearly a myriad of issues associated with employee overtime rates, there are a variety of ways to mitigate the negative effects of overtime. The proper solutions for managing overtime can vary based on industry, company size, work environment, and many other factors. It is key to recognize that overtime policies should be regularly assessed to determine their effectiveness.

Managing Overtime

To properly manage the direct and indirect costs associated with excessive overtime, employers should do the following:

• Reduce unscheduled absences by addressing the root cause(s) of them.

• Ensure staffing levels are appropriate and that they meet varying demand through the day, week, month and year.

• Review policies and procedures to ensure that they do not encourage excessive overtime.

• Take steps to increase productivity during the regular workweek.

Choosing Appropriate Level of Overtime

The appropriate level of overtime for a particular facility depends on a number of factors, including whether your employees must be paid an overtime premium, training and recruitment costs, safety and quality issues, and the cost of the benefits package.

Interested in learning more about overtime? Curious as to how overtime may be negatively impacting your current operations? Download our FREE white paper titled:

Staffing Levels

A Key to Managing Risk in 24/7 Operations
alt
alt

 

CIRCADIAN® FRMS and 24/7 Workforce Solutions

CIRCADIAN® is the global leader in providing 24/7 workforce performance and safety solutions for businesses that operate around the clock.  Through a unique combination of consulting expertise, research and technology, software tools and informative publications, CIRCADIAN helps organizations in the 24-hour economy optimize employee performance and reduce the inherent risks and costs of their extended hours operations.

REFERENCES

  1. Bureau of Labor & Statistics. Current Employment Statistics. 2013.
  2. Circadian’s Shiftwork Practices 2002.
  3. Circadian’s Shiftwork Practices 2004.
  4. Circadian shift worker database.
  5. Van der Hulst M. Long Work Hours and Health. Scandinavian Journal of Work, Environment and Health 2003;29.
  6. A standard 12-hour schedule is not counted in this definition, as it is usual to work three or four days a week when working these schedules.
  7. Daltroy LH et al. A case-control study of risk factors for industrial low back injury: implications for primary and secondary prevention programs. Am Journal of Industrial Medicine 1991;20.
  8. Hayashi T et al.. Effect of overtime work on 24-hour ambulatory blood pressure. Journal of Occupational and Environmental Medicine 1996;38.
  9. Ettner SL, Grzywacz JG. Workers’ perceptions of how jobs affect health: a social ecological perspective. Journal of Occupational Health Psychology 2001;6.
  10. Lowery JT et al. Risk factors for injury among construction workers at Denver International Airport. American Journal of Industrial Medicine 1998 Aug;34.
  11. Rosa RR. Extended workshifts and excessive fatigue. Journal of Sleep Research 1995;4.
  12. Cornell University. Industrial and Labor Relations, Institute for Workplace Studies. Overtime and the American Worker.1999
  13. Shields M. Long Working Hours and Health. Health Reports, Autumn 1999; 11.
  14. Kirkaldy B et al. Working Hours, Job Stress, Work Satisfaction, and Accident Rates Among Medical Practitioners and Allied Personnel. International Journal of Stress Management 1997;4.
  15. Nevison J, Overtime Hours: The Rule of Fifty.
  16. Permission from Nevison, Oak Associates.
  17. Shepard E, Clifton T. Are Long Hours Reducing Productivity in Manufacturing. International Journal of Manpower 2000;7.

 

 

Home  |  Privacy Policy  |  Terms of Use  |  Sitemap  |  Contact Us

Subscribe to our newsletter!


goButton

 

Contact Information
Email: info@circadian.com
Phone: 1.800.284.5001
Local: 1.781.439.6300

Circadian

Circadian Headquarters
2 Main Street, Suite 310
Stoneham, MA, 02180, USA