Sponsored by WORKFORCE DEVELOPMENT
Three Ways To a Better Bottom Line G
Mark Woodka, CEO, OnShift
iven today’s unprecedented work- force challenges and tight labor market, I’m still surprised to fi nd
that so many organizations manage labor as an afterthought. This needs to change. While the thought of reducing labor
costs can bring to mind slashing wages or cutting back on staff , I’m pleased to share that this is not the strategy I recom- mend. Fortunately, there are many ways to improve operational efficiencies that drive measurable and impactful labor cost savings. The key is to develop a proactive workforce management strategy that drives out unnecessary costs.
Evaluate turnover We are all painfully aware of the major problems stemming from high turnover in senior living, yet not all providers have pinpointed how much turnover costs their organization. As a best practice, community leaders should work with their fi nance exec- utives to build out a fi nancial model to deter- mine their true cost of turnover. The model should include end-to-end costs, including advertising, screening, vacancy (overtime and agency use), training, onboarding, etc. All-in, providers are spending on average $3K-$10K to replace each caregiver, often leading to a six-fi gure annual expense. Once you have estimated the costs of
turnover, consider channeling funds toward positively engaging with staff , so they can be retained. Recognizing and rewarding staff for their contributions or quickly and easily measuring satisfaction to capture feedback, so managers can act on it, can go a long way toward driving engagement and ultimately reducing turnover.
Minimize overtime Overtime can be sneaky, creeping into schedules and shifts without managers real-
26 SENIOR LIVING EXECUTIVE / ISSUE 5 2017
izing it. But overtime adds up! In fact, a re- cent survey found that 46 percent of senior care providers spend more than 6 percent of their labor budget on employee overtime. Overtime costs come in many diff erent
shapes and sizes. Overtime often comes into play when staff call off at the last minute and managers scramble to fi ll the shift. Other times overtime happens under the radar, when employees ride the time clock for a few extra minutes here and there. And, I still see many organizations that struggle with overtime that’s built into assignments when a new schedule is published. Ouch! All of these issues can increase costs very quickly, but they can be avoided. Be proactive by off ering schedulers a way
to gain visibility into overtime including who, when, how and why. With the right systems and processes, schedulers should be able to identify potential overtime, including hours worked and hours scheduled when they cre- ate and update employee schedules. Armed with this information, they can adjust assign- ments in the most cost-effi cient way possible, avoiding overtime before it occurs. As for those clock-riders, be sure to set a
policy for early arrivals or late stays. Employ- ee behaviors will likely change and overages decrease simply because managers pay at- tention to employee punches and shift data. Even small improvements to overtime can
deliver noticeable savings. Our experiences have shown that a 1 percent reduction to overtime can deliver $24,000 - $60,000 sav- ings for an average sized community.
Analyze employee utilization More and more, I’m seeing senior living pro- viders rely on agency workers to fi ll shifts. There was a time when senior living provid- ers would not have even considered using agency staff , but today’s staffi ng shortages and tight labor market have forced the issue.
Fortunately, with careful consideration
of employee capacity and utilization, these premium costs can be avoided. Employee capacity and utilization is a
simple calculation. Community leaders should compare the hours employees are supposed to work (capacity) against the hours they do work (utilization). For exam- ple, if an employee is willing to work 24 hours per week but is only working 16 hours per week, they are underutilized by a full shift. Identify these employees and add that shift to their schedule. This will help reduce costs by avoiding unnecessary overtime and agency usage, which are byproducts of inef- fi cient utilization of employees. Our experiences have shown that the
practice of analyzing utilization is often overlooked. In fact, most organizations underutilize many of their employees. We recently conducted an analysis for a skilled nursing provider and found their full-time staff utilization was only 77 percent. That means that almost a full quarter of their ca- pacity is underutilized. In an environment with providers relying on overtime and agency to cover shifts, running this analysis can be doubly impactful.
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