Security Contractor’s Guide to Reducing Overtime
How to protect your profits through reducing overtime, cutting labor costs and improving schedule optimization.
As a security contractor with a distributed workforce, labor is always going to be your largest expense. According to IBIS World’s 2019 reports, wages account for 63.8% of revenue in the labor-intensive security industry; a rate that has increased annually over the past five years to hover at $24.6 billion. By 2024, this cost is projected to increase to $42.7 billion. Overtime for hourly employees is the number one profit killer, particularly in service industries with thin margins like contract security. The secret to cutting labor costs by reducing overtime? Stop it before it starts. Below are a few ways security contractors can reduce overtime and improve schedule optimization.
Know your service-level agreements (SLAs).
SLAs dictate the service standards and pricing obligations you’re required to deliver to your customers. If your contracts don’t allow you to bill your customers for overtime, you’re still on the hook for paying it. Even if your SLAs allow for overtime to be billed back to the client, you still need to keep it in check so you’re delivering the service your clients want at the price they’re prepared to pay.
Use an integrated scheduling software — effectively.
If you’re still using paper (yes, that includes spreadsheets) to schedule your security officers and track their time, you typically can’t spot overtime problems until after they happen. Even if you have scheduling software in place, make sure you’re leveraging all its features. You should be able to see several weeks at a time to spot any overtime problems before they happen. In fact, your solution should be able to alert you to those issues as you’re scheduling.
Set clear goals.
You’ll never know if you’re making progress if you don’t have clear schedule optimization benchmarks and goals. First, you need to know how much overtime your officers are working each week. If you don’t know how to get that number, consider looking into implementing an integrated scheduling solution. Once you have those overtime benchmarks, you can then set specific goals on reducing overtime. Get as specific as you can and be reasonable about what you can achieve.
Dig into your data.
Overtime isn’t always avoidable, but you can reduce it and control it through regular data review. Reports can help you find bottlenecks in your process, overtime patterns, discrepancies and exceptions. If you’re using a well-rounded scheduling system, you’ll get real-time attendance information that equips your schedulers and dispatchers with a live view of who’s on site and who’s not.
Integrate your scheduling and payroll systems.
If your scheduling software is integrated with your accounting and HR/payroll systems, you can avoid clunky processes, redundant data entry and the errors that go along with them. If your scheduling tasks are handled effectively, payroll and billing information is already in the system. From an operations perspective, that means when you properly manage your schedules, you’ve ensured both billing and payroll figures are correct in one step.
Hire more security officers.
If you’re facing a constant struggle to fill shifts without putting your officers into overtime, you probably need to hire more people. If you’re not fully staffed, this issue is never going to go away, no matter how efficient your other processes are. Partner with your HR department to assess the existing candidates and start conducting interviews as soon as possible.
Overtime isn’t just a problem for your scheduling staff to figure out. Often it involves a good amount of organizational change and teamwork from account managers, HR, upper management and executives to pinpoint issues, resolve them and put better practices into place.
For security contractors, overtime can be a very costly problem. It’s even more imperative now to get a handle on overtime as wages rise across the country and the cost of doing business becomes more expensive. For more in-depth information and additional tips on how to improve your schedule optimization, download our Security Contractors’ Guide to Reducing Overtime.