17 Jul Managing Labor Costs – Daily versus Biweekly Productivity

A labor cost management system is driven by hours paid to employees from your time and attendance and payroll systems. Payroll in most organizations runs biweekly with a 3-5 day lag after the end of a pay period. With many time and attendance systems, you can also get time worked each day. The data for measuring productivity can be grouped biweekly (from payroll) or daily (from time and attendance). Each of these approaches has different strengths, as summarized below. I often see organizations start with biweekly productivity (easier to implement and has a sizable impact) and then move to daily productivity when their managers ask for more detail to help them make better informed decisions.

Critical Success Factors

Both approaches have the same critical requirements for success. The hours per unit targets must be realistic, achievable, and tied to the organization’s budget. Additionally, the workload or units that drive the productivity calculation need to reflect the need for staffing in the area accurately.

Daily Productivity

Daily productivity is an excellent tool for front-line manager performance feedback. It provides data so departmental leaders can understand how their previous day’s decisions impacted their performance. Some organizations use it to monitor and minimize the adverse financial outcomes of a slow volume month at both an organizational and departmental level. The daily periodicity also allows you to see the effectiveness of flexing staff to volume. You can even use a correlation coefficient to turn this data into a single number that allows management to identify underperforming departments that need help adjusting staffing to volume. Automation is essential for daily productivity. Providing this data both timely and efficiently means having the tools to run the system “hands free” so that the data is waiting for the management team each morning.

Volume: The system can get accurate volume from patient charge detail information in many areas. (Example: A charge for an MRI procedure counts as a unit of volume for that area.)

Hours: The data extraction from the time and attendance system can be difficult and often requires translating detailed clocking data into worked hours.

Unanticipated benefits of daily productivity are that front-line managers using the system can often identify problems with charge entry or inaccurate clocking based on the results of the system. Employees forgetting to clock in or out and lags in charge entry, both common occurrences, negatively impact the accuracy of the reporting. However, on the positive side, a daily system allows managers to identify these problems faster. While both accuracy issues improve with time, particularly the end of a pay period for worked hours data, the relative inaccuracy makes using this data for accountability more challenging.

Biweekly Productivity

Biweekly productivity is an excellent tool for accountability. It provides accurate and moderately timely feedback on decisions about whether they will meet their salary budget. This system also allows you to aggregate performance to see if a director or executive with multiple cost centers is meeting their budget in total. The payroll-based hours reports are more accurate than the daily time and attendance data and are typically easier to access. Usually, clockings get cleaned up by the end of the pay period, and any further adjustments made in the payroll system show up in these reports. While helpful, automation is less critical for biweekly reports since you update them less frequently. The biweekly reports can be less “high tech” and more manual and still be manageable to run on a timely basis.

Conclusion

Both types of data frequency are valuable. The biweekly tool is easier to implement and best for accuracy and accountability, while the daily tool is better for timely front-line manager feedback. It is common for organizations to start with a biweekly dashboard and then move to daily reporting when managers ask for more detail.

About The Author

John Stigaard has worked in healthcare analytics and operations improvement for over 30 years. His experience includes managing the annual staffing budget process for a single hospital-based health system. He has successfully led the development and installation of labor cost management systems in over a dozen organizations.