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A new overtime rule is poised to shake up enterprise workflows.
In May 2016, a federal overtime rule that has been in the works since 2015 became official. Starting Dec. 1, 2016, the U.S. Department of Labor will require companies to pay employees earning $47,476 or less per year over time for every extra hour of work.
Not surprisingly, the provision has sparked debates about long-term effects. Proponents of this regulation believe the new mandate will ensure that qualifying employees get paid for all of the time they spend working. Those opposed to the regulation feel that some small businesses or universities won’t be able to sustain the additional sum of money they’d have to pay workers each year. According to The Washington Post, the vice president of human resources at one university predicted that the measure would demand an additional $18 million annually, which is the equivalent of a 4.3 percent tuition hike.
Regardless of the far-reaching positive or negative repercussions from the new law, this much is certain: Human resources departments will have a lot of workflow adjustments to make between now and December. 1, 2016.
“Organizations will have to spend some time re-envisioning workflow structures.”
On a day-to-day basis, organizations are swamped with business requirements. Whether it’s independent contractor compliance, the Affordable Care Act, PCI compliance, payroll taxes or something else, the manner in which a business achieves its daily objectives is dictated by a slew of regulations. Meeting all of these requirements in such a way that workflows are unobstructed isn’t easy. Not to mention, business process management is sort of like a house of cards. Remove or add to the house in the wrong way and you send the whole thing toppling. This is exactly what the overtime overhaul has the potential to do.
Organizations will therefore have to spend some time re-envisioning workflow structures in the coming months. Industry Week noted that many businesses will be in the tough spot of deciding whether to classify employees who are just barely over or under the salary cutoff as “exempt” from the rule. These decisions will be driven by a number of factors, such as weighing how likely an employee is to work overtime and whether that overtime worked is a value or detraction from the company. The result of this new gray area may force organizations into restructuring job functions in such a way that draws a clear line in the sand between overtime-eligible employees and those who should be considered exempt.
Many businesses, especially those with large sales departments, may be more heavily impacted when bonuses and commissions are factored in. This is because non-discretionary compensation can only account for 10 percent of the salary that will determine whether or not a certain employee is exempt. As such, it might be in the best interest of a company that relies heavily on a commission model to hike up wages just above the point of exemption and, in tandem, decrease the amount offered in bonuses and commissions.
As supervisors and HR managers navigate tricky terrain within and beyond the next six months, operational reporting tools may be able to help them make the most of the new overtime rule. Consider the fact that companies need tools to decide, by analyzing historical overtime trends, which employees should get a pay hike so that are “exempt” from this rule, or to determine which “non-exempt” employee should be asked to work overtime. Additionally, organizations will have to scrutinize status-quo business processes, further optimizing them for efficiency for the sake of eliminating sources of overtime and possibly even redefining company roles according to these alterations. In actuality, this means that decision-makers will have a chance to significantly enhance workflows. To do so, they will need unfettered access to summaries and reports derived from the data associated with enterprise resource planning (ERP) solutions such as Oracle E-Business Suite, PeopleSoft, Taleo, JD-Edwards and more.
An operational reporting tool like Orbit Analytics is designed to do all of the above on a daily basis. In context to the new overtime rule, managers and supervisors will be able to aggregate and summarize real-time data to make well-informed decisions about who should and should not qualify for overtime. This information, when paired with the advanced business intelligence functionality of ORBIT Analytics, can help HR and management teams find the way forward.
Likewise, other lines of business can also benefit from Orbit Analytics in the coming months and beyond. Access to at-a-glance operational insights can help workers improve their own day-to-day business processes at a granular level while more advanced users focus on the bigger picture (i.e. definition of company roles and corresponding functions, and how they fit into the overarching business objective).
At the end of the day, the goal of reliable, highly functional operational reporting has always been to streamline internal business processes to keep an enterprise functioning like a well-oiled machine. It achieves this by summarizing massive quantities of workflow data into digestible reports and graphical displays. But the true test of how well these systems actually perform comes at times such as these, when new regulations risk impacting the integrity of workflows in ways that are not entirely foreseeable.
With a business reporting tool that plays nicely with your company’s ERP applications, you’ll have everything you need to see the new overtime rule less as an obstacle, and more as an opportunity.