Advisory Insights – Managing the Transition to the New Overtime Rules

By Jeff Wilkie, Consulting Executive and Human Capital Strategies Practice Lead

“It’s not the change that kills you…it’s the transition.” – William Bridges.

Many companies are still trying to assess and implement new processes, roles, and services to comply with the new Overtime Rules set to go into effect December 1st, 2016. As mentioned in last month’s July Advisory Insights whitepaper, the new rule will have a substantial impact, expanding overtime eligibility to more than 4.2 million exempt workers in the U.S.   Employers have received general guidance from the Department of Labor. However, employers and leaders within their ranks will need to define impacts of this change such as how the change will affect employee performance and behavior in order to comply with the new rules. Although this ruling seems to be only geared toward the mechanics of how people work and capture their time, the status and perception of the change will have an impact and it must be managed.

As noted above, the new rule will allow for many more American workers to receive overtime pay.  To receive this benefit, workers will face the requisite increase in accountability for their work time as well as a change in status.  We believe these Human Capital intangibles are significant and must be acknowledged and properly channeled when implementing these new rules. Let’s look at how you can understand the change and communicate more effectively with your employees to ensure the best possible transition to “the new normal.”


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Three tactical strategies are critical in managing your human capital through this transition. Be aware that there will be a period of uncertainty as new processes are implemented and employees begin working within the confines of new expectations. This uncertainty usually brings an initial drop in performance before productivity resets and improves. Post transition, employees will be operating in the new way which will create a new culture and set of work standards. Your goal is to ensure this new “mode of operation” satisfies both your expectations and also the New Ruling’s compliance guidelines.

Tactical Strategy 1: Describe what’s really changing.

Job descriptions may require new policies and processes as well as the corresponding changes in technology to accommodate them. It will be important to discuss “who is losing what” and how the work they produce may or may not be different. As mentioned, there will be concerns about change in status, losses in productivity, and the impacts on external and internal service delivery. More than ever, transparency and understanding of “the why” related to DOL change and the difference in work being performed or required will need to be reiterated again and again. This is simply to reinforce the need to sustain the change. Like a rubber band that snaps back to its original form, people will naturally revert back to old habits or old behaviors. It’s human nature.

As employees will have to monitor their time in a way didn’t before, ensure they understand the things that matter most will not change: completion of key tasks and servicing the client/customer. As workers achieve productivity milestones under the “new normal”, it will be important to celebrate new successes while honoring the past (i.e. acknowledging accomplishments from former roles as exempt employees).

Tactical Strategy 2: Help them manage uncertainty in the Neutral Zone.

One of the best models for change management comes from Williams Bridges book, Managing Transitions. He discusses that those impacted by a major change usually have a period of uncertainty where they are trying to make sense of the change. He adapts this scenario to the rules of order. For example, regarding new methods of working or managing their time, employees may experience a period where they find themselves struggling to perform regular job duties or sustaining mandated changes in their work practices. In this time, as a leader, it becomes all about helping people to “normalize the neutral zone.” In other words, help them to know it is okay to have doubts and challenge new ways of thinking and working. It may be important to implement some temporary systems and provide perspective on short-term goals that will help them adjust to the new ways of doing things. It is also paramount to get others to spend time together and strengthen intra-group connections through activities, happy hours or other fellowship building opportunities.

Tactical Strategy 3: Launch the Four P’s.

As mentioned, honesty and transparency regarding the change is critically important. Gaining buy-in and ownership to compliance will allow the change to succeed. In sharing this strategy, leaders must communicate effectively as they launch the Four P’s:

  • Provide a Purpose – Explain the logic and expected outcome again and again of the rules and their impact on the organization. It’s critical to reiterate the “why” behind the change and the opportunities and improvements that will be attained.
  • Build a Picture – Describe the intended outcome and how things will look and feel once the rules are fully implemented. Be sure to acknowledge how employees are feeling and functioning now and reaffirm your commitment to getting them there.
  • Share the Plan – Discuss a step-by-step phasing of implementing the rules and some appropriate milestones for testing the new roles and job descriptions against reality once they “go live”. Give employees an opportunity to voice concerns or dissatisfaction. Then determine what areas are non-negotiable and obtain their buy-in to the plan.
  • Give all a Part to Play – Even if individuals are not directly impacted by the changes required for compliance to the plan and outcome, it is important that they are aware of the changes going on around them and know how they fit into the big picture. This ensures employees understand that each role is important and critical to the company’s overall success.

These changes create an opportunity  for leaders to be more accessible, flexible, and responsive to employee concerns or challenges.  We recommend you aggressively communicate what is and is not changing in your workplace regarding the new overtime rules and give employees time and space to adjust to the new expectations on them.  Finally, launch the Four P’s to help create buy-in and comfort with the new workplace rules.

HoganTaylor’s Advisory Practice stands ready to help you assess the impact of the Overtime Rules on your organization and to develop an implementation and communication plan to be ready for the December 1, 2016 deadline.