TRC Talent Solutions

Are You Effectively Managing Overtime? 

We’re living in a very interesting time when it comes to our economy. Job growth rises – then experts predict cooling. The economy grows – but signs of an impending downturn are present. The mixed signals found within economic indicators are enough to leave hiring managers and number crunchers at a loss. Imagine being tasked with staffing your operation to the fullest extent but doing so without going overboard and paying out much-needed capital when it’s not bringing back the return needed to make a profit — or break even. 

That’s happening in a lot of places, and one of the key drivers of overspending on labor is the mismanagement of overtime, which ranks as one of the biggest ongoing expenses for most companies. Employers want to limit overtime — and most employees do, too. While the increased hourly rate is nice, people have families and free time and they’d much rather spend their time elsewhere than at the office. 

Limiting overtime isn’t just about keeping more money in the company account. “A study reported by CNBC and conducted by John Pencavel of Stanford University found that productivity takes a nose dive at 50 hours of work. In addition, once a person hits 70 hours of work in a week, their productivity is no greater than if they had worked 55 hours, despite working the additional 15 hours.” 

How much money would it cost any business to pay that kind of overtime and get such little production in return? 

But how can you effectively manage overtime without losing needed productivity and damaging employee morale? It can be difficult, but it’s not impossible. Here are a few ways to help manage overtime in a smart, honest way. 

Give Your Salaried Employees a Raise!  

No, really. If you have salaried employees earning less than $23,660 per year, you’re still required to pay overtime. While the devil is in the details, you could save money on the backend and provide a salary boost for employees by raising their pay above that limit, thus making them exempt from overtime. There’s also the concern of litigation for misclassification as employees have been wrongfully — whether intentionally or not — incorrectly classified. 

Tracking Time Provides Useful Data 

One of the more effective ways of managing overtime is to have data that points to where your problems are. Utilizing time tracking software for employees can help both management and staff better understand how to use time and when to course correct. It also helps in the proposal process. When you track employee time you get a better idea of how long it takes to perform a task. Another area where time tracking helps with managing overtime is in the alert system that notifies management and the employees about their time and the pace they’re currently on. Tracking time can help head off some of the unnecessary overtime work. 

Hold Fewer Meetings 

Is there anyone who wants more meetings? How many people feel most of the meetings they attend are effective and efficient? 

*crickets

Meetings eat up a lot of time… I mean, a lot! According to one study, around 15% of an organization’s time is eaten up in meetings, and that number has increased every year since 2008. Another study claims more than $37 billion is wasted each year on unproductive meetings. If your company has this problem it’s probably costing you a lot more than you’d like, and that’s both in hard dollars as well as in employee satisfaction. 

“Simone Kauffeld, of Technische Universität Braunschweig, and Nale Lehmann-Willenbrock, of the University of Amsterdam, found in a study of 20 organizations from the automotive supply, metal, electrical, chemical, and packaging industries that dysfunctional meeting behaviors (including wandering off topic, complaining, and criticizing) were associated with lower levels of market share, innovation, and employment stability.” 

Deploy Cross-Training  

Too often an employee is forced into an overtime situation because he or she is the only person who can perform the task as needed in the office. This puts the employee in an unfair position as they’re often stuck while it also puts the employer in a tricky position because if the employee ever leaves, they’re left with a job that needs to be done and no one capable of doing it. 

Cross-training is beneficial to employees as it develops new skills, and it protects the employer from loading up work on a small number of employees. This is very much a win-win with regards to overtime work and payment, a topic that can become acrimonious. 

Managing overtime is a tricky, but it’s absolutely something that needs to be done well. The good news is you have expertise at your disposal when you need it. TRC Talent Solutions has partnered with thousands of companies to help manage headcount and create systems in place to maximize productivity without blowing into overtime budgets. Contact TRC Talent Solutions today to speak with our professionals and to determine how best we can serve your needs.