According to a study conducted by Inc and Go, 71% of employees have worked overtime at least once a week.
Across industries, the idea of overtime does not have many takers. However, overtime in the workplace is not always a bad move. It can be handy in certain scenarios.
Picture this: your company needs round-the-clock coverage. Overtime can help you by providing that extra manpower to keep things going smoothly. Plus, it is a win-win for both the company and the employees because it gives the latter a chance to earn extra income.
Overtime is also a way to deal with the unexpected spikes in workload. It allows workers to step up and tackle the short-term bursts. Companies do not have to hire extra staff to manage these temporary ups and downs in workload. With overtime, you only pay for the hours you need.
However, when using overtime, it’s of utmost importance to understand its impact on your team. The key is to use it only when you can manage the overtime hours well.
In this blog, we look at the why and how of managing overtime effectively.
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Why is Keeping Tabs on Overtime so Crucial?
If employers aren’t managing overtime properly, it can have a serious impact on the productivity and well-being of their workers. Mismanaged overtime often leads to burnout and disengagement along with high turnover rates. It also affects a company’s workplace culture!
When employees are pushing too hard with their overtime hours, it messes with their sleep and overall health. This could spell trouble for job safety and work quality. Also, if overtime becomes the norm, it can turn into a crutch for the workforce. This could lead to more absenteeism and less productivity in the long run.
To avoid these negative outcomes, managers need to handle overtime wisely. It is important to track both team and individual overtime hours and keep an eye on absenteeism and any abuse of the overtime policy.
Key Steps to Better Manage Overtime
1. Set a Maximum Overtime Threshold
For starters, establish a clear limit on overtime hours to maintain labor costs at sustainable levels. Typically, overtime pay comes after employees have worked more than 40 hours a week. Since there are no government restrictions on overtime hours, it is essential to have well-defined policies outlining the maximum allowable overtime. These should also specify which employees are eligible for overtime work.
Companies need to mention weekly, monthly, and yearly limits on overtime hours that can feasibly be compensated. Implementing a cap on overtime ensures a fair distribution of workload among employees. It also provides everyone with an opportunity to earn extra income, if desired.
2. Monitor Employee Work/Overtime Hours
Keeping tabs on employee working hours and overtime can be tough if done manually. It helps to invest in technology automation for overtime management.
Effective tracking of overtime ensures every employee has an equal opportunity to earn extra income. With automated systems in place, you can easily adjust schedules when someone reaches their maximum overtime threshold for the week.
3. Establish and Communicate Your Overtime Policy
Having a clear overtime policy is essential to outline the company’s stand. This policy should include all relevant laws regarding overtime hours, as well as how the company compensates for overtime work.
It should also specify how employees can communicate with their managers about overtime opportunities. By setting clear expectations for both workers and supervisors, you facilitate open communication. This way, everyone is on the same page regarding overtime practices.
4. Implement Cross-Training for Employees
If only a handful of team members are skilled in particular tasks, it will inevitably be these same few individuals getting overtime. This not only increases their risk of burnout but also disrupts their work-life balance. Moreover, it might leave other team members feeling slighted for missing out on extra income.
One effective solution is to ensure that your employees receive cross-training across various roles. This way, you will have a larger pool of qualified staff to fill in for vacant shifts. There is also more flexibility in scheduling. Cross-trained employees help you minimize unnecessary overtime. Plus, they enable you to distribute overtime opportunities more fairly when needed.
5. Limit Overtime to Meet Demand
Avoid falling into the trap of excessive overtime. Typically, the need for extra work arises during busy periods or rapid growth phases. While this can boost profits, ineffective overtime management might eat into those earnings. A chunk may go towards paying for overtime and related health costs.
To mitigate this, align overtime hours with demand and only authorize it when necessary. Smart scheduling can help trim down overtime expenses and ensure the right number of staff are on hand at any point.
How Technology Helps in Overtime Management
Using technology like Time and Attendance software is a game-changer for overtime management. It sends alerts to frontline managers the moment an employee clocks in overtime. It also streamlines the process by efficiently tracking and monitoring employee hours, and handling overtime calculations while seamlessly integrating with your payroll system.
The software automatically logs those extra hours and calculates pay accordingly on digital timesheets. Time and Attendance software like Akrivia HCM safeguards against potential disputes where employees say they have worked more overtime. By keeping daily timesheets, the software shields businesses from inadvertently paying out for overtime that wasn’t worked.
I am an SEO professional and writer at VOCSO Digital Agency. I love to learn and write about digital marketing terms like SEO, social media, and SEM.
