Although many believe that overtime must be avoided, it can be a good choice for companies in several situations.
Think about it; overtime is an efficient solution for 24/7 coverage in the company. It can help any organization to improve its competitive position in the local labor market by offering the opportunity to workers to earn extra income. overtime also allows workers to respond to any short-term variation in workload or staffing quickly.
Companies don’t have to manage additional staff to cover such variations in requirements and only pay for the time needed. Still, if you are facing challenges, it might be because you don’t know how to manage overtime. Effectively using overtime requires employers to understand the adverse effects on the workforce. This is what we are going to discuss in this article.
Why is it essential to manage overtime?
If employers are not effectively using overtime, there can be severe repercussions on workers’ productivity and health. Poorly managed overtime can result in employee burnout, reduction in worker engagement, and excessive turnover.
Workers overworking interferes with their ability to get adequate sleep, leading to poor health and safety and quality problems on the job. Furthermore, if the overtime is prolonged, it can inadvertently create an overtime-dependent workforce with higher absenteeism and lower productivity.
To minimize these consequences, managers must know how to manage overtime reasonably. It is essential to keep an eye on overall and individual overtime hours and monitor absentees and workers exploiting the overtime policy. There are several steps you can take to manage overtime more effectively.
Five best practices to manage overtime more effectively
1. Cap overtime limit
Overtime hours must always be regulated to keep the labor cost within sustainable limits—generally, overtime pay kicks in when employees reach 40 hours per week. As there are no federal limitations on how much overtime an employee can work, there must be clear policies capping the overtime limit and explaining which employees are or aren’t allowed to work overtime.
Employers must determine a weekly, monthly, and annual cap on overtime hours that the business can afford to pay per employee. Capping the overtime limit is necessary to ensure that the work gets distributed more evenly amongst the workers and every employee gets a chance to work overtime hours if they want to earn the extra pay.
2. Track employee working hours and overtime
It will be a tedious task to track employee working hours and overtime if managers have to do it manually. This is why it’s essential to deploy an automated overtime management software like Truein that can efficiently track and monitor employee working hours, facilitate overtime calculations, and easily integrates into the payroll system.
Tracking overtime within the workforce is necessary to ensure that everyone gets a fair chance to earn extra income. You can also adjust schedules if a worker hits their maximum overtime hours for the week. Automation provides you with data and insights on managing overtime more effectively.
3. Create an overtime policy and share it with your team
An overtime policy is mandatory to provide a complete overview of the company’s stands regarding overtime rules. It must also entail all the local, state, and federal laws around overtime hours, and the company compensates for working overtime.
A good overtime policy includes the rules and procedures to control overtime. It should also highlight how employees discuss overtime with their managers. Set expectations for both workers and supervisors to facilitate communication regarding the same.
4. Cross-train employees
A “single point of failure” must never be present within the workforce. Simply put, a few workers should not be the most skilled or with the most experience, as their absence can be detrimental to the productivity of the overall workforce.
Spreading responsibility and specialties among the whole team is one way to reduce overtime. Instead of relying on a few skilled workers, you must have a training and development program to train other workers to step in and pick up the load if required. Cross-training employees is one of the best ways to ensure that production and business operations are not affected by the absence of a few workers.
5. Allow overtime only when there is a demand
There must not be an endless overtime cycle. Usually, the demand for more work spikes during busy seasons or when your business is going through aggressive growth. This leads to increased profits, but if you are not managing overtime more effectively, your earnings might directly go to paying employees for overtime and health costs.
This is why it is necessary to match staffing to demand and allow overtime only when required. Managers must schedule smarter to reduce overtime and to ensure that the correct number of staff is available when needed.
How can Truein automate the process of overtime tracking and calculation?
Truein is a complete employee time and attendance management solution. It is a cloud-based, hardware-less application that also features overtime recording, calculation, and management. Irrespective of the industry or workforce size, you can deploy Truein at any remote site or company campus for effective work-hour recording.
The app uses an AI-based algorithm for identifying and clocking in workers. It also features GPS tracking and geofencing, ensuring workers are present on-site while recording overtime. Truein supports custom reports with overtime calculations and 70+ policies to automate overtime, shifts, and payroll-ready reports. Schedule a demo today and try Truein for free.
These are the essential tips you must know on how to manage overtime within your organization. Every company has challenges when working overtime, but automation software like Truein benefits every employer. It automates a large part of overtime tracking and calculation that helps managers schedule better.