Reduce Overtime Costs Without Sacrificing Productivity

For a small business, unexpected overtime costs can quickly eat into the bottom line. When you’re trying to maximize productivity, it can be difficult to find the balance between getting the most work done and maintaining careful control over your labor costs. Here are some ways to reduce overtime without sacrificing productivity.

Negative Effects of Too Much Overtime

Explore some of the common side effects of excessive OT.

Decreased output

Research from Stanford University showed that there are two main reasons productivity decreases when employees are asked to work more hours than usual.

“First, it may be the case that employees simply become much less efficient: due to stress, fatigue, and other factors, their maximum efficiency during any given work day may become substantially less than what it was during normal working hours.”

The second reason is an extension of the first. Some employees showed such dramatic drop-offs in productivity, attention, and even safety consciousness during those extra work hours that their overall productivity actually decreased. In short, adding extra overtime can actually harm your overall productivity.

Diminished worker well-being

The NIH analyzed studies from a 30-year period that revealed concerns about workers’ occupational health. Their findings acknowledged that work time can often extend beyond the assigned hours when you factor in extra labor outside assigned tasks and commuting and travel.

Extending these hours further increases the risk for health conditions lik:

• Cardiovascular diseases
• Chronic fatigue
• Stress
• Depression
• Anxiety
• Sleep quality
• All-cause mortality
• Alcohol use and smoking

Employees who are unwell, physically or mentally, can’t perform their assigned work, and they are also more likely to resign, causing a snowball effect of overwork and chaotic overtime schedules for the remaining workers.

Social effects

The Stanford University study noted that some life tasks are required regardless of what else is demanding your time. All workers have outside obligations that are both necessary and joyful; they need time to run their households, care for children or elderly family members, and spend time with friends and family enjoying hobbies and exercising. For some workers, overtime can mean there’s no extra time for the enjoyable parts of life. This can lead to missed sleep, burnout, irritability, and an inability to focus well, contributing to tension with co-workers and managers.

Four Ways to Reduce Overtime Costs

Here are four simple way to reduce the risk of OT harming your business budget.

Adjust pay periods or schedules

Carefully consider what works best for your industry. It may be that your business isn’t benefiting from a common pay period of Sunday to Saturday. If you run a busy restaurant, demand for workers on weekends will be higher than on weekdays. If an especially busy night means your highest-paid employees stay on past the end of their shift to help cover the customer demand, you may discover unplanned overtime that seriously eats into your labor budget. Adjusting schedules and pay periods can help you follow federal and local labor laws while still keeping your overtime budget in check.

Track employee time precisely

Rather than relying on physical time cards, invest in time-tracking software that tracks employee hours to the minute. This allows you to analyze trends with certain employees or time periods so you can adjust before you’re in deep with unexpected overtime. Software can alert managers in real-time when an employee has reached their expected hours for the pay period, and you can make decisions according to demand rather than discovering the overage days later when you’re legally obligated to pay the increased rate for the time worked.

Offer flexibility using accessible software

Overtime management can be aided by giving employees access to the schedule with real-time notifications of changes as they happen. With additional scheduling features like employee shift swaps, manager approval within the software, and pay calculators, employees can feel empowered to stay aware of the schedule and collaborate to staff each shift appropriately. Combined with clocking in and out via the phone app, there are significantly reduced chances for errors, confusion, and call-outs.

Cross-train workers

Balancing each shift with workers who have appropriate training and skills can be a challenge. Cross-training employees to cover jobs outside their regular responsibilities can not only help reduce overtime, but it can also give you peace of mind in staffing emergencies. When employees are siloed into a narrow set of job tasks, you risk needing their overtime hours when demand for their skill set arises. Cross-training builds morale and encourages collaboration among employees, leading to more productive and positive work time.

WorkforceHub Streamlines Scheduling and Reduces OT Issues

Running a small business means trying to prioritize worker well-being, productivity, and a tight budget at the same time. It can be difficult to find the right balance, especially when demand is high. Time-tracking and scheduling software can provide solutions that give you tighter control over shift patterns, real-time information, and a focus on your employees’ work-life balance.