When used strategically, overtime can be a quick way to maximize your team coverage and increase production for your firm.
When not used strategically and overtime has out stayed its welcome, it can lead to decreased productivity, quality issues, and burnout. This ultimately leads to disengaged team Members and reduced job satisfaction. It’s a slippery slope and the trick is recognizing when overtime is more than just a band-aid to get you through a hump.
Here are some things you need to consider when offering overtime to your team Members.
Overtime should only be allowed with your approval. There may be certain exceptions that are always approved, like when team Members are supporting you at an in-person event. Even then, there are often ways you can adjust a team member’s schedule in advance of the event so that overtime can be reduced or eliminated. Add a policy to your employee handbook and notify your team, that overtime should be discussed in advance prior to working it.
Even when you approve overtime, you need to be very observant of your team Members’ performance. Burnout is real. When overtime becomes a constant part of the workload, not only will you be paying an increased hourly wage, you may see minimal gain from those who work overtime, as their productivity will likely decrease over time. Individuals with burnout are prone to fatigue, insomnia, irritability, and other adverse health consequences including a compromised immune system.
Look at the numbers! You need to know what your cost of hiring is, fixed costs for employees, and weigh that against the breakeven point of paying for overtime over a period of time for non-exempt employees.
The cost of hiring should include not only the fees for placing ads or using an agency, but also your time spent hiring and training a new person.
Fixed costs should include any amount of money you have to pay per person you have on your team regardless of how many hours they work like: insurance, sick time, licensing costs, etc.
Analyze your overtime, over time. Overtime rates are typically 1.5 times the regular rate of pay in excess of a set daily or weekly amount. In some cases, it could be double time depending on the hours being worked. This calculator can help you estimate your weekly cost of paying overtime vs. hiring someone at the regular hourly rate.
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