November 29, 2021 | Payroll Software | Posted by Ascentis Thought Leadership
5 Strategies to Reduce Overtime Costs
Overtime isn’t always a comfortable conversation for scheduling and payroll professionals. On one hand, overtime costs are an unavoidable and necessary part of doing business for many companies. On the other hand, paying workers for hours beyond your original projections can feel like something close to a failure for your workforce management team. Striking a balance between reducing overtime expenses and maintaining productivity is an ongoing challenge for employers across all industries, but especially for small business owners and companies in labor-driven fields that rely heavily on an hourly workforce.
With all of that in mind, we’ve pulled together a few cost-effective time management and administrative strategies for getting employees to work efficiently and effectively while protecting your bottom line.
- Keep an Eye on Schedules: In the modern workplace, there is very little excuse for letting unnecessary overtime catch you by surprise. Your workforce management software should make it simple to keep an eye on your employees’ schedules, allowing your HR team to predict when teams or individual employees are coming close to their 40-hour threshold. Recognizing those overruns before they happen lets you adjust schedules and set more realistic productivity goals, preventing costly overtime pay. Watching schedules can also help identify whether specific employees are working more overtime hours than others. That knowledge can be useful for adapting policies, altering schedules, and assigning tasks to make sure that your team is functioning at maximum productivity and efficiency.
- Invest in Tech and Equipment: Many employers are tentative about putting money into new equipment and technology because of the up-front costs. While it’s true that a new software suite or an updated piece of machinery usually doesn’t come cheaply, too many companies allow that short-sighted view to drag down their long-term productivity. Investing in technology that reduces the time employees spend on repetitive processes means they will have more time to devote to more important tasks. That freed-up time in turn means that projects will get finished more quickly and productivity will stay high, ultimately reducing the need for overtime hours. Something as simple as automating time tracking and payroll functions can yield major rewards by reducing costly errors and cutting down on hours spent manually tracking employee time.
- Reskill and Upskill Employees: One key reason that businesses run into excessive overtime hours is a lack of fully trained and certified workers. For example, a manufacturing facility might require workers to complete a thorough safety training program before they’re certified to operate a certain piece of machinery. If only a few employees have completed that certification, those employees may end up racking up extensive overtime hours for projects that require that equipment. That problem can be solved with a learning management system that makes it easier to upskill or reskill existing workers. Upskilling involves providing workers with training that allows them to advance their position within an organization — getting an entry-level worker trained in skills that could bump them up to the next pay grade, for instance. Reskilling involves training a wider range of workers to perform a wider range of tasks — making sure that all workers on a certain shift know how to safely perform every duty in that shift, perhaps. By cross-training and diversifying the skills and knowledge of your workforce, employers can make it easier for their teams and staff members to accomplish goals without spilling over into overtime hours.
- Set Limits on Overtime Hours: In some cases, the solution to workers collecting excessive hours may be to simply set a cap on how many hours each employee is allowed to work in a specific period. The Fair Labor Standards Act (FLSA) mandates that all non-exempt workers receive time-and-a-half pay any time they work more than 40 hours in a work week, but it is up to the employers’ discretion how many hours are allowed to work per pay period. Setting a limit on time worked in a specific period while still allowing enough room to make sure that all necessary work gets done can be helpful on several fronts. For one, it can discourage time theft in the form of workers who might slow down their work on projects in order to push themselves into overtime territory. It can also help workplace morale by removing the appearance of favoritism or inequality in cases where certain employees consistently put in more overtime hours than others.
- Pay Attention to Your Data: If your business is consistently running into issues with excessive overtime, there is almost certainly data that can help you understand why. Your workforce management software generates tremendous amounts of insights into the ways your employees work most efficiently. This helps to establish not just who is working more hours and when, but also gives your human resources team a better idea of why. For example, if one team in a manufacturing facility is consistently putting in more hours of overtime than others, a thorough data analysis can help pinpoint the cause. Is that team using outdated or inefficient methods? Are some team members putting in substandard work or missing shifts? Are they simply being assigned more difficult tasks than they can accomplish in a set time frame? Analyzing data surrounding productivity, attendance, and employee feedback can be invaluable to answering those questions.
As we’ve said, overtime hours are a fact of doing business for most employers. They can even provide a nice incentive for your workforce under the right circumstances, but when they’re allowed to go unchecked they can also create serious delays and cost overruns for business owners. Find out more about the ways automating your workforce management solutions with Ascentis can help your organization with reducing overtime and labor costs while staying fully productive.
With more than 35 years of experience in providing Software as a Service (SaaS) solutions, Ascentis thought leaders have become a respected source for insights, tips, and innovations in the Human Capital Management (HCM) space.