Overtime accrues when a regular full-time employees work additional hours, beyond the usual 40 hours per week. Under US labor laws, employers must compensate overtime hours at one and a half times the base pay rate or with equivalent paid time off (comp time). A certain amount of staff overtime is inevitable as staff may be asked to work beyond their usual hours to respond to short-term staff shortages due to training, sickness or emergencies. But when overtime becomes excessive or unexpected, it can be costly and bad for employee morale.
Imagine it is late Friday and you have a big order that needs to be shipped as soon as possible so you ask your entire crew to come in on Saturday. Although you are paying overtime for Saturday hours, it is not too bad as this is a one time deal. Before you know it, working Saturday is routine for your crew to catch up on orders that did not get completed during the week. Since hiring new employees requires training and incurs additional costs for employees' benefits, paying the overtime differential doesn't seem all that bad. Your crew is happy with the extra pay and you have experienced staff on hand.
But when overtime is consistently high, employees may depend on it as another source of their regular income. Without constant monitoring, you may not notice the drop in employee productivity as more idle time occurs during the week. Inefficient scheduling combined with overtime pay practices give incentives for the build up of idle time and subsequent overtime - a very costly combination. Taking away overtime would have a dramatic impact on employee morale and may be perceived as a cut in job security.
Excessive overtime is an indication that staffing is deficient in any of several ways:
- Too few employees are provided.
- Employees are lacking required skills or the wrong type of staff is hired or retained.
- Inefficient shift schedule and/or inadequate shift coverage plan.
- Employees are not scheduled properly.
There are many sources of data that can help managers detect and assess the ill-effects of under- and over-staffing. Unfortunately, many companies still employ a manual approach to staff scheduling. By relying on paper or Excel spreadsheets to schedule employees, so much time is wasted that managers have little time to optimize work schedules to reduce overtime, improve coverage, or deal with other staffing issues. Lacking reporting capabilities, tracking labor costs and schedule adherence is a nightmare.
Modern scheduling software like Snap Schedule Scheduling Software alerts you to scheduling conflicts and helps you avoid unexpected overtime, overworked staff, unfilled posts/positions and unpleasant surprises. It lets you quickly see any over/under staffing condition while making shift assignments and automatically computes and displays the assigned head counts and variances for comparison with required head counts.
Scheduling your employees for overtime can be a good temporary solution but without the proper tools to effectively manage the process, it can often turn into a costly expense for businesses. The ability to see the whole picture is vital to effective staff scheduling. Knowing about unintended consequences downstream of decisions requires constant monitoring of key performance indicators - something that is difficult to do manually.
