Sometimes overtime can often feel like your only option but, even when demand is high and budgets are low, there are still ways to reduce employee overtime
This is an edited version of an article which originally appeared on When I Work
Treat overtime as the exception, not the rule
Company culture starts at the top. If you treat overtime like any other hours worked, and just part of doing business, your employees will do the same. Instead, overtime should be treated as the final option, not the first.
Changing your ‘overtime culture’ might be a challenge for those employees who are used to working it and receiving overtime pay. But, for your business as a whole, a culture of overtime often goes hand-in-hand with a culture of disengagement and employee burnout. If your employees are so accustomed to working longer, or clocking out late, that it doesn’t even warrant a conversation, it’s time to talk to your team and take a closer look at your organisation’s values.
Make sure your team has the right equipment and resources
Learning how to reduce overtime is about making the most of normal employee hours—working smarter, not longer. There are a lot of manual and administrative tasks that eat up employee time throughout the day; it’s said that the average worker spends more than a quarter of their day reading and answering emails alone!
Find ways to automate these tasks, or make them easier. Instead of hosting daily meetings, use an online project board where everyone can check the status of the project and their assignments. Project planning tools like Asana are easy to use and often free depending on the size of your team.
The small things add up. It’s important to make sure your team spends the majority of their time on their actual responsibilities, and that they have the tools they need to do their best work. If your team is spending their shift troubleshooting clunky software or old equipment, it’s time to replace these with something more efficient.
Track and identify overtime patterns
Payroll shouldn’t come as a shock. Instead of being unhappily surprised by employee overtime each pay period, get ahead of employee overtime before it starts. Today’s scheduling apps and work management software tools allow employers to set up tracking alerts for employee hours. If an employee hits their maximum for the week, or is working over their usual average, knowing this early gives you time to adjust schedules.
It’s not just important to track hours worked, but also how much overtime employees are earning, and how often. Forbes reports that just 21% of employees say they’re highly engaged at work; chances are, a small group of employees are working the majority of overtime hours.
Go back through your employee payroll and carefully evaluate timecard data. Are there certain times of the year, such as during the holidays, where overtime is typically high and unavoidable? Are the same people working more overtime each shift? Next, compare your planned labour budget to your actual labour budget; is your employee scheduling accurate, and a match to your budget in reality, or does it need some adjusting?
Cross-train your employees
A ‘single point of failure’ is part of a system that will bring the entire system to a halt if it stops working. If one employee is the most skilled, or has the most experience, they’ll likely be the ones picking up all the slack; they work the most overtime because, without them, your business grinds to a halt.
If you notice one employee earning the most overtime, or if they’re the only one who can do the job, burnout is already on its way. What will happen if that employee calls in sick? What if they take a holiday, or take a new position and leave your business?
Spreading responsibilities and specialties amongst your whole team is a good way to reduce overtime. Instead of relying on a single, skilled employee, train other team members to step in and pick up the load.
Try flexible work schedules
The best work doesn’t only happen from nine-to-five – it doesn’t even have to happen in an office. Over half of employees report that, if they need to get work done, they would prefer – and be more productive – doing it from home rather than at the office.
Research shows, over and over, that flexible work schedules benefit both employers and employees. Employees with flexible schedules are more productive during the hours they do work and use their time more effectively—reducing the chance of overtime or not getting their work done as scheduled.
Flexible work-scheduling may not work for every business, and not everyone is cut out to work from home. Allowing employees to experiment with telecommuting, or flex time, can help reduce overtime.
Overtime is an inevitable number on your spreadsheet of labour costs, but it doesn’t have to be an endless cycle. Employers have the power to set how many overtime hours employees are, or aren’t, allowed to work.
Determine a weekly, monthly, or even annual cap of overtime hours your business can afford to pay per employee. Try to build-in enough room so that, if employees need to pitch in and work more overtime, they can, but not to the point where overtime begins to feel common. Capping overtime ensures that work gets distributed more evenly amongst your team and that everyone has a chance to work overtime hours if they’d appreciate the extra pay.
Match staffing to demand
The endless overtime cycle typically pops up in two scenarios: when demand outweighs labour, or when employees are improperly scheduled. Working too much overtime isn’t healthy for anyone and leads to high rates of employee burnout and turnover. Which is more-cost effective? Taking on a new employee to pitch in a few hours a week as needed, or paying overtime and losing your best employees to ill health? If keeping up with demand is the issue, consider hiring some extra help.
However, matching staffing to demand doesn’t automatically mean hiring more people. Another great way to reduce overtime is learning how to schedule smarter. Smart scheduling ensures you have the right amount of staff is available when things are busy, and that you aren’t overstaffed when things are slow. Check your workforce management or scheduling software to see how demand and current staffing stack up. Are you paying for too many employees who aren’t needed on the clock? Or are you paying overtime for employees when more staff is needed?
Establish an official overtime policy
Finally, it’s time to put everything in writing. An overtime policy should include how you’ll do all of the above—and more. While taking any relevant legislation into account, lay out how you plan to compensate for overtime hours; if you use any legal terms in your policy, be sure to define them.
A good overtime policy also includes the new rules or procedures that will help keep overtime under control. Most importantly, decide who approves overtime and how employees should discuss overtime with their managers. Set expectations for both supervisors and individual employees.
Communicate how you plan to help everyone abide by any new overtime caps or restrictions.
Ultimately, your overtime policy should be written to match your business’ needs and set clear boundaries for everyone.