How to Keep Overtime Costs Down

by Gabriele Kaier, 04.05.2017

Overtime ranks as one of the biggest ongoing expenses for most companies. Managing correctly overtime helps to avoid expensive lawsuits, low morale, and helps you stay conform with changes in overtime regulations. But how can you manage overtime more effectively to protect your employees and your company? These five tips will help you avoid the greatest pitfalls and unnecessary surprises.

The Problem with Overtime Costs

Overtime ranks as one of the biggest ongoing expenses for most companies. The correct management helps to avoid expensive lawsuits, low morale and helps you stay conform with changes in overtime regulations. Misclassification or time worked without pay can have enormous financial repercussions for employers.

But how can you manage overtime more effectively to protect your employees and your company? These five tips will help you avoid the greatest pitfalls and unnecessary surprises:

Employee Time Tracking

Working hours under control

With online time tracking business owners and managers gain company-wide as well as individual employee level overview of working times. Managers can configure to get informed when overtime threshold is achieved as well as define the conforming legal requirements and easily comply with them.

Detailed reports of your employees

View statistics of employee working hours related to specific employees and review the reasons for overtime. Such reasons can range from staff shortages, too many projects or an employee who enjoys getting paid some extra money. Thus, the reports help you gain an overview of how time is spent or allocated to specific projects within your company. Managers can make informed decisions in relation to resources.

Avoid timesheet rounding

An online time tracking solution avoids timesheet rounding which typically happens innocently but usually falls in the employee’s favor. According to the American Payroll association this is about 10 minutes per shift and per employee.

Be aware of misclassifications

As an employer you have to ensure that classification is correct for your employees. It does not matter if you are willfully or innocently misclassifying employees. Evaluate regularly your employees´ duties and relationship to the company to avoid potential consequences.

Develop your team’s capacity

Overtime expenses add up for certain individuals because no one else can do their jobs. Not only overtime rises, but it is also risky if you are for example losing an employee at a critical juncture. Mitigate risk and reduce overtime by developing your team’s capacity so your company has the flexibility to respond to fluctuating workflows. This includes training for different skill sets which spread out the burden. Identify duties that can easily be learned by several employees, it doesn’t make sense to cross train on all duties or skill sets. You can drastically reduce overtime while increasing productivity and efficiency.

Learn to calculate your resources right to avoid overtime

For efficient employee scheduling and planning, it is important to assess the person correctly and to plan employees according to their skills, talents and position. For example it doesn’t make any sense if an employee with less experience has to lead a project. A learner maybe has to compensate the lack of experience with overtime. Perhaps he also needs some help and additionally burdens colleagues and supervisors.

Assign the right priorities

In stressful times, it depends on the management how much stress passes on to employees. It is not possible to get things done at the same time. The extent to which overtime rises directly relates to the right calculation of the management. Especially young managers do not have the experience to prioritize all tasks right. A change to agile project management methods allow to react faster and more flexibly in case of unexpected developments.