How to reduce overtime costs

The full cost of overtime is sometimes over looked as it’s not that easy to identify what the total cost is. Overtime costs much more than just the additional wages. Individuals who regularly carry out overtime can burn themselves out which could then lead to workplace accidents and time off work. Then there’s the cost of cover or agency staff to consider. Read on to find out how you can reduce the costs to your business.

Spot individuals who depend on overtime early on
Overtime dependants often know how to influence the amount of overtime they work and, to some extent, abuse the system. Tactics include dawdling during the shift, working all weekend and then calling in sick on a Monday, and being available on premium-paying Sundays but not Saturdays. Take a look at the hours your staff are actually spending in the office or on the factory or workshop floor. Recognise where regular peaks in demand are not covered by normal rostered hours and spot regular weekend working.

Don’t incentivise overtime
Some companies financially reward presentees with bonuses that incentivise the long-hours culture, which many see as a tangible benefit to working overtime, especially during periods of economic instability. Merit payments and premiums also incentivise excessive overtime working. Take care not to fall into this trap. Instead, help employees see the benefits of work-life balance.

Consider flexible working
You’ll all be aware that in June 2014 flexible working procedures were extended to allow ALL employees (well, all those with at least 26 weeks service) to request a change to their working pattern. Previously, only employees who had children under the age of 17 (or 18 in the case of a disabled child) or employees who were carers had the right to request flexibility. HR180 can help you look at ways that you can incorporate flexible working and make sure you are applying flexible working within statutory requirements.

Offer alternative incentives
Establish a non-pay-related incentive scheme that rewards workers for completing their tasks within the standard working day or shift, such as more scope for training and career progression and increased leisure time. Offering teams the chance to self-manage, whereby they can implement shift swaps among themselves, brings a sense of pride and autonomy and can alleviate some of the pressures facing the management team. In manufacturing settings, “job and finish” schemes work well. This means calculating how long it will take a certain job or production run to be completed, and if workers complete it ahead of schedule, they are allowed to finish work early.

Abolish earnings fluctuations
People have a sense of comfort knowing that they will receive a set wage every month, as it allows for household budgeting. But those working in a seasonal business are keen to work overtime as a way of compensating for those months of reduced pay. By giving workers equal monthly wage packets, the desire to work overtime can disappear. So, although working hours are flexible enough to meet business demand, the pay packet remains sacrosanct and immovable, offering reassuring stability to the workforce.

Key points
– Understand what drives the need to work overtime
– Recognise the long-term damage overtime can do to both your employees and your business
– Offer alternative incentives such as “job and finish”
– Ensure your business is not accidentally incentivising low productivity and service through high overtime usage