Strategies for Overtime Management in The Workplace

Although many believe that overtime must be avoided, it can be a good choice for companies in various situations.

Think about it: overtime is an efficient solution to 24/7 coverage in the company. They can help any company improve its competitive position in the local labor market by offering employees the opportunity to earn additional income. Overtime also allows workers to respond quickly to short-term fluctuations in workload or staffing levels.

Companies do not have to maintain additional staff to meet such fluctuations in demand and only pay for the time required. If you're still facing challenges, it could be because you don't know how to manage overtime. To use overtime effectively, employers must understand the negative impact on the workforce. We will discuss this in this article.

Why is it important to manage overtime?

When employers do not use overtime effectively, it can have serious impacts on employee productivity and health. Poor overtime work can lead to burnout, lower employee engagement, and excessive turnover.

Overtime affects workers' ability to get enough sleep, leading to poor health and safety and quality problems at work. Additionally, if overtime continues for too long, it can inadvertently create an overtime-dependent workforce with higher absenteeism and lower productivity.

To minimize these consequences, managers need to know how to manage overtime wisely. It is crucial to keep track of total and individual overtime hours and to monitor absences and employees taking advantage of overtime policies. There are several steps you can take to manage overtime more effectively.

Five best practices for more effective overtime management

1.Overtime cap

Overtime must always be regulated in order to keep labor costs within an acceptable range. As a rule, overtime is only paid if you work more than 40 hours per week. Because there are no federal limits on the amount of overtime an employee can work, clear guidelines must be established that set the overtime limit and explain which employees can and cannot work overtime.

Employers must set a weekly, monthly and annual cap on overtime that the company can pay per employee. A cap on overtime is necessary to ensure that work is distributed more evenly among employees and that each employee has the opportunity to work overtime if they wish to earn the additional compensation.

2.Track employee hours and overtime

Tracking employee hours and overtime is a tedious task when managers have to do it manually. That's why it's important to use tools like IceHrm's overtime module, which efficiently records and monitors employees' working hours, makes overtime calculation easier, and easily integrates into the payroll system.

Tracking overtime within the workforce is necessary to ensure everyone gets a fair chance to earn additional income. You can also adjust the schedule when an employee has reached their maximum number of overtime hours per week. Automation gives you data and insights to manage overtime more efficiently.

An overtime policy is mandatory to provide a complete overview of the company's positions regarding overtime regulations. It must also reflect all local, state and federal overtime laws, and the company must compensate for overtime.

A good overtime policy includes the rules and procedures for controlling overtime. It should also show how employees discuss overtime with their managers. Set expectations for employees and managers to make communication about them easier.

4.Comprehensive training of employees

There should never be a “single point of failure” in the workforce. Simply put, a few workers should not be the most trained or experienced, as their absence can impact the productivity of the entire workforce.

One way to reduce overtime is to distribute responsibility and areas of expertise across the entire team. Instead of relying on a few professionals, you need to set up a training and development program to train other employees so they can step in and take on the load when needed. Cross-training employees is one of the best ways to ensure that production and business operations are not affected by the absence of a few employees.

5.Only allow overtime if there is a need

There cannot be an endless cycle of overtime. Typically, demand for more work increases during peak seasons or when your business is experiencing aggressive growth. This leads to higher profits, but if you don't manage overtime more efficiently, your revenue could go directly to paying employees for overtime and healthcare costs.

For this reason, it is necessary to adapt staffing levels to needs and only allow overtime when necessary. Managers need to plan smarter to reduce overtime and ensure the right number of employees are available when needed.

How can IceHrm automate the process of overtime recording and calculation?

IceHrm is a complete HR management solution. Regardless of the industry or the size of the workforce, you can use IceHrm for effective time tracking.

These are the top tips you need to know to manage overtime in your company. Every company faces challenges when it comes to overtime, but software like IceHrm is beneficial for every employer. It automates a large part of overtime recording and calculation and helps managers plan better.