Using overtime is a quick and easy way to meet demand that exceeds capacity. However, if your company uses overtime frequently, chances are there are other problems within your organization that need to be addressed. Does your company need to purchase new manufacturing equipment? Do you need to improve efficiency? Are your workers getting used to the extra pay and consider it part of their salary?
In order to maximize profits, your company must find ways to operate more efficiently. Reducing overtime costs can help your bottom line. But how can you do it successfully?
Here are five tips to help your organization streamline operations and reduce overtime costs:
Tip #1 – Get the tools and technology you need to be more efficient. Look for new ways to automate processes so employees can do their jobs faster. Consider using technology to automate workflows and improve project management. If employees can be more productive during regular work hours, overtime may not be needed.
Tip #2 – Employ additional staff, temps, or subcontractors. Some businesses naturally have peak periods. In order to meet seasonal demand, you could hire temporary workers or subcontractors to meet short-term needs. If your business is growing, develop a plan to hire additional full-time or part-time staff.
Tip #3 – Hire the best candidate for the job. Employees are most productive when they have the right skills and experience to do the job. Make sure you recruit qualified candidates and share job expectations.
Tip #4 – Train your workers. As your business grows and technology changes, you need to keep your employees informed. Take time to educate your workers on important internal policy changes and quality requirements. You should also provide opportunities to update job skills and certifications.
Tip #5 – Use overtime the right way. Sometimes you have to use overtime to meet an unpredicted spike in demand. Try to limit your company’s use of overtime to times like these. Give managers the tools they need to track overtime so they can understand where and how overtime is used in your company. You can then use that information to make strategic decisions about future hiring needs or process improvements.
Many businesses rely on time and attendance software to help track and manage employee work hours and pay policies. EmpowerTime by Empower Software automates the collection, calculation, and reporting of employee work transactions and is flexible to meet the unique needs of your business.
Empower can track any type of work environment using your labor rules and policies. The powerful calculation engine can support complex pay policies and unlimited work rules. Managers can access data from the desktop so they can sort and view overtime costs by employee—and stay up to date on exceptions that require immediate action. Companies who successfully reduce overtime costs will further benefit from improved operations and efficiencies.