To Allow Overtime, or Not to Allow Overtime
How a company approaches overtime can have a big effect on its profits and employees. Conventional wisdom suggests that paying an employee 1.5 times their usual hourly rate should be avoided at all costs, but the time and resources required to train a new employee aren't cheap either. Every business has to decide their overtime policy for themselves, but here are some factors to consider when making the call.
A skilled job benefits from a seasoned employee
All jobs are not created equal. Complex jobs in particular often call for a seasoned employee who may have already worked their 40 hours this week. Hiring a new employee for a high-skill job has the potential to cause frustration for everyone. Aside from being unfamiliar with the way your company does business, a new employee doesn’t have same the capabilities as a seasoned worker. When your new hire runs up against unexpected challenges on the job, you may end up calling that more experienced employee to come to the rescue anyway - and end up paying them both.
Consistent high volume may be a sign it’s time to expand
If you’re regularly paying many employees overtime, it may be time to invest in a new hire. Employees cost more than their hourly rate, so when deciding to expand be sure to consider the new employees fully-burdened labor costs. This means taking the cost of payroll taxes, benefits, PTO, equipment, tools, and supplies into account. It sounds like a lot, but investing in one or more new employees can help meet growing demand without breaking the bank with overtime costs.
TSheets Overtime Alerts feature helps proactively manage OT to avoid it
Managing employee time more effectively is one more way to avoid overtime, and TSheets Time Tracking new OT Alerts make it easier than ever. By setting alerts, you can notify employees, managers, or account administrators when an employee is nearing overtime hours. Say you have a job coming up on Friday that demands a skilled worker. After a TSheets overtime alert Wednesday afternoon, you may reconsider sending your best employee to complete a basic job on Thursday morning. You’ll save money in extra overtime and send the right employee for the job. Choose to have alerts sent via email, Twitter, or text messaging for even more convenience.
To allow overtime or not to allow overtime... That is the question. And it very well may have a different (and correct) answer for each company.