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Strategies to Reduce Overtime Costs


Strategies to reduce overtime costs have their ever-required necessity so far as the economic-financial management is concerned. Today, you will find here such action plans by which you can save money through reduced excessive overtime costs, offer your employees work-life balance by sidestepping extra hours of work and ensure time management. 

Following are the strategies to reduce overtime costs:

Organizational Culture change

Managers can make it possible, yes! Keeping overtime an option and not a routine practice can help reduce your overtime costs immensely.

You might have seen the strategic-level senior management in meetings all day on coffee or tea; and asking others whole the day what are you doing so far in your performance week, OR even talking to juniors and peers about their own achievements in life, etc. And then those people sit in the office in late hours to do whatever routine tasks they had to in time before.

This creates a culture of overtime for your organization, being set example by you as a Chief Executive Officer or a business owner.

Such overtime culture costs not only the organizational office time and resources over usage but at the same time, it pushes employee burnout {that is fatigue and no more energy to work – due to free hours in office routine time} and a tool against employee engagement causing disengaged employees at large.

Therefore, organizational culture needs change, from overtime habitualism to time-bound activities on day to day and hourly basis.

Highlight and Track (H&T)

Being a manager, you need to track and highlight the patterns of overtime in your organization so that to have an idea in mind it needs reduction!

Moreover, it has been observed even in mechanistic organizational design and cultures where there are stern command and control systems in vogue with strict chain of communication that overtime is accustomed routine!

By tracking not only the employee's 40 hours completed per week, through physical or via software help but also the performance produced in that hourly times; and the alarming situation when the 40 hours reach near to the defined limits should be curtailed to reduce hourly input for lessening of overtime costs.

Cross Train your employees

If one employee is trained and skilled to work for hours and hours. And then again the same employee has to carry out the assigned job tasks after office hours on a routine basis, employee burnout is already on its way through!

Hence what to do to avoid employee burnout having dependence on one employee, is a question of key concern for employers.

Cross-train your employees for several differential skill sets so that the workload can be distributed among workers and is not on one person.

This way of one employee leaving a role to another business – say the employee switches the job -, or remain home due to illness, or is on unscheduled holidays, the jobs would neither disturbed nor disrupted.

Limit the hours of overtime

There is no limit for at least or at last hours for overtime payments so far as the law is concerned.

What to do then to reduce overtime costs? Oh!

No worries dear employer, we have for you yet another way to reduce the overtime costs in your organization!

And that is through: to limit the overtime hours as a policy initiative.

Equip the employees with adequate resource  

If your employees are coping up with less equipment or old equipment/technology fighting with the speed matters etc., make sure that those techs should be replaced with adequate requisite resources needed for your day-to-day business activities to be carried smoothly.

This is the financials invest to avoid financials in waste! It is spent money to save money rather. This way the time of your employees would be saved as well to do the work faster than before. Make sure the most of the hourly office time of your employees is engaged in the performance of tasks and not coping with the lessened number of or old resources in place.

Flexi-working hours introduction

For flexible working hours introduction, the research so far has shown that if employees telecommute that is work from home and communicate via distant tech, this way the employers can save up to $11,000 per year!

Employee(s), if they are given flexible time at their will to work, have been proved to be more productive than in comparison with the physical working. This does not mean that all the offices are to face closures like lockdown, but it needs at least a looking into a considerable strategy to choose such option, if feasible as per your business needs. This can cut down reduce the overtime costs at a larger scale. 

 Staff demand and Supply match

Employers need to make a sufficient number of employees employed so that to match the demand of the business. In HR language, it is known as staff demand and supply match. This way the workload would be distributed among workers and would lead to a decreased need for overtime hours.

Policy Implementation; Monitoring and Evaluation (PI&ME)

For reduction need in overtime costs, it is advised that you should make an overtime policy wherein make sure the employee time at work is at work, and not disengaged.

Not only this, but then it needs the policy implementation of the policy made. And, when the policy is in its implementation phase, here comes the time for the performance monitoring and evaluation.

Saga Rectification

Employees are often seen in offices, especially public-service-run, in epic telling about their lives, making the workplace a messed up house for all.

As an employer/manager, you need to rectify the said saga of habitualism.

Lessen meetings Mandatory attendance System

It is generally observed and experienced through tacit knowledge via empiricism that meeting is made mandatory attendance for those who have nothing to do but be at the listening end! Those meetups necessity systems need an improved update in the form of making this non-mandatory to save the working hour precious time and hence cost.

Watchdog Policy

It is suggested that a watchdog policy be initiated and implemented in general for all employees by all employees and in particular for the teams by their team leads.

This way, through CCTV monitors and/or physically; and even remote workers through certain programs installed via hi-tech, should be monitored to its effective time utilization.

Model Leadership

You are a model being a leader of a team, manager for employees, or owner of a small business. People do follow you, therefore make yourself a role model leader to be followed who is working on time within allocated office hours, avoiding frequent overtimes except when it is merely unavoidable. 

Software Solutions

Several scheduling software are there in technology markets to track the hourly performance of your employees. This definitely helps in effective time usage and overtime reduction.

Learn from the wastage 

People often give the name of experience to their mistakes, this is so true in its essence. Learning from the wastages experiences for the purpose of not repeating those, makes you better than before. This applies to your overtime practices as well.

More-for-Less principle

More for less principle is for pay more to pay less. This means that hourly wage if replaced with performance-based pay can work much for reduction of work overtime investments.

Time Tracking

Amongst the said action plans, time tracking is an effective tool for managing the number of hours worked and that is utilized effectively and not defectively, efficiently, and not deficiently. Giving your employees time-based assignments having deadlines to meet, and rewarding the same even non-financially like an appreciation note, etc., can work for your cutting costs pertaining to overtime pay.

New Hiring 

New hiring is the least option if your existing workforce is not willing, even after all the said and other ways you had adopted resulted in a void and the pay period is a mess.

But, the bottom line of the discussion is, the hires must be communicated clearly the strict optional overtime policy management initiatives you have taken so far for the implementation, monitoring, and review purposes.  

More or less, the afore-mentioned advice is believed to be beneficial for reducing your overtime costs, if followed in its true spirit.