Overtime – The Hidden Budget Buster (and What to do About It)

Sometimes it’s essential to approve overtime so that an organization can continue running effectively. This is usually accounted for in budgets, especially around holidays, planned employee vacations, leaves, or transitions. However, there are times when overtime becomes necessary unexpectedly, and this can have a significant impact on the bottom line.

Overtime can quickly creep up to staggering numbers, especially if your organization is in a pinch.

Here are some tips on how to keep overtime expenses under control, and how to plan for the unexpected:

1. Monitor employee schedules and consider alternative schedules.

One of the best ways to control overtime expenses is to monitor employee schedules closely. Keep track of employee hours worked, including start and end times, lunch breaks, and overtime hours. This will allow you to identify trends and patterns and adjust schedules if needed. You can also look into alternative work schedules, such as compressed workweeks or staggered start times, which can help to reduce overtime expenses. These schedules can increase productivity while minimizing the need for overtime.

2. Plan for busy periods and review workloads.

Anticipate busy periods and plan for coverage if needed. This usually occurs around the holidays but can also happen if one or more employees’ planned time off overlaps with each other. Schedule employees so there is enough coverage during peak periods and encourage employees to plan well in advance. Regularly review employee workloads to ensure that they are manageable and fair. Adjusting workloads can help to reduce the need for overtime and improve productivity.

3. Cross-train employees.

Cross-training employees can help to increase productivity and reduce the need for overtime. When employees have a broader range of skills and can perform different tasks, it makes it easier to schedule them to cover for absent or busy colleagues without incurring overtime expenses. Be careful with this though, you don’t want to stretch your employees to thin.

4. Automate scheduling.

Automating scheduling can help to reduce errors and improve accuracy. Automated scheduling software can help to optimize schedules and reduce the need for overtime by ensuring that there is enough coverage during busy periods.

5. Encourage time off and provide incentives.

Encourage employees to take time off when possible. This can help to reduce stress and burnout, two major causes for reduced productivity and increased overtime expenses. Providing incentives, such as comp time or bonuses, can also help to motivate employees and reduce the need for overtime. This can be particularly effective during busy periods when overtime may be required.

6. Work with a staffing agency.

One great way to reduce overtime costs is to plan ahead and secure coverage with a temporary or contract hire. A good staffing agency will be able to find a near perfect match to cover in times where your team is spread thin. They should also be able to help out on short notice too. It’s worth it to connect with a staffing agency so they can provide relief in the event that overtime begins to overwhelm the budget.

Whether you’re looking for long or short-term, temporary, or direct to hire, Arbor Associates is here to help. Give us a call today!


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