Toolkit: Smart Strategies for Overtime Management

Around-the-clock scheduling is necessary for fields that involve critical services, public safety, or continuous operations. Providing 24/7 coverage often requires filling an eight-hour weekly gap beyond the 160 hours covered by four 40-hour crews. Most employers use overtime for this because crews work an average of 42 hours weekly, which only represents minimal overtime costs (approximately 5%).

The alternatives have drawbacks. Hiring part time employees is one approach, but this may result in high turnover and a significant management effort to maintain staffing. A third option, employing a whole additional crew, is usually not financially sustainable as a 40-hour crew is hired for only eight hours of work. (An extra crew’s remaining hours can be used for relief, training, or maintenance, but this is inefficient if not regularly needed.) 

Demand for products or services often varies seasonally or periodically. A common strategy to handle these fluctuations is the use of overtime pay to provide immediate access to skilled, trained workers.

Overtime offers flexibility to match workload variations affordably. Short-term overtime costs are cheaper than hiring new full-time employees when factoring in the costs of recruitment, benefits and training expenses. 

Other approaches to workload fluctuations include stockpiling products during slow periods (for soft goods companies) or hiring temporary employees. In some cases, allowing full-time staff to work overtime leads to higher efficiency and better decision-making than employing temporary or part-time workers.

Short-term personnel shortages may arise from turnover or absences (e.g., vacation, illness, jury duty). Many employers leverage overtime to manage these occasions using their existing skilled workforce without maintaining excess capacity. This approach incurs costs only when additional labor is required, making it a flexible and cost-efficient solution.

For industries in which consistent turnover or absences pose a significant problem, one alternative is hiring full-time relief staff. While this method provides a dependable backfill, it may become inefficient if the employer does not regularly utilize this relief capacity.

Offering overtime can be a strategic tool for attracting and retaining employees. Here's why:

• Increased earnings potential: Job seekers are often drawn to roles that offer opportunities for higher earnings. Overtime pay, typically at a premium rate, can make a position more appealing.
• Flexibility and choice: Employees appreciate having the option to work overtime without it being mandatory, fostering a sense of control over their schedules.
• Demonstrates company commitment: Employees are more likely to stay with a company that provides opportunities for growth and rewards their hard work.
• Boosts morale and engagement: Candidates are drawn to workplaces where employees feel valued and motivated, which can be achieved through fair overtime policies.
• Supports career development: Employees may see overtime as an opportunity to gain more experience and skills, making the role more attractive.