There are two perspectives when it comes to overtime. Some argue it benefits both employers and employees equally, while the other contends it either favours one group or causes inconvenience for both parties. For employers, overtime is the immediate solution to keep projects on track. For employees, it offers the benefit of extra earnings. However, the frequent use of overtime can be detrimental to both employees and employers.

In this blog, we will explore the challenges of overtime, examine why some companies are forced to schedule overtime and show how a smart employee shift management system can effectively minimise overtime requirements while offering big savings.

Understanding the Overtime Problem

While overtime in moderation has its perks, regular overtime creates financial stress for the employer and mental stress for the employees. Studies reveal that despite the opportunity to earn more, only about 25% of employees actually enjoy working overtime. Today, work-life balance has become a priority for the majority of the employees. People are realising that all work and no play can lead to burnout.

As for companies, high overtime costs can hurt their profits. If projects can be completed within regular hours through smarter schedule choices, overtime is an unnecessary expense. This brings us to a critical question: How can businesses save on overtime? But before we go to that, let’s understand the few factors that create the demand for overtime work.

What is Overtime and What Creates Its Demand?

Overtime refers to the amount of hours an employee works beyond their standard schedule. It is usually compensated at higher rates than the basic salary.

Overtime demands can arise from multiple scenarios. When workloads pile up, companies often reach out to their employees for extra hours to wrap up critical tasks on time. Additionally, tight deadlines, staff shortages, seasonal fluctuations etc. can necessitate overtime to bridge the gap.

Average Overtime Costs for Businesses

Every time companies schedule extra hours beyond the standard working hours for each employee, they end up spending way more than usual, up to 15% extra on their payroll expenses. Typically, it kicks up wages by 1.5 times the normal rate. Different industries get hit hard, with some sectors like manufacturing and healthcare bearing more due to staffing shortages and irregular workloads.

Key Causes of Unnecessary Overtime

Overtime isn't just about extra hours—it's a complex issue that can drain a company's resources and team spirit. When businesses don't manage work schedules smartly, they end up paying more for unnecessary overtime and stressing out their employees. Here’s what leads to this—let’s analyse the reasons.

Poor Scheduling:

Poor scheduling is the biggest contributor to unnecessary overtime. When the employees' availability and the need for workload are not taken into consideration when creating a schedule, these shifts can go unfilled. For example, if an employee cannot report to work when scheduled or fails to claim a shift, someone has to cover it at the last minute, and they have to be paid for the overtime.

Inefficient Workforce Planning:

This situation arises when the scheduled employees' number does not tally with the number of labour hours in demand. If the management fails to predict the fluctuations in workload, then in times of high workload, fewer employees may be present at work, and thus, it becomes necessary to schedule them for overtime. To overcome this challenge, managers can use employee shift scheduling software to analyse past schedules and adjust future ones for better outcomes.

Limited real-time visibility of staffing requirements:

A lack of real-time visibility into staffing needs creates a hardship for managers. Managers, as you know, are required to have up-to-date information on employee availability, workload, and project demands to make informed scheduling decisions. Without real-time data, they will be forced to make last-minute arrangements, which often involve unexpected overtime.

In this case, too, a shift management system with real-time analytics can help you make better choices regarding your staffing demands.

How Smart Shift Management System Can Cut Overtime Usage?

With smart employee shift scheduling software, you can significantly reduce overtime usage needs. Here is how it can help you in the process.

Smart Shift Sorting

The shift management system can help you systematically arrange shifts based on exact staffing needs. When there are sufficient employees to take up key responsibilities in each shift, there won’t be any incomplete work and thus no need for scheduling overtime.

Future Demand Predictions

By analysing historical data on the shift management system, managers can accurately forecast peak work periods and ensure that there are enough people to cover the tasks on time without requiring overtime allotment.

Flexible Schedule Adjustment

Modern employee shift management systems are empowered with automated mechanisms to instantly adapt schedules when employee availability or workload demands change. It is often noted that too much reliance on manual scheduling leads to misaligned shifts and issues like overtime.

Live Staff Availability Tracking

Live staff availability tracking can show you who's free when. If a task needs extra help, you can quickly find someone available and thus avoid overtime for others. For example, in the context of a restaurant business, if John is busy and a rush order comes in, you can see Sarah is free and assign it to her.

The Bottom Line

Overtime can be helpful but should work for both employers and employees. Good shift management helps with that. We trust that this blog has sparked ideas on how to tackle overtime maximizing your shift management system.

Are you ready to trim overtime costs and optimize shift efficiency?

Don't let inefficient scheduling and excessive overtime needs drain your resources. Take control of your team's time. Mewurk's advanced shift management system has been designed for both employees and employers alike. We invite you to try it for your business and see for yourself how it brings changes. Your first year is on us. Contact us for details.