How To Manage Overtime Effectively - XCD

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When managed effectively, employee overtime can mean higher productivity and better results for your company’s bottom line. However, when managed improperly, overtime can bring a host of problems ranging from employee burnout to lowered productivity and even an increased turnover rate.

It’s down to HR professionals to ensure that overtime policies and procedures are managed strategically to ensure the perfect balance of operational efficiency and happy, satisfied employees. So, what steps can HR take to make overtime work for your organisation? Here’s our comprehensive guide.

Benefits of overtime

To any seasoned HR pro, the potential benefits of staff overtime are obvious. For starters, employees working overtime can increase productivity at key moments in the build up to project deadlines or key dates throughout the year. With extra time to complete tasks, employees can speed up project turnaround times and achieve impressive output levels. This can also have advantages for customer satisfaction, as team members will be able to provide better customer service by working longer hours in line with needs. Plus, overtime pay can help motivate employees to work harder and increase loyalty and employee engagement within the workplace, helping with retention over time.

More specifically from HR’s perspective, organisations that offer overtime opportunities to employees provide more flexibility in staffing. HR can manage staffing levels with existing employees to handle increased demands in peak periods of the year without having to hire additional or seasonal staff to help manage the workload. This solution has clear benefits for HR, reducing the amount of admin and resources that go into hiring new employees by instead making better use of the existing workforce.

Finally, one of the less frequently discussed benefits of overtime is that it allows human resources teams to identify top-performing employees. Team members who are happy to put in overtime and deliver great results can be identified and lined up for promotion in HR’s succession planning and talent management processes. 

Problems associated with overtime

Despite these many potential benefits of overtime, organisations that have large numbers of employees working overtime may see a number of issues that are of concern to HR. For example, the diminished work-life balance can lead to increased stress, tiredness, and damage to employees’ mental and physical health. In some cases, this can manifest in burnout where employees show reduced productivity, increased absenteeism, and lowered morale.

The fatigue resulting from working extended hours can also lead to increased health and safety risks and decreased quality of work. Errors, lack of attention to detail, and impaired concentration can all be problems that result from employees working longer hours than usual.

Moreover, the increased labour costs that result from having to pay overtime premiums can put a strain on the organisation’s budget. This, coupled with the decreased productivity from working too long hours, can mean that organisations may see diminishing returns from overtime workers’ efforts.

Finally, HR professionals need a firm grasp of labour laws and regulations relating to employee overtime. Failing to comply with the relevant regulations can lead to lawsuits, penalties, and the possibility of damage to the organisation’s reputation. For this reason, it’s essential that HR ensures total compliance with all labour laws.

So, with these potential issues of lowered employee wellbeing and safety, reduced productivity and performance, increased costs, and increased requirements to comply with labour laws, what can HR do to manage overtime more effectively? Below are our essential tips.

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Develop and communicate clear overtime policies

The first step is to review your existing overtime policies or establish new ones. Most importantly, these should be communicated clearly with team members so that they know when they can take overtime, how to request it, and what compensation or benefits they can expect. Ideally, this will be communicated in your employee handbook or company intranet homepage. For overtime to work successfully in your organisation, the policies and procedures should be clear, transparent, and consistent among all employees.

Overtime policies may include:

  • Overtime hours: Employees can work additional hours on top of their regular work schedule and these hours are typically compensated at a higher rate than their regular hours.
  • Variable rate overtime: The compensation for additional hours worked may vary based on factors such as the time of day or day of the week. For example, employees may receive a higher overtime rate for weekends.
  • On-call overtime: In some industries where employees are needed to be able to respond to urgent situations, on-call overtime allows them to be compensated for the time spent on-call.
  • Overtime with TOIL: Time off in lieu policies allow employees to accrue additional annual leave in proportion to the amount of overtime that they work.

Use your data to your advantage

It’s essential that you leverage your HR data to gain insights into overtime trends and patterns within your organisation. Creating dedicated reports and dashboards using your HR software can allow you to gain full visibility over overtime and its impacts on the business. You can track time worked across different departments, analyse overtime hours against productivity levels to check whether the returns are sufficient, or you may evaluate annual or monthly overtime trends to predict future staffing needs.

With a data-driven approach, you can gain key insights into the state of overtime and your workforce in order to track the effectiveness of your policies. Even dashboards into employee wellbeing metrics such as absenteeism levels and employee engagement survey results can help your team keep a finger on the pulse and ensure that excessive overtime isn’t damaging workers’ wellbeing.

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Encourage employees to take control with self-service

Overtime is accompanied by a lot of additional admin for HR and payroll teams, ranging from claim processing and approval to reimbursement calculations and data uploads. One way to reduce the strain on your team is by using time and expense management software with powerful self-service time tracking capabilities.

By using the self-service tool through the desktop or mobile app, employees can quickly and effortlessly track their own time, submit overtime requests, and manage their schedules more effectively. This way, HR no longer has to waste time chasing managers for approvals, begging employees to fill out timesheets, and doing long-winded calculations to find out how much time is billable. Instead, employees take ownership of the process with intuitive self-service workflows that allow them to handle their overtime themselves. HR pros can enjoy a reduced admin load and more time freed up for important tasks as a result.

Keep an eye on performance

Carefully tracking employee performance and productivity is also essential to ensure a good ROI on overtime. Having access to hundreds of HR metrics and custom reports at your fingertips using your HR software is vital for this. However, equally important is performance management buy-in from managers and employees. Open conversations between employees and managers to understand their experiences and challenges related to overtime should become a regular part of the performance review process. Encouraged by HR, managers can promptly address any performance concerns and offer support or resources as needed to maintain productivity and wellbeing.

Identify and tackle the root causes of overtime

It’s also crucial that HR takes the time to identify and address the causes of overtime in the first place and considers alternative solutions. For example, inefficient processes, understaffing, poor resource or workload allocation, or lack of training may be leading to overtime being necessary. While overtime isn’t necessarily a bad thing, identifying these issues and managing them can help ensure that any overtime taken is having positive impacts rather than negative results on the company.

Leverage your HR tech to ensure efficiency and accuracy

XCD HR software supports various types of overtime, including on-call, fixed rates, variable rates, and variable overtime hours with associated multipliers. Processing and approving claims become simple and efficient, ensuring employee reimbursement occurs in a timely manner, aligning with payroll cycles. With direct integration to payroll systems, payment information can be sent directly, and payment can be made through BACS if required.

Beyond transforming the way you manage overtime, XCD HR and payroll software has a plethora of useful time and expense management tools for the HR professional. Configurable timesheets and automated time tracking workflows can streamline time reporting and help provide real-time visibility over the workforce. Flexible work cycle tools automate leave calculations and more, while expense reporting and management features can help streamline paperless expenses and provide organised audit trails. 

XCD time tracking and expense management software also ensures HMRC compliance across all payroll and expense processes, providing peace of mind to HR professionals. In short, the software encompasses everything that HR and employers need to keep on top of overtime pay, time tracking, and much much more.

Want to try XCD HR and payroll software for yourself? Book your demo today to find out how our cloud-based desktop and mobile app can help you improve overtime management.