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Overtime can be a cost-effective way to flex your workforce and increase your capacity in order to meet fluctuating demands. However, too much overtime – especially when unplanned – can become an ineffective and expensive fix for problems that, if left unchecked, can reduce your organization’s competitiveness and impact profits.
It’s important to recognize that 50% or more of overtime is due to lack of labor planning, failure to meet performance expectations and lack of real-time visibility into work progress. Managers often do not have sufficient insight into and control of labor productivity, utilization and scheduling to effectively manage overtime hours.
There is clearly an opportunity to leverage a labor management program to improve planning and boost visibility to performance – and then to utilize those capabilities to take specific actions that offset the need for overtime, such as:
Gain Real-Time Visibility Through Technology. A labor management system can help reduce overtime by simplifying and automating performance tracking and analysis. Managers can see and understand where and why they’re experiencing delays, bottlenecks or employee performance issues. In addition, proactively identify negative trends that could result in the need for overtime.
Get Leaner. By eliminating wasteful processes and non-value-add activities, a Lean labor management strategy can improve productivity and trim overtime.
Emphasize Cross-Training. A labor management program usually includes establishing best practices and standard operating procedures. These provide a detailed guide for training – and cross-training – your associates. And once your team is trained to handle multiple jobs, it becomes easier to reassign workload when needed.
Match Staffing Levels to Demand. For many companies, inefficient labor planning is the main cause of unplanned overtime. Manual scheduling processes do not allow organizations to quickly adjust to fluctuating work demands, leaving some employees idle and others with too much work. Labor planning software gives organizations greater visibility and control of labor utilization, which can dramatically reduce the need for overtime. Plus, these systems can allow you to define the skills required for each activity so the most qualified and efficient employees are assigned.
Pay More to Pay Less. Rewarding superior performance with hourly bonuses can motivate associates to work at a higher level. This increased throughput can reduce the need for extra work hours. And, in many cases, the cost of the incentives will be far less than the overtime expense. Read our white paper to review the cost comparison.
There are many ways to effectively manage and reduce overtime, but any successful strategy starts with understanding the reasons for the overage. Harnessing the analytical power of labor management tools gives you insightful operational data that will allow you to determine the actual root causes of overtime, develop the right strategy and successfully implement it across your organization.
To learn more, download the Effective Strategies for Controlling Overtime white paper.