Balancing Excessive Overtime With Employee Underutilization

Balancing Excessive Overtime With Employee Underutilization

This article was updated on August 22, 2018.

Many organizations have a hard time balancing the work schedules of nonexempt employees. This is particularly true in industries that experience fluctuations related to seasonality, such as retail or hospitality entities. Or, within organizations that answer the call of human or weather-driven emergencies, such as first responders, HAZMAT teams or power line crews.

While computer modeling may be able to predict and suggest the best scheduling program for your organization, you'll likely still find yourself occasionally balancing excessive overtime with response-interrupting undertime — a lack of key personnel for situations that require a quick ramp-up.

Look at your organization's overtime payouts. It may seem that far too much money is spent on personnel working beyond a 40-hour workweek. On the other hand, however, is the fear of insufficient personnel being scheduled. HR leadership can help achieve a balance between the two extremes by setting a sensible policy and establishing practices that protect unnecessary wage expenditures.

The Dangers of Overtime Versus Undertime

Though the 40-hour workweek may be considered the norm in the United States, the truth is that some jobs don't fit neatly into that model. So while demand for certain workers may be above or below that 40-hour watermark, and contract or "pro re nata" (PRN) availability is growing, it's important to understand the dangers of both overtime and undertime. While overtime is a clearly understood concept covering all hours worked past 40 hours per week, undertime is a murkier concept that may be used to describe times when too few hours are scheduled per employee. This includes times when a full week is scheduled but that time is underutilized or informal time spent by an employee at work in non-work-related activities, such as socializing or surfing the internet.

Excessive overtime can lead to employee burnout, resentment of the organization for impinging on work-life balance, dangerous on-the-job situations caused by fatigue and health issues caused by heightened levels of stress. On the organizational side, excessive overtime can be extremely costly, hurting margins and potentially leading to the need for restricted human capital expenditures in the future if workforce costs are not sustainable.

On the other hand, undertime scheduling can lead to employee disengagement and higher turnover. If an employee is relying on one particular job to be their entire income and that job does not continue to provide enough hours, that employee may jump ship for steadier work. Additionally, dissatisfaction may result when an employee doesn't work enough hours to qualify for enterprise-provided benefits. For the organization, scheduling fewer hours can mean that not enough staff is available when a quick response or fast upscaling of manpower is necessary.

Achieving Balance

Creating an overarching and practical scheduling and overtime policy in a larger workforce can ensure that various departments schedule according to the same guidelines and reap the benefits of perfect-fit scheduling at the same time.

You can begin this by process by keeping the following in mind:

  • Embrace "share the load" overtime scheduling, so that no individual or specific group of employees is burdened excessively or that no individual or specific group of employees is able to reap the economic benefits while others interested in overtime earnings are passed over.
  • Pay PRN or on-call employees a stipend to cover times when the employee could be called in to work but isn't. This enables better economic stability within the PRN workforce, provides the ability to scale up quickly when necessary and could reduce the risk of turnover related to underemployment factors.
  • Allow flexibility in scheduling during non-emergency or non-peak times to ameliorate the consequences of irregular scheduling and enhance work-life balance.
  • Ensure HR partnerships with individual business units to support the development of guidelines that determine which circumstances demand overtime scheduling and which circumstances can be addressed during regularly scheduled employee work hours at a later time.
  • Work with your CFO to set firm limits on how much money can be spent per work or per business unit on overtime work, allowing enough flexibility to spend more on truly emergent and urgent situations.
  • Continuously improve your scheduling process by using historical hours and other data to help predict demand and Six Sigma process improvement techniques.

Factors out of the control of managers within your organization may still result in occasional undertime, underutilization or overtime situations, but thoughtful policy creation that protects both the worker and the organization can facilitate smoother sailing when the unexpected happens.