It’s been a year and a half since Irene joined her company. So far, she has not had any salary disputes. All was going well until her mother became ill and was rushed to the hospital. As the bread winner, it was Irene’s job to take care of her mother’s medical expenses.
Irene requested to work overtime, two hours everyday. The company granted her request. However, a problem came when the company released her salary. She noticed that they recorded only a little more than half of her overtime work she performed. She asked her friend at accounting what happened to her extra hours. They told her there was an issue with her time logs. Because of the system the company used, they were not able to credit all her extra hours.
As she submitted her dispute, the HR payroll person winced. Company policy stated they had to resolve all disputes in a month. But, with all the other concerns that came in this cut-off, they were struggling to comply. With the system in place, they had to go through each overtime dispute by hand.
When Overtime Is A Problem
In a pinch, overtime can be a real life-saver for a company. It is a better way to manage sudden or seasonal spikes in workload. Hiring more people usually means more time for training and extra costs. It’s better to use existing staff to deal with the extra work. But when mismanaged, overtime can be a liability instead of an asset.
There are several issues with overtime policies. First, there is the problem of wrong calculations. Manual systems are often unreliable when capturing the correct time-in and time-out of employees. Regular overtime can usually account for 10-15% of a company’s annual budget.
If a company pays more than it needs to due to payroll errors, it increases costs. If it pays less than it should, the added disputes will take time to resolve, also increasing costs. Then, there is the matter of employee dissatisfaction.
Another issue with overtime is that it can turn into a cycle. When there’s too much overtime, it becomes a costly trend. Overtime work can potentially go under the radar. The company can then miss opportunities to cut back on excessive expenses.
This often happens when there is no accounting visibility. Some payroll systems also do not allow report generation.
This is not yet even covering the negative effects overtime has on the employees. When people get tired, they are more prone to take sick leaves. This in turn causes the remaining people to do more overtime to cover for the missed work, continuing the cycle.
How To Monitor Employees’ Overtime
Managing overtime gets tricky when done manually. You will need the right software to make sure that overtime is logged with minimal errors. Here are some steps you can take to manage your employees’ overtime work as you see fit.
Check the employees’ work. Do an assessment of their workload. Try to determine if an employee can do all his tasks within normal work hours. Sometimes, employees can no longer finish their work within their work day. Then, it is time to re-check their assignments. If it is off-peak and employees still go for overtime, it might be time to hire more staff. In such situations, overtime becomes an extra cost.
Keep complete work records. Paper-based logs are not good for checking hours worked. Try using a biometric system. It uses software to log the exact number of hours someone spends in the office. These systems are tamper-proof and the data also gets fed direct into the payroll system.
You should think about using a system that allows staff to monitor their hours worked. This is important so they can see the total number of hours in their next salary. This prevents salary disputes such as hours missing from work records. Mistakes can be fixed even before the pay day since employees can report them as soon as they see it. Automated payroll systems such as Salarium can address all these needs.
Do overtime audits. Run reports showing how often people do overtime. From there, you will be able to drill down into why they work overtime in the first place. You can also see how overtime affects the finances of the company. The audit should show how many hours the employees worked in total, as well as the actual amounts spent.
Plan in advance. It is important to have a chart of when work hours peak. This will go a long way in planning manpower needs to meet the demand. Sometimes, the problem lies in the distribution of the employees. There might not be enough people to cover specific parts of the shift. It may help to cross-train another division with less work. This will help cover the demand, at least until you can bring in new hires.
Keep an eye on employees. It is important to also keep an eye on your staff and their activities. There may be times when some of them work slow on purpose. They do this to be able to clock in overtime. If you feel this is the case, it might be time to address the issue with those employees.
Not long after Irene’s dispute, their company decided to switch to a better payroll platform. Doing so fixed almost all disputes, especially on overtime problems. Processing of the few complaints that do come in also became much faster.
The HR payroll team also benefited from the time saved. They used it to look at the company’s overtime system, finding potential problem points. From there, they were able to draw plans to reduce overtime-related expenses.