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The Cost of Overtime

August 14th, 2015

Overtime regulations have been the subject of some legislative scrutiny lately and may soon adjust to better reflect the needs and standards of the modern workplace. But right now, the same general rules have been in place for several years: overtime pay equals 1.5 times the hourly rate a given worker receives during the first 7.5 hours of the day or five days of the week. Not all positions are eligible for overtime pay, and salaried employees have overtime hours factored into their annual compensation and benefits.

But as a manager, are you closely monitoring the cost of your overtime hours and the value you derive from these hours? When you’re faced with an unexpected influx of orders, do you tend to push your current employees into overtime in order to produce your product or deliver your service on schedule? And are the results worth the toll this takes on your payroll budget?

Short Versus Long Term Goals

Before you make a plan to accommodate a rising demand for labor, estimate how long this demand will last. If this spike will subside within a few days or weeks, your overtime expenses may be well worth the benefits. You’ll build revenue and decrease risk by relying on employees who are already trained, tested, and familiar with the ropes. But if this increase in demand will continue for months or more, or if this spike correspond with a predictable point in your annual business cycle, consider the cost benefits involved in hiring temporary or contingency team members to share the load.

The Benefits of Contingency Staffing

As your need for help increases, pushing your current teams to the breaking point won’t just come at a cost to your payroll budget; it may also have a negative impact on work quality, morale, and turnover. Reduce both cost and risk by turning to an established staffing agency and taking on a temporary team of contingency employees who can pick up the slack. These employees can be carefully selected to meet your needs; if you require specific skill sets, training or educational credentials, the right staffing agency can provide them. Your temporary team can step in the door and start working right away.

In the meantime, temporary staffing can reduce the headaches and hassles involved in taking on new full-time staff. Taxes, insurance, and payments are all handled by the agency, not by you, so when it’s time to return your workforce to its original shape, these temporary employees will simply be reassigned to other clients.

Hiring temporary teams can keep your staffing program agile and cost effective. To learn more, reach out to the experts at Merritt.

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