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Working overtime – the pros and cons for employers and employees

pros and cons of working overtime
Nina Janza
Nina Janza
7 minute read

Working overtime is defined as working any additional hours that exceed the normally scheduled working time. That’s usually working more than the 40 hours week limit. 

Overtime hours are regulated to some extent by working time directives or legislation, which differs from country to country, but in general has the goal of protecting employees from being abused.

The problem with working overtime is that it is frequently abused, and is thus frowned upon. It is for this same reason that we need legislation to regulate it. 

People usually work overtime because they have to (poor time management and project estimations, workforce shortage etc.) and rarely because they want to. In addition, some companies even try to avoid compensating overtime work for salaried employees.

Nevertheless, working overtime can prove to be beneficial for employers and employees. Managing overtime in fluctuating markets can also be an important source of competitive advantage if done strategically and with productivity in mind. 

And if the overtime is not based on abuse (there is proper compensation for employees), it can represent a “win-win” situation. However, it can be tricky to overcome some of preconceptions on the topic.

Why do most people end up working overtime?

First, let’s start with the main reasons why most people end up working overtime, some of which might be not what you expected (i.e., poor time management):

1. Too much work

An overload of work is the most frequent reason for having to do overtime; and if that’s a constant it’s not a good sign. If a lot of employees end up working overtime on a regular basis, their manager should re-evaluate their workload. 

Overtime hours should never be the norm, but if the increased workload only happens in short periods or sprints, working overtime can be a strategic measure.

2. Meeting overload

Interestingly, the next most frequent reason for people to end up working overtime is being overloaded with meetings and other distractions at work. 

The solution here is to set a clear meeting agenda, invite only the people who are absolutely vital and make sure useless meetings never get in the way of getting work done.

3. In-office distractions

As with meetings, other in-office distractions can prevent us from getting work done and extend the time it takes to complete a task. Open offices mean more collaboration and, consequently, more distractions. 

Most people struggle to regain their focus after being distracted. If you notice a pattern, try to move their station to a quiet corner or a closed office.

You can read more about how to handle distractions at work here.

4. Email overload

Too many notifications and emails mean people get less real work done. Encourage your employees to check emails less frequently and to schedule uninterrupted time blocks for deep work. 

For some occupations emails are real work (online support etc.), but for the majority of people spending too much time on emails can be a reason for having to work overtime.

Read the best email management tips.

5. Striver syndrome

Whereas the last three reasons were related to poor time management, this one is related to ambition. Should you work overtime to prove yourself? 

Not in a healthy work environment, except for shorter periods in order to successfully finish a project or advance your career. As mentioned, working overtime should never be normal.

 If you notice someone doing it, compliment their hard work, but remind them that quality is what counts and that you don’t want them to burn out.

Several studies have been done, which showed that working too many extra hours for too long leads to physical health problems, mental illnesses, injuries, decreased productivity and job dissatisfaction. 

So, there always has to be a limit to working overtime, since it’s a “lose-lose” situation for the employer and employee if strict limits are not set.

In some cases working overtime makes sense for both parties

Managers don’t like resorting to overtime work, which is understandable as it has many negative aspects. 

Some of these negative aspects we’ve already mentioned, such as:

  • Lower productivity
  • Legislative challenges
  • Higher costs
  • Possible health issues for employees

However, the most common alternatives in fluctuating markets can be even more costly and could even be overkill. 

In order to avoid overtime hours, some managers do the following:

  • Hire someone full-time to meet demand, which raises the company’s fixed costs.
  • Order too much stock, which turns into additional costs.
  • Run out-of-stock, which leads to missed opportunities.

Deciding what path to take should be based on the reason why your employees are working overtime and how often are they doing it

Is overtime a sign of a toxic work culture at your organization, or is it employed only when really necessary and compensated properly?

Working overtime must be properly compensated and should not lead to wage theft. That means having clear policies on payment or other ways of compensating the overtime work (counterbalancing overtime, additional perks, etc.) is the foundation of a healthy working environment.

What is the “overtime lie”?

The overtime lie is a concept that sees overtime work as too expensive and aims to keep it under 5 % at all costs. But why is it a lie?

Because the answer to the question “should we work overtime?” is not simply “No”

Effective management of overtime work comes with some big advantages - flexible working capacities when needed, low inventory and short delivery times; all of which result in consumers satisfaction.

Overtime work can be a competitive advantage if managed properly, but as we have seen, it must be done for the right reasons in the right way. Most of all, overtime should not be normal or a sign of poor daily productivity due to of distractions.

How to reduce ineffective overtime work

You are probably already tracking overtime hours in your company. If you do, you know which department works the most overtime and which the least. 

If not, implementing tools such as All Hours - clocking app is the first step to managing overtime hours properly. The clocking app also comes with an overtime tracker.

The key question is, do you know the causes of overtime in your company? We mentioned five possible reasons already, but there are three more reasons that can stand between you and an optimal schedule:

  • A continuous workforce shortage
  • Subpar absence management
  • A business culture that promotes unnecessary overtime work

If the above categories aren’t problematic, ask yourself the following five questions:

  • Do the same people and departments keep working overtime?
  • Are certain employees or departments often absent without giving a specific reason?
  • Is there any concern among departments and employees about overtime work in regard to the company or some employees?
  • Do you have too many vacancies?
  • Is there a possibility of errors when tracking working hours?

As you can see, unnecessary overtime work can be the result of many variables. The best methods to reduce it are the following:

  1. A significantly faster or automated planning and notification system. Adapt working hours to real-time needs and notify employees so they can respond to changes and not use overtime unnecessarily.
  2. Transparent real-time scheduling, which is essential as it enables efficient planning of work-related commitments. The term “real-time” is crucial here.
  3. It’s not enough to create effective schedules, you also need to know how to measure the effectiveness of overtime work. You can use Bradford factor to help you with that.

The most effective way to implement the above measures is to digitize and automate the key parameters for effective time management. 

Automation reduces unnecessary overtime and significantly shortens the amount of time you spend managing it. It takes into account the availability of employees, and their knowledge, certificates, and legislation.

With an automated time management system like Dynamic Scheduling, you can quickly and accurately match employee schedules and fluctuating market demand. Such a system can provide an answer to the question of whether or not to work overtime in a matter of seconds.

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