Is Overtime Doing More Harm Than Good at Your Company?

For a variety of reasons, many employees regularly supplement their base salaries with overtime pay. Some companies encourage the practice because managers believe it keeps the workflow on track during the busiest times. This may seem like a win-win situation, but there can be some hidden costs involved with working too much overtime.

The biggest danger is that overtime will go from being a temporary solution to standard operating procedure. As the costs associated with doing business increase, many companies are tempted to cut employees. Management may take the position that reduced staffing levels are adequate to get the job done as long as everyone "pitches in a little more" by working overtime. But when that "little more" starts adding up to many hours each week, overtime can become a detriment to the company's profitability. At the same time, employees quickly grow accustomed to inflated paychecks and what started out as extra can become essential to them.

The Social and Health Effects

Too many hours reduce the amount of quality time employees spend with family members, which can result in stress and irritability. Sometimes employees try to compensate by sleeping less and "burning the candle at both ends." To stay awake, they turn to coffee or other stimulants. The result is likely to be tired, irritable and overworked employees who have impaired judgment and slowed response times, which could set the stage for accidents both on the job and while driving.

Productivity can decline as well. Employee fatigue means more errors; reduced concentration; impaired motor skills and coordination; decreased ability to handle stress; and faulty problem-solving and decision-making abilities. The work these employees perform may be poor quality or have to be redone, which actually slows down the workflow.

Additionally, one extensive government report looked at the relationship between general health and overtime and found that too many extra hours can lead to unhealthy weight gain. The weight gain resulted from a combination of two factors: eating habits tend to worsen and employees have less leisure time to exercise and participate in sports.

The same report showed that cigarette smoking and alcohol consumption also tend to rise when employees work many extra hours. All three conditions represent increased health risks that may result in higher employee healthcare expenses. Source: Report by the U.S. Dept. of Health and Human Services and the Centers for Disease Control

If that isn't enough, overtime may create physical problems for employees. Work-related stress can raise blood pressure and increase the risk of cardiovascular disease. It can also increase absenteeism, Workers' Compensation claims, and ultimately, health insurance costs.

A Workable Compromise

If your company must have employees work overtime, here are some steps to help combat the negative effects:

• Establish a maximum number of hours employees can work overtime. If a staff member tries to work hours above the limit, put a stop to it.

• Support family life demands. An employee who has been actively working overtime for an extended period should be given priority for vacation and personal time requests, especially during the holidays.

• Create a reduced-hour employee. If possible, have a floating employee on staff that can be rotated to substitute in any department when necessary. This person might be a current part-time employee who would be willing to work flexible hours to accommodate the company's needs.