25 Jul How to Reduce Your Labor Budget: Trim Unplanned Overtime
“Every problem is a gift – without problems, we would not grow.”
-Tony Robbins, author, coach, speaker, and philanthropist
Identifying and solving business problems is an essential aspect of running a company. Every business has its own problems, but one shared concern among company owners across all industries relates to financial growth. It’s nearly impossible to grow financially if a business is constantly dealing with budget issues.
But as Mr. Robbins stated, such a problem can be viewed as a way to help a business owner grow. Identifying budgetary concerns and resolving them can help you improve your business efforts and transform the way you manage your workforce.
The Problem: Unplanned Overtime
For most companies, labor is one of the most expensive aspects of operation. But while you can plan for scheduled hours worked, overtime can quickly throw a wrench in your plans, particularly when it’s not planned. Unplanned overtime can eat into profits quickly, making it much harder to achieve financial growth and success.
The Bureau of Labor Statistics reports that the average American employee works about four hours of overtime per week. Since labor laws require overtime to be paid at a higher rate, those four hours per week (which translate to 200 hours per year) can cost the business a lot of money. For example, if an hourly worker receives a standard rate of $15 per hour, four hours of overtime at time-and-a-half results in an extra $90 per week, or $4,500 per year. Multiply that by the number of hourly workers, and you can see how unplanned overtime can wreak havoc on a labor budget.
The Solution: Automate Your Timekeeping
Most hourly workers track their time in some form, whether manually or through a time clock that records punches. But if your business is currently relying on manual tracking methods, you could be paying more. Time theft is a real problem that impacts companies of all sizes, and it’s especially concerning when employees report working overtime hours, as the pay rate is higher.
Automated timekeeping is the solution for time theft, and using a clock that authenticates each employee prevents buddy punching. The result is accurate data that doesn’t include stolen time. But choosing a more advanced timekeeping solution can also prevent employees from working overtime hours when they’re not authorized to do so. With the right system in place, you can transform the way you manage employee time.
In our post next Tuesday, we’ll cover three additional ways automated timekeeping can reduce unplanned overtime and help companies adhere to their labor budgets.
This information is provided with the understanding that Payroll Partners is not rendering legal, human resources, or other professional advice or service. Professional advice on specific issues should be sought from a lawyer, HR consultant or other professional.