You see it every year: during strategic periods, such as summer vacation times, holidays, and locally busy periods, your staffing budget bounces out of bounds as the cost of employee overtime rises. Hiring more full-time — or even part-time — employees is out of the question, leading you back to your original problem — controlling staffing costs. It may seem hard to believe, but hour-for-hour, you may find it more cost-effective to rely on temporary help than to pay seasoned employees time-and-a-half (or more) for overtime. Here’s why:
Tracking Overtime By Department
If your organization’s staffing costs are soaring, take a closer look at where the costs are higher. In almost every organization, it’s the most critical departments that account for the highest overtime costs. That often translates to paying time-and-a-half for the most expensive employees, cost-wise, in the organization — i.e. seasoned and/or highly paid staff members. When balancing the cost of overtime versus the cost of temporary help, run the numbers for the hourly cost of the employees who account for the lion’s share of the overtime costs. You’ll often find that temporary employees are less expensive, hour-for-hour, than full-time or even well-compensated part-time employees.
Broadening Your Cost-Effectiveness View
When it comes to the true cost of overtime, the hourly wages cost is only part of the picture. A 2005 study by Occupational and & Environmental Medicine found that employees working in positions where overtime is common have a 61% percent incident of injury than other workers. For those who work at least 60 hours per week, hazard rate increased by 23 percent. Longer shifts, such as those of at least 12 hours, was also associated with an almost 40 percent increase in injury rate. Research also proved that injury rate increased in tandem with the number of hours per day or week in workers’ usual schedule (i.e., longer regular shift times or work weeks) were found to increase workplace hazards in kind. Interestingly enough, the research suggested that the work itself did not need to be hazardous or associated with risk for injury in order to increase the risk — the mere act of being on the job longer increased the risk. The implications of the study are clear: overtime increases costs that are not tied directly to wages, including the costs of workers’ compensation claims and insurance.
Making the Case For Temporary Employees
If overtime costs at your organization fall into predictable patterns, relying on temporary employees to fill seasonal or employee-leave associated gaps is often more cost-effective than paying overtime. New to the temporary staffing world? Let Staffing Partners’ employment experts help you to work on a staffing plan that reduces the costs and hazards associated with routine overtime, and watch your staffing costs go up while your employee morale increases.
