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Analyze the actual cause of your overtime on a regular basis. Daily is best. The longer you wait, the less others remember. Get the list of anyone working over 40 per week (or your weekly normal without OT) and sort it by supervisor. Make each explain detailed reasons why they decided to approve the premium (50% over base on all hours over 40 worked per week).
Many times OT occurs needlessly and may lie in problems with supervision not paying attention or ignoring work flow during normal working hours. Line up the reasons and determine whether your OT is warranted or can be cut. Some of the reasons you discover will uncover other management problems as those listed below.
Reasons for overtime and questions to raise:
Example #1: A service order came in late in the day (4:30 p.m.) and a tech took the call and worked OT. The company charged the same as any other call and thus did not recoup the OT premium on employee cost.
Questions to ask: Did someone ask the customer if performing the work the next morning would be ok? (normal time, no OT, less expensive) If the customer insisted performance be done immediately on his initial telephone call, was he then immediately asked by your inside sales person if he would approve a premium charge for the order to be done or fulfilled after normal working hours? If this is not in place, review your pricing policies. He may have agreed and would have paid you if the bill called for it. He also may have hesitated and said, “Let’s do it first thing tomorrow.” Give best pricing rates during normal working hours and charge premiums for calls after 8 p.m.
Example #2: Clerks come in on Saturday to perform filing and work overtime.
Questions to ask: Was the OT approved beforehand? If not why not? Why was filing not performed during the normal working hours? Were there extenuating circumstances or was this a one-time exception? If this repeats itself, review daily normal workloads and adjust tasks by employee in order to eliminate OT. Shuffle duties because there is problem with workload. Someone is busy while someone else is not. Find out who.
Example #3: Does your facility have a pre-approval policy? If not, your OT is out of control because employees have different monetary needs.
Questions to ask: If your supervisors allow employees to work OT with no supervision, this is your first mistake. Require employees to ask first and get permission. Many will not if it is difficult to argue a good reason.
Example #4: Certain machine operators in your plant always must work OT in order to complete jobs. Compared to other departments, this group is 25% greater every week.
Questions to ask: If the operators insist they go as fast as the machines allow, you may need to evaluate and upgrade your aging outdated capital equipment. They may be mismatched in your operations and OT may be an indicator how inefficient your equipment has become. If it happens to be one operator, then trace back through quality control as to which operators have the best passing rates on QC checks. The guy running OT may just be a lousy operator who needs training or replacement. Evaluate the machinery, type of job and other particular data when analyzing OT.
