Some companies won’t allow you to work overtime at all. Some allow it but don’t require it, except maybe when something important comes up. Yet other companies force you to work overtime. I worked at a temp job where I worked 84 hours a week. Why do some companies want you to work well over 40 hours normally, while others do not? I’m guessing the ones that don’t don’t because you’d pay less in wages by increasing the number of employees instead of the number of hours they work. I can’t imagine why a company would want people to work 50 or more hours a week though. The idea popped into my head that it may be so that the company has to pay less on benefits for employees since there are fewer of them, but in fact every company for which I’ve worked that offered benefits just did the typical 40 hour week. Do people in certain fields just expect to get overtime for extra money, so the company gives it to them? Are wages in fields that typically get overtime lower to compensate for the pay increase past 40 hours?
There are lots of reasons companies may use overtime. One is that many businesses are seasonal. It doesn’t make sense to hire more full-time employees for temporary business spike. Another reason is that it often more efficient to have one person work long hours rather than hire another person to share the task. Computer programming is a good example. Having multiple people working on the same project introduces inefficiencies because things must be communicated back and forth and schedules have to be coordinated. A single employee can just bang out what they need.
I am an IT consultant and have been working lots of overtime of the project that I have now. The sucky thing is that contractors don’t get overtime pay. The reason I have to work overtime is because I am an expert in certain key things and different parts of the business need my input at weird times.
HR person here. What companies should be doing is maximizing their efficiency. If you have a large enough company you can collect enough data to figure out exactly when it makes sense to hire more workers. W/ respect to overtime for current employees, if the employee is subject to the FLSA provisions, you would need to factor in time and 1/2 for hours over 40, plus possible state or union overtime payment requirements. Whether the employee gets paid time and 1/2 or not, there is probably a quality control and burnout/turnover factor above a certain amount of overtime.
For new employees, you would factor in recruiting, training and benefits costs.
Smaller companies are unlikely to have as good of data to optimize, so are more likely to wind up making inefficient staffing decisions.
I am unaware of any strategy to keep wages low but employees “make it up in overtime.” Not saying it may never happen in a specific labor market, but in general wages are set by the value of the skill.
That kind of falls into what I meant when I said “something comes up”. It’s obviously impractical to hire more people simply because you have a busy week, but there are many companies where the minimum is well over 40 hours. These are mostly industrial jobs.
Well that’s understandable. It explains a lot of the situations. There are many where it is far from necessary though. My current job works at least 50 hours a week. Lately many of us have been working more than that, which is understandable because we got a rush of orders. However, I fail to see why we don’t work 40 hours when there isn’t much work to be done. Only one person can do my job, which is to cut out parts (because there’s only one machine), but I make them faster than everyone else can put them together anyway. Why not hire a few more people and work 40 hours normally? My grandfather (the supervisor) has said he doesn’t have much money available to him to hire more people, but if he hired about 30% more people and we worked 20% less, more work would be done and the company would come out about even. I can only think that some people would be upset that they only got 40 hour paychecks, but yet others would probably be happy with that. (I would.)
I hadn’t thought about training either, which does cover a lot of other jobs. Still, I think there are a lot of jobs where employees don’t need to be trained, or need very little training.
As for recruiting, is it partly because companies have trouble hiring enough people for 40 hour weeks? Maybe there are just more jobs than people, so the jobs force the few people they have to work more. It seems to me like they don’t even attempt to hire enough people for 40 hour weeks though. I have a feeling this isn’t the case, except in certain fields that require specially trained personnel.
Recruiting costs vary a great deal based on what type of a job it is and the geographic focus of where you’d recruit from. So it’s hard to generalize. A nationwide search for an executive has totally different factors from a laborer in a small town. But even for a labor position there is time off to interview, maybe a need to check references, drug screen, background check (all depending on the company, of course).
Also, there are often severance costs or at least unemployment insurance premiums that add to costs when you let people go. And union contracts may dictate how overtime and staffing are handled.
To your point about employees expecting overtime, that is possible. When I sort of dismissed it at first, that was from an employer perspective, in that it’s not a strategy employers usually use in setting wages. But it may well be a strategy employees use in selecting jobs. However, it is not a sound strategy, because the company will wake up someday and optimize its staffing, and they may not get the overtime anymore.
You may be able to take on a project at your job, since your grandfather’s the supervisor you could work together, to run the numbers on this. A library or bookstore will probably have a book with some templates to help calculate this type of thing.
The company that I work for , has 2/3 full time people , with a 1/3 rounded off with Temp workers , for both day and afternoon shift. The third shift is not quite a year round shift at the moment.
What you make is a product and that product has cycle times for how much the customer wants , easy enough with toilet paper ,but in the automotive sector it goes week by week depending on what GM and DCX forecast, so our workforce is some what elastic in nature.
Overtime allows the company to contract the size of the work force, while maintaining deadlines for shipping product out the door, while expansion of the work force may be desirable , it may not be sustainable.
Declan
You need to negotiate a better contract.
It sounds like you work for a small, privately or family owned business. If that is the case then the answer can be anything from there not being enough qualified workers to the owner deciding that the time and effort required to ride herd on a greater number of people is not worth the amount of money that would be saved. This is an inefficiency that a competitor could take advantage of but if he has an established and loyal clientelle or is nearing retirement (or just doesn’t give damn) then he may not care.
I own a small business with about 30 employees in two locations. The job market is tighter now than it has ever been. We are hiring people who we would never even have interviewed in the past when jobs were less plentiful. Believe me, hiring more people often just complicates matters. Even if all the job involves is pushing a button when a light comes on you would be amazed at how hard it is to find someone who will do the job properly. By the time you go through interviewing and hiring 20-30% more people, training them, having a lot of turnover when you figure out they are incompetent or they decide they don’t like the job or the people or the hours etc… then you are often better off to pay the people you already have overtime.
An opportunity cost is also exacted if you spend too much time looking for employees when you could be more productively spending your time in other areas. To put it simply in a way that most small business owners are sure to understand, there simply is not enough time to do everything that should be done. Every day you have to decide what is going to give you the biggest bang for your buck and concentrate your efforts there. Management is also often privy to information that employees are not, such as the tenuous relationship you may have with a major customer or the general prospects for the industry.
And one more thing (of about a million) that is probably worth mentioning is that when you are hiring someone for a full time position you are making a commitment that they will have a job. If you lose a customer or two and you have overstaffed you have increased the base amount you have to pay even if you cut everybody back to no OT. That base amount is a minimum you can’t fall below without having to let people go. Job security is a cliche’ right up to the point when you no longer have it.
The government also may penalize you for laying people off by increasing what you pay in unemployment taxes etc… This isn’t as much a problem in my state but in others it is a major consideration.
These are just a few of the things you have to take into consideration. I hope it was helpful.
It has been helpful. I still can’t imagine why Fluor worked us 84 hours a week with so many people quitting because of it (I would think they would at least make three 8-hour shifts instead of two 12-hour shifts), but it does provide insight into most jobs I’ve worked at. Things can get pretty complicated I guess. As long as I’m not on salary though, I guess I can handle the overtime.
Depends on the contract, or on the customer. When my company switched me to a different contract doing the same job in the same place, I could suddenly start reaping OT. The contracting there was unusually complicated.
Ha, tell me about it. Many were the Sunday mornings I got roused by the call for my unique skills because it was an emergency. The payoffs are more than monetary. It’s one way to earn kudos points, or as the Buddhists would say, “merit.” Earn extra goodies, tangible and intangible, as long as you’re willing to put out extra on demand. At weird times.
I work in a place where if you don’t choose to come in on weekends for OT, they start to think there’s something wrong with you.
I’ll look up the reference on Monday if anyone cares, but there was a paper some years back called, I think, the $200 hour, which tracked work effectiveness with overtime. It concluded that at over 50 hours a week the number of mistakes made because of tiredness brings productivity down to the 40 hour level.
I can believe it. When I was working for a microprocessor company, we were expected to work 10 hours a day, just to show how hard we were working. Dinner was served, and while not mandatory, most people showed up. I know a lot of people spent their supposedly working hours doing personal stuff - not surprising, since when else would they do it? I can see it for a big push, but it is stupid long term. Being on salary, we got zippo extra money.
snailboy, do you think you did 84 hours of real work?
I think the question has gotten answered fairly well, btw.
I’d be lying if I said we never messed around. Things were pretty laid back as long as we didn’t have an important task to do. However, I spent much of my time walking up and down the power plant. It was very tiring, and for someone with an injuried knee like myself, it was excruciating until I got used to it. Granted I could take the elevator to the 8th floor (it’s higher than a typical 8th floor) and walk down, but that’s still challenging while carrying a bucket of supplies. The thing is it’s not just this one job that works 84 hours a week. Jobs in the oil field tend to work about this many hours. My friend is working one that’s usually 78 hours a week, occasionally more if needed. They’re usually temporary jobs, only lasting a few weeks to a few months, although they’ll send you to the next job if you do well. It just blows my mind that they’d require so many hours though, knowing not many people are willing to do it. Most of the places have lower standards for their employees for that reason and yet have to pay more per hour just to get anyone. There must be some reason they’d be willing to pay so much more for some labor hands that pretty much anyone could do. I can understand working 50 hours now, but 84 hours still baffles me.