Overtime Dilemma: How Can We Cut Hours and Track Employee Performance Effectively?

I have to prepare a policy for the overtime. How can we reduce the overtime hours and measure employees' overtime performance? If any policy or procedure is available, please share it.

How many employees do you have and how much overtime is being done? What are the local rules regarding overtime? Is overtime a permanent feature? Why is overtime being done? Are production targets not being being met in normal working hours? Is there any reason for not meeting the target - production bottlenecks, slow work, or any other issue? Overtime rates are normally double the normal wage rates. The company should consider whether it is okay to have overtime or hire more staff. A holistic look by bringing all relevant aspects needs to be done.

Understanding Overtime Reduction

Well, it is a good move to reduce overtime because it creates a significant impact on labor costs. Therefore, it is obviously a concern for any management to restrict overtime. Before venturing into action, you need to understand the basics and the ground reality.

Key Considerations

1. Do you have sufficient employees to undertake the day-to-day work?
2. Is absenteeism higher among employees?
3. Why does your establishment rely on overtime, and what tasks are performed during overtime?

The answers to your queries lie within the three points mentioned above. To assess employees' overtime performance, you need to analyze the amount of work completed in comparison to the labor costs incurred, with reference to the average fixed cost.

Please let me know if you need further assistance.

Thanks for the clarification.

Why is OT being done?

Is it for additional work or to compensate for absentees' work? Are production targets not being met within normal working hours? We are part of the operation and maintenance department; hence, there are no production targets to meet.

Is there a specific reason for not meeting targets?

Such as production bottlenecks, slow work, or any other issues? Usually, OT rates are double the normal wage rates, which equate to 25% of the basic salary and 50% of the basic salary on weekends, as per the law.

Considerations for OT reliance

The company should consider whether it is appropriate to rely on OT or to hire more staff. While OT can be acceptable if reasonable, it seems that the site managers are requesting excessive amounts of it.

To Mr. Prabhat,

1. Do you have sufficient employees to undertake the day-to-day work? - Yes.
2. Is absenteeism high among your employees? - Not high, but local employees frequently take leave.
3. Why does your establishment require overtime, and what work is performed during that time? - We are involved in the operation and maintenance of government hospitals, water networks, and buildings.

The Challenge of Overtime in Factories

Overtime in a factory, as far as I am concerned, is a chronic issue. Once it becomes a practice, it turns into a demand or deemed compulsory right of employees. From the beginning, it's important to inculcate a habit of finishing the target numbers, whether in a line concept or group concept.

When Overtime Occurs

Overtime should only occur when there is a sudden demand from the customer. In a normal synchronizing flow or Kaizen line, once the cycle time is analyzed and set, it becomes a manpower empowerment to achieve the daily goal, unless there is an unfortunate machinery breakdown or deficiency in part numbers. These issues could be avoided or diverted if proper supporting staff is made responsible. Leadership plays an important role in this process.

Impact of Overtime on Work Culture

Overtime influences favoritism on the shop floor and spoils the work culture of motivated employee groups who strive to achieve target numbers by the end of the shift. Encourage motivated employee groups who can exceed norms by multitasking, and recognize them with appreciation or get-togethers at the end of every month.

A Case Study in Leadership

I had an opportunity where I removed the supervisor concept for a production line. I identified one highly motivated worker and made them a leader responsible for output in a Kaizen line. The result was amazing, achieving a record in both output and line rejection!