Overtime Benefits CAN KILL your Business

Ordinarily, you would read the headline and elicit a fairly obvious and righteous response.

‘How can that be? Overtime pay is only a fair proposition, for every employee – who invests extra time towards your organisation. It is almost a basic right!’ you would exclaim.

The burning question that arises though is – will companies be able to afford this extra pay?

The United States of America already provides overtime to a section of its workforce. President Obama’s recent proposal to increase the number of people who qualify for the overtime benefits (including those who earn up to $970 a week); has taken the business community by storm. Business group lobbies are up in arms trying to prevent this from happening.

Cons of Overtime Benefits

Here is a low down on why enforcing overtime benefits, by the government, can be a pain:

1. Lowers profits for companies: Paying for overtime benefits eats heavily into the profits of your companies, with small-scale companies being worst hit.
2. Can become a cause for increase in unemployment: Getting your company to forcefully dole out overtime benefits, pushes it to let go of employees and drive then salve-drive fewer employees to complete the same task efficiently
3. Leads to need for stricter supervision: Point two (above) then leads to stricter supervision, by the organization, of how employees’ time. In the struggle to ensure that employees don’t waste any time during their work hours, they are discouraged from taking any breaks whatsoever!
4. HR to monitor employee time tracking systems closely : Companies need to invest extra time and effort into keeping track of overtime put in by employees
   
5. Potential misuse of the overtime benefit scheme can take place: Companies will need to keep track of employee who misuse the perks of the overtime benefits program, by staying on in office until late, with no work to do.
6. Reduction in number of promotions: As overtime benefits saps into company profits, promotion of your people is going to be an expensive proposition. The end result will be fewer opportunities for workers at the bottom rungs of the organisation

So the negatives of overtime benefits really link back to how employees may end up suffering (by being laid-off or not receiving a promotion) in the long term, in exchange for short term benefits.

Pros of Overtime Benefits

On the flip-side, there are three strong arguments supporting overtime compensation:

1. Fair play: People need to receive compensation for the work they do. Therefore, it would be only fair for extra hours to equal to more pay. Else, what most companies currently engage in is slave-driving, with employees controlled under the veiled threat of unemployment.
   
2. Employee motivation: Compensation of your employee for the extra time they put into your enterprise will only make them feel like their efforts are being appreciated. This would result in more motivated and happier employees who will only add to your company’s bottom line.
3. Rise in disposable income, keeps inflation in check: High levels of unemployment and lack of wage gains kept price pressures weak, despite the Federal Reserve’s aggressive economic stimulus campaign since 2008.
   The Obama administration is about to boost pay for about 5 million low income workers after announcing changes to how US employers determine who gets overtime.

If any government really wants the overtime compensation to help the people and its economy then it should ensure that it is implemented equally across companies, with a special relaxation in the law given to SMEs.

Alternately, your company can keep employees motivated, and working longer hours, with the following reads on engagement tactics:

1. The Most Epic Employee Motivation Checklist
2. With Variable Pay, make your employees an offer they can’t refuse

To manage your employees’ time it is important to have sound systems in place.

Empxtrack’s has the Attendance & Shift Management module that can help managers keep track of their employees’ time. Click here for a demo.