Equal Distribution of Overtime in Manufacturing Businesses: 5 Mistakes Factory Managers Make

Business Articles

Overtime is one of the easiest ways to manage fluctuations in demand through your factory. When a large order with a short turnaround period comes in, you may need to get your workers to work extra hours to meet the client's needs, but overtime distribution can become a challenging issue. If you're keen to make sure overtime distribution in your factory is reasonable and fair, avoid the following mistakes other managers make.

There's an over-reliance on overtime

Your full-time factory workers should earn enough money during a normal week to support their families. What's more, many states now set their minimum wage higher than the federal level to support reasonable working practices. Nonetheless, too many factory managers and workers start to rely on overtime.

Overtime is a tool that can help you manage peaks in demand or cope with unplanned absence, but it's also an unwanted expense for your business. If you don't match your staffing levels to the expected work demand, you will always need to rely on overtime. At premium rates, overtime is the most expensive way to get people to work in your factory, so it's vital that your base staffing levels are adequate to meet normal demand.

There's no overtime distribution system

Unfair distribution of overtime can quickly lead to dissent and accusations of favoritism. While you will naturally want to rely on people who work hard and turn up on time, it's important to have a system that makes overtime available to as many workers as possible.

Factories use a range of systems to distribute overtime. For example, a relief list is a popular option, with workers ranked in order of seniority or service time. Nonetheless, these systems can take up a lot of time to manage. Time and attendance software packages now give you the option to set up an overtime distribution system that allocates overtime based solely on demand and availability, with limited manual intervention. These tools also make overtime distribution fairer and more transparent to your workers.

There's no reasonable overtime limits in place

Through your overtime distribution system and payroll, it's important to set and enforce reasonable overtime limits. Studies show that people who work excessive hours are at higher risk of work-related injuries. What's more, the risk of an injury increases with the length of a worker's schedule. As such, it's your responsibility to make sure your factory workers aren't putting themselves at risk.

Nonetheless, you should also understand that people work excessive hours for different reasons. A sudden blanket ban on overtime could place your workers in financial difficulties. As such, you need to deal carefully with the problem. For example, you may need to gradually restrict a worker's access to overtime to allow him or her to manage any ongoing financial problems.

Ineffective tracking of hours worked

Under the Fair Labor Standards Act (FLSA), most employees in the United States must receive extra pay when they work more than 40 hours in a week. If you don't pay your workers at least 1.5 times their usual rate when they work overtime, you could end up in legal hot water.

In many cases, factory owners don't deliberately break these rules and underpay their workers. With no investment in time and attendance tools, factory managers cannot always accurately track the actual hours their people work. This is a recipe for disaster. If you're going to offer overtime, you need to make sure you have the tools to track and accurately pay for every hour worked.

There's no control on mandatory overtime

Mandatory overtime is a contentious issue in many workplaces. While enforced overtime is not illegal under federal law, the FLSA rules about extra payments serve to deter some employers' demands of their workers. Some state laws also restrict this practice. For example, California law forbids enforced overtime past 72 hours per week.

Nonetheless, given the cost and health risks associated with extra hours, it's generally in your interests to offer overtime solely on a voluntary basis. Mandatory overtime can also damage relationships with unions, and businesses that rely on enforced extra hours are seldom working in an efficient way. Carefully consider how and when you force workers to work extra hours, and consider the alternatives. For example, some people may prefer extra time off.

Many factories rely on overtime to meet their customers' demands. Nonetheless, factory owners and managers must make sure they have the tools in place to manage costs and look after their workers' welfare when they work extra hours. For more assistance, contact companies like SmartLinx Solutions LLC.

11 January 2016