Overtime and Productivity

Here's a valuable discussion of mandatory overtime, the four-day week with ten-hour days, and related labor-time organization and productivity issues. July 2, 2008

We have been casual about recruiting workers to do overtime. We have plenty of work and it's difficult to get people in. How do owners deal with the usual banter about OT versus new people, and the like? I'm about to make it policy that we work 1.5 hours OT Monday through Thursday. Does anyone have any thoughts about enforcement, moral, when to let someone go for failure to show, etc? We manufacture office furniture in the NE and have approximately 20 men and women on the plant floor.

Forum Responses
(Business and Management Forum)
From contributor S:
I know this will sound a little backwards, but it worked for us. We instituted a four day work week. We work four ten hour days so we have a three day weekend every weekend and sometimes four days depending on holidays. We found that we get more work done in four days than we were in five days. If at the end of the week we are still behind then we can come in on the Friday and still have 2 days off.

Our employees are well rested after three days off, so we think that’s why we get more work done. I think starts and stops are also at fault for slowing things down, and with the extra two hours a day we get more .The other advantage is that you tell your employees to make dentist appointments, go to the bank, etc. on Fridays so they don't have to take time off of work.

When it comes to hiring people see the three day weekend and are intrigued. As an owner the benefit to you is you can go in on Friday and get a ton of work done because there is no one to bother you, and you also still get two days off. The customers also get used to the idea that you are not around on the Fridays so it’s never really a problem either. I use the fifth day to order and pick up materials and see customers so on Monday things are ready to go. Maybe it wouldn't work for you, and most people are quick to say "it would never work for us" but we have yet to find the down side to the four day week.

From contributor M:
I have found “mandatory” doesn't usually work. Get everyone together,r explain how much work you have and when it needs to be done. Buy pop and pizza here and there, and thank everyone for all the extra work they do. Don't let a job sit that had to be rushed through. Guys hate to see something rushed and then it sits for a week and a half. I bet your production will go up. Treat your employees with respect and honesty and they will come through for you

From contributor T:

I would suggest that working OT occasionally is fine and necessary from time to time. However, if you try to do it on a longer term basis (over three weeks) you will find that production drops off quite a bit, even less than what you were getting in a normal work week. People do need their rest and to spend time with their families. If it looks like you're going to be buried for more than the three weeks, start considering part-time or contract personnel to fill in the extra load.

From contributor J:
The company I work for used to work 4-9 hour days and 4 hours on Friday. This was very popular and worked very well. One of our project managers liked to use Friday as dumping day. He would dump a bunch of work orders late Friday morning and demand they get done that day because the contractor “needed the items that day”. Then on the following Wednesday or Thursday he would take the items to the jobsite.

From contributor S:
We have been doing the four day week for over five years now. Why do you have to have people there on the Friday? In the beginning there is an adjustment period, but that goes the same with any kind of change you might institute. You are still giving your clients the same number of hours of access to your company In fact it is better because if they don't want to contact you while they are at work, you are open 1 to 2 hours past normal working hours.

The other thing to remember is your operating costs are slightly lower because you only have to power up all your lights and machines four days a week instead of five. That is very minor but over time it adds up. I once worked for a company in Montreal that had a three day work week where they split the staff and worked three twelve hour days. They were there six days a week.

From contributor S:
A few more things to think about - with four days you have four less times a month you have to pay for breaks and lunch. Multiply that times all of your employees. You can also turn the heat down for three days which adds another savings

From contributor B:
Part of the reason we don't work four tens is that it actually yields less production time.

With an 8 hour workday, you get 2,300 work minutes per employee per week. (8 hours = 480 minutes - 20 minutes mandatory paid break time = 460 minutes x 5 days = 2.300).

With a 10 hour workday, you get 2,280 work minute per employee per week (10 hours = 600 minutes - 30 minutes mandatory paid break time = 570 minutes x 4 days = 2.280).

This is bean counting, but it adds up - 20 minutes per week per employee. Also, I agree completely about avoiding mandatory OT for any prolonged period of time.

From contributor B:
Actually, exact paid break times vary by state. Here in Washington there is a mandatory 10 minute minimum paid break for each four hours worked, and no one may be required to work more than three hours straight without a break.

From contributor S:
The numbers may indicate that you have less production time, but we noticed an increase in production with the four days compared to five. With the issue regarding overtime, our guys don't feel hard done by when asked to work the Friday because they still get two days off.

No matter what choice you make nothing works perfect for everyone. I like the four day week and would never switch back. I did my employees would revolt. Overtime is one of those things that loses you employees if not treated correctly. The shop down the street from me says his employees would not work five minutes of overtime. I am not sure what he is doing to warrant that but in some hiring markets I can see that happening .

From contributor Z:
There might be some merit to a four day work week with staggered shifts. If you had some of the crew work Monday through Thursday and some of the crew work Tuesday through Friday your shop would be staffed five days a week, nobody would have to work overtime and you could spread the availability of bottleneck resources over a 50 hour work week (25% Increase in resource availability).

There might be some diminished productivity from those last two hours but there might also be some benefits from the extra day off each week. All other things being equal, if I was a wage worker I would prefer a four day work week to a three day work week.

However, we digress. The question was how to sell this idea to the crew. He wanted our thoughts about how this would impact morale and how to organize and enforce policy.

If overtime was mandatory, I would sit the crew down and explain what you want and why you want it. I would then ask for volunteers. I would make the statement that if I cannot meet my staffing needs I would shift to plan B.

We ran two shifts for a while several years ago. I passed out a calendar to everybody and had them fill in the hours they preferred to work. As you could guess, everybody wanted 8-5, Monday through Friday. I gave them the calendar again and told them what I needed and told them if they couldn't figure it out amongst themselves I would fill out the calendar. The problem got solved and nobody grumbled too much. As for enforcement of any policy, you have to be consistent. If you are not, bad things will likely ensue.

From contributor D:
I agree with much that has been said here already. The last shop I worked in had OT most of the year, it was great that you could work an extra hour or two 3 or 4 days a week. Then there came a short period where OT was made mandatory. I think it was a few weeks to a month, and you could see the moral go down pretty quickly. It's one thing to work an extra hour or two if you have nothing going on, it's much different when you’re told you have to work extra hours.

Guys have families and their own lives. If they wanted to be chained to the shop they would open their own. The reason they work for someone else is for a steady paycheck and schedule. If you decide to make OT mandatory I would guess you will see the same drop in moral and probably reduced output. That shop was also in the NE and had about 30 guys on the floor, just for comparison sake.

From contributor G:
Maybe a solution would be to pay more than "time and a half" for overtime work? For me, it was almost always less expensive to pay for 40 hours overtime than to hire an additional 40-hour employee. This scenario may not hold true for you - only you can make that decision.

If you calculate all the expense you will incur with an additional employee - training, cost of turnover, health insurance, etc, you might find you can pay twice the hourly rate for overtime and still come out. Just a suggestion, but run the numbers as this might raise the level of motivation some.

From contributor R:
Have you already taken the time break down which jobs need to be completed each week? Working overtime or not working overtime isn't nearly as important as completing your workload each week. I agree with Contributor S that working 4 10’s works great, but if the scheduled workload isn't complete by the end of the day on Thursday, everyone already knows they need to come in on Friday.

I'm not sure what the big deal is about working more than 40 hours anyway from an employee standpoint. It seems to me that I used to love the extra money. From an owner standpoint, unless you have crappy margins on your jobs, overtime won't hurt your bottom line much, if it does at all because your volume will go up.

From contributor S:
In our business climate where I am there are very few people to hire. Almost every sector in industry is short staffed by a large margin. The donut shops are paying kids to work part time $10.00 to $12.00 an hour. In order to keep employees on any level companies have had to give raises all around. Most people don't want to work overtime because they are already making more money than they ever have before so they see no need. Money for an employee was always the reason to work more hours, but when you make that same money by working only 40 hours, guess what.