One of the most common issues that businesses face is that of overtime. This article analyses the issue and proposes a few solutions for tackling this problem.
First task to perform would be analysing exactly what type of workforce, with which skill sets does your enterprise requires. For an engineering / manufacturing firm, you would probably require welders, grinders, fitters, etc. If so, how many do you require for the quantum of workload that you need for optimum production per day? With the given set of workers – their skill sets as well as numbers, would you require to engage them overtime? Is overtime necessary every day, or just a few days in a week?
This needs proper fand systematic production planning. Putting things into the right perspective will help you decide whether you need to engage your existing workers overtime, or should you add / employ more workers.
If you employ more workers, would they have enough workload for the day? Perhaps it would be better to hire more workers on contractual basis for a few days in a week. In case more workers are surplus, in a shift, overtime could be your answer. But in case overtime becomes a regular phenomenon, hiring more workers and starting another shift in the workshop would be more beneficial. How does one arrive at the correct decision?
The answer is in analysing the time needed for production, number of work hours needed, and the cost effectiveness of hiring more workers v/s. employing the existing workers overtime. A careful analysis will certainly throw up the best possible solution for your business.
The other important factor, and probably a sensitive one, would be the work efficiency of your existing work force. On analysis of the quantum of production obtained during regular shift and the late shift will give you figures that may sometimes be surprising. You may notice that some workers demonstrate better productivity during the overtime shift, but are less efficient and productive in the regular shift. This is a clear indication of mischief and delay tactics in the regular shift to earn more money by delaying the work for earning overtime. As we all know, overtime payment is at least 1.5 times and sometimes 2 times the normal work time.
Many businesses face the problem of Overtime. Many companies pay heavily on overtime. Do you want to save this cost and utilise overtime only when it is needed? Let's see how we can do that.
The first find and decide the kind of skill sets that your workforce requires. For example there in an engineering company you need welders, fitters, grinders, and so on but how many of them you need and what is your shop floor order backlog that needs to be put in a proper perspective. First if you do that you will come to know that the activities can be planned in such a manner that you don't really need to engage for overtime every day of the week may be you have to engage only 2 days in a week or 3 days in a week.
Sometimes, this could be because of incompetence, or overall lesser efficiency. However, in case this lack of efficiency is demonstrated in both shift, you might need to counsel and train the worker before taking action. However, purposeful inefficiency needs to be dealt with severely and strictly, as this has a direct effect on your production, and hence profitability.
With systematic production planning, you can then easily decide whether to hire more work force, whether to start production in two shifts, or simply pay overtime to existing workers. This should be diligently done with proper observation and analysis.
To summarise,
1. A proper production plan should be in place including the skill set and number of workers that are needed
2. Efficiency analysis of workers should be done in both normal work hours and overtime work hours
3. Whether to hire permanent workforce or to engage on contract needs to be looked at based on the production plan and the cost efficiency keeping in mind the futuristic requirement
Links for all Business Articles: