How to Save Money by Reducing Overtime

Some overtime is unavoidable in many work settings, but excessive amounts of it can cripple your budget and burn out your employees. A better approach to overtime can help you save money, improve efficiency, and even provide benefits to your employees.

If executed well, it can pose a massively positive change. So what are the best strategies for reducing overtime?

The Value of Reducing Overtime

Lower overtime can be worthwhile for your business in several ways:

·       Immediate cost savings. When employees work overtime hours, you have to pay them more. Thus, reduced overtime means immediate cost savings.

·       Higher efficiency, productivity, and safety. You can also regard cost savings and improvements in your business in terms of higher efficiency, productivity, and safety. When employees work long shifts or extra days, they become fatigued and less capable of performing efficient, safe work.

·       Less worker stress. Some employees will appreciate the extra pay that comes with overtime, but it’s also true that working overtime hours can add stress to a person’s life, especially if the individual works overtime on a steady basis. Reducing those hours means your staff will suffer lower levels of stress.

·       Higher morale and retention. Overall, overtime reductions correlate to higher morale and less employee turnover. It’s yet another way you’ll save time, improve efficiency, and make your workers happier.

Key Strategies to Reduce Overtime

Below are some of the top strategies for reducing overtime in your operations:

·       Use better tracking software (and identify root causes). The right software can help you track overtime so you can better comprehend the extent of the problem (as well as its causes). With proper tracking, you can identify the most egregious incidents of overtime and analyze how they come about. With proper analysis, you can pinpoint the roots of your overtime problem and start to work on eliminating them. The strategies herein will help you address common causes.

·       Allow more flexible work schedules. Offering your employees more flexible work schedules allows them to work on their own time, which empowers them to be more productive while reducing their stress. It also affords you more flexible coverage, which may lessen the incidence of short staffing.

·       Cross-train your employees. Consider providing all your workers with cross-training, to equip them with the knowledge, skills, and experience necessary to step into other roles when necessary. That way, if you end up short stacked in one department, you might be able to pull employees from another area to cover your needs. Cross-training is an investment of time and money, but it can be worth it.

·       Hire when you need to hire. Some businesses are plagued with overtime problems because they refuse to hire new employees. If you’re facing consistently higher demand, or your business is short staffed in general, you can probably save money in the long run if you hire someone. Many business owners try to avoid bringing on new full-time hires or spending the time and funds to train them, but sometimes it may be a practical necessity if you want your business to continue to thrive.

·       Work with contractors. Working with independent contractors can offer advantages over full-time or part-time staff. You won’t have to cover their benefits, and you may use them much more flexibly. If you have a temporary demand for additional employees, you won’t have to hire new in-house staff, nor will you have to resort to overtime; instead, you can tap into your network of contractors.

·       Provide the necessary resources. Giving your employees the resources they need can enable them to be more productive, and empower them to cover more ground. Better software, devices, and training, plus more overall support can dramatically reduce your need for overtime.

·       Automate whatever you can. You’ll never have to pay overtime to a software program or a machine, so you should automate anything you can. Automation is consistent and cost-efficient when applied properly, so try to identify tools that will help you improve your business.

·       Instill better managerial approaches. Overtime control starts with management, so enact better managerial approaches. Make sure everyone is on the same page about how much overtime is allowed and for what work, and encourage your leaders to experiment with new approaches to make those goals a reality.

·       Address your work culture. Sometimes, excessive overtime is a result of your organizational culture. If you push your employees to work hard and go “above and beyond,” they may take that as a reason to exceed the allotted hours they’re supposed to work. Some adjustments to your organizational culture could be in order.


Collectively, these strategies can make overtime a relic. Though there may still be occasional stretches when you’ll have to demand overtime from your team, these situations should be few and far between – and your business will be far better off for that.