Overtime and the Hourly Employee

Hours in a growing industry is always a challenge. In established industries it is simply a math problem where a certain amount of overtime equals another full time employee. In a high growth company, it is much more difficult. Employees become reliant on overtime pay for their daily expenses. A person who should only be making $2.5K a month starts bringing in $3.5k a month and their lifestyle becomes dependent on making that kind of money. However, in the end people who are putting in that kind of overtime will only want to put in that kind of time for so long. Once you realize that you have employees putting in 300+ hours a month you have to realize that these peoples lives are not "typical". Retention is also an issue over the long term. People do not want to work those kind of hours long term. While with the economy the way it is you can get away with it for a while, after a year or two employees will even take a pay cut to get a more family or lifestyle friendly schedule.

Really these type of situations should never happen. While their will be time frames of a month or so where increased hours are necessary in a production environment, if you go more than a quarter with this type of overtime you need to seriously consider adding shifts. The danger you are facing if an hourly workforce gets used to gross amounts of overtime is a complete change in the demographics of your hourly workforce. If you are looking specifically for guys who will work 200+ hours a month, they will never be happy when told that they only get to work 180. They have car payments and mortgages based on the high hours. They will leave and you will be forced to find people who have more realistic hour expectations. While you always want to hire people who will work a high amount of hours, too many of those and you create a situation where it is an entitlement. A proper mix is needed. For retention purposes you need at least a 70 percent hourly workforce that is happy to work 40 hours a week. Then you can leverage the other 30 percent to fill in the gaps. There will always be employees who will take whatever hours they can get, but creating workforce that is entirely composed of "hour whores" is a recipe for failure. In a Union environment you also get people that are on the watch for percieved seniority violations as it pertains to overtime.

Bottom line: Create a sustainable production pace and find a metric that tells you when to add people. For people in a more static and established industry you need to get with your controller and figure out what those metrics are.

Talk to a safety guy about the myriad of safety issues associated with long hours as well.