Labour has a cost (wages, overtime, shift penalties, weekend/public holiday penalties, oncosts such as payroll taxes). Has any research been done to assist in determining when it is more efficient to pay overtime to existing employees versus employing new staff? I guess there will be a way of evaluating this mathematically. If you can point me to existing research in this area it would be greatly appreciated.
Hi, Chris:
Interesting question. Perhaps the issue could also be... failure to inform the payroll department for new hires! Please take a look at this new article ( Haggerty, 2013) as it discusses the wage overpayments and underpayments which can be a source of significant costs for employers in the U.S. in terms of staff time spent.
It offers tips on how to reduce these costs including the accuracy in payroll process, improved internal communications and identifying sources of errors.
It also outlines some problems that cause additional payments including failure to inform the payroll department for new hires, time card errors and miscalculated overtime!
- Haggerty, P. (2013). Recovering Certain Wage Payments Can Prove Costly to Many Employers. Payroll Practitioner's Monthly, 24(9), 1-6.
Hope this helps!
Nadeem
Article title and your summary both look interesting. I tried accessing through Google but it appears unavailable. I don't suppose you could attach a copy?
Have you looked at Fred Brooks' seminal book Mythical Man-Month: Essays on Software Engineering? Brooks argued that "man-month" is a hypothetical unit of work and coined "Brooks'law": "adding manpower to a late project makes it later". According to Brooks's law the possibility to measure useful work in man-months is a myth.
Dear Chris, Your highlighted problem is a true problem of management because of per man productivity or head count issues. Generally these kinds of problems are dealt with marginal cost calculations until the increase in cost reaches to the constant rate of return. If the overtime cost gives you increase rate of return, keep on increasing the overtime workers. Sometimes the overtime cost is calculated against the motivation of the employees. If the unit cost is increasing with overtime but disseminating the monetary benefits to employees increases extrinsic motivation that reduces the turnover intention and cost associated with training & Development, then the management deliberately does it to get specially intangible benefit . If the matter is purely related to finance then obviously will be dealt with hourly calculations. So in such kind of issue 'time and motion study' is advised. Regards
I think some overtime, not every day of the week, can be reasonable. However, an excess brings stress to the team. Thus, hiring young staff, with relatively affordable fees, may be an option.
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