more-arw search

Q&A Forum

What has been your experience with cutting or managing overtime, i.e. process impact and productivity impact?

As financial professionals we have all had to cut expenses. Clearly the largest targets of reduction are the largest expenses - people and technology.  What experience have you had with reducing overtime costs? This question does not relate to cutting people, just non-budgeted hours.

If you had this situation, were there any unintended/unexpected outcomes? 


Sara Voight
Title: Controller
Company: Critical Signal Technologies, Inc
(Controller, Critical Signal Technologies, Inc) |

For professionally pointed employees (i'm speaking of internal office spots and not general labor or call center staff), try FLSA overtime.This changes everyone from an hourly rate to a salary. Overtime is calculated at a modified rate. A staffer will know that their base salary is $XX annually. The calculation of overtime is based upon the weekly salary divided by the number of hours worked for that week. Overtime is earned at 50% of the current week's hourly rate. Someone can earn overtime, but it becomes less profitable the more hours they work.

Take a salary of $400 per week ($20,800 annualy; simplified for math purposes), their hourly rate would be $10 for a normal 40 hour work week. When they work 45 hours, their hourly rate becomes $8.88, and overtime pay is $4.44 for the five hours - $22.20. If they were paid at straight overtime ($10/hr; $15/hr OT), they would make $75.

In my view, this manages two ends of the spectrum. Staff do get paid overtime when qualified for it, but since it isn't such a guaranteed money maker for them, they tend to be more strategic in getting their work done within regular hours. This also prepares them to advance to a true salary position that won't get OT. From the employer perspective, atual OT costs decrease dramatically even if the total hours worked does not change.

I found that this also helped me draw better entry level applicants when I could advertise a salaried position (and let them know they could still get OT), instead of hourly.

I have simplified the answer and examples. There are more rules published by the DOL which outline the way this is done (and you can create a weeky salary that is based on more hours than 40 per week, if that is what is normal in your industry).

Topic Expert
Regis Quirin
Title: Director of Finance
Company: Gibney Anthony & Flaherty LLP
LinkedIn Profile
(Director of Finance, Gibney Anthony & Flaherty LLP) |

Sara - thanks. Very interesting. Can you refer me to a link where I can review this approach in more detail?

Topic Expert
Linda Wright
Title: Consultant
Company: Wright Consulting
(Consultant, Wright Consulting) |

In running a large customer service organization, I had all staff write time, placing each task in a particular bucket. What we found was that certain problem resolution tasks took the most time. Then we went to market for technology that allowed categorization. This analysis allowed us to route the more complex calls to special staff, who could handle these during normal hours. The regular--have you received my payment calls, for example--could be handled by the rest of staff.

Sara's approach is interesting. We looked into a salaried approach, but our HR organization would not approve that for AR/customer service staff.

Products and Companies

Get Free Membership

By signing up, you will receive emails from Proformative regarding Proformative programs, events, community news and activity. You can withdraw your consent at any time. Contact Us.

Business Exchange

Browse the Business Exchange to find information, resources and peer reviews to help you select the right solution for your business.

Learn more

Contribute to Community

If you’re interested in learning more about contributing to your Proformative community, we have many ways for you to get involved. Please email [email protected] to learn more about becoming a speaker or contributing to the blogs/Q&A Forum.