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Herman Trend Alert: Overtime to Increase

Under ideal conditions, employers have just the right number of employees to perform the work that needs to be done. Overtime payroll costs are minimal, incurred only in those rare instances when there is some unusual circumstance or a critical employee is ill or on vacation. Over the past few years, companies have reduced employment to minimum staffing levels. People have been asked to work extra hours from time to time on an “as-needed” basis. This strategy has been a preferred alternative to hiring more people and increasing fixed payroll costs.

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Herman Trend Alerts are written by Joyce Gioia, a strategic business futurist, Certified Management Consultant, author, and professional speaker. Archived editions are posted at http://www.hermangroup.com/archive.html

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From “Herman Trend Alert,” by Roger Herman and Joyce Gioia, Strategic Business Futurists. Posted: Dec. 30, 2003, 9:00 a.m., EST

GREENSBORO, NC — Under ideal conditions, employers have just the right number of employees to perform the work that needs to be done. Overtime payroll costs are minimal, incurred only in those rare instances when there is some unusual circumstance or a critical employee is ill or on vacation.

Over the past few years, companies have reduced employment to minimum staffing levels. People have been asked to work extra hours from time to time on an “as-needed” basis. This strategy has been a preferred alternative to hiring more people and increasing fixed payroll costs.

For a number of organizations, finding qualified workers is not as easy as it once was, even with so many people out of work. The thousands of unemployed people don’t necessarily have the skills needed to meet job requirements. For example, emergency medical technicians and paramedics who work on ambulances and rescue vehicles are not standing in line looking for jobs. Municipal emergency services and private ambulance companies need people who are trained, experienced, and have current certifications. These employers are forced to pay overtime rates to their professionals because they can’t find enough people to hire on a full-time or part-time flexible schedule.

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We are hearing from operators of tow-truck companies that they have difficulty hiring people who have the ability to diagnose and repair automotive mechanical problems and are also willing to work on an “on-call” basis around the clock. Managers of apartment complexes have challenges finding people who are skilled at performing the wide range of maintenance functions that cause tenants to call for help at all hours. Companies servicing equipment in grocery stores, factories, hotels and restaurants suffer with job openings that mean lower productivity or service levels.

With the inability to hire people with the skills to do the work, employers must ask their workers to put in more hours, taking time away from their families. They don’t complain about the extra pay, but don’t want to work the extra hours on a regular basis. If the load becomes too much, they will leave; and their departure will create a greater need for overtime from remaining workers.

Copyright 2003 by The Herman Group–reproduction for publication is encouraged, with the following attribution: From “Herman Trend Alert,” by Roger Herman and Joyce Gioia, Strategic Business Futurists. (800) 227-3566 or www.hermangroup.com.

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