Should You Hire More Employees or Pay Overtime?

In an ideal world, companies would have just enough employees on the payroll to complete their required duties. It’s a delicate balance, but one that pays off in spades, as there’s no overtime to pay and no one standing around twiddling their thumbs. That may sound great, but we all know that fluctuations in business make this idyllic picture impossible to achieve – at least not for very long.

Seasonally-dictated industries have the most experience dealing with this scenario, as the very nature of their business necessitates fluctuations in staff. Any business can experience shifts in labor demands, however.  A construction business may see a sudden rise in business following a natural disaster. A food manufacturer may experience increased demand after an endorsement by Dr. Oz, Dr. Andrew Weil, or Prevention magazine. A toy company may inadvertently hit on the hot new trend that every child simply has to have this Christmas. Any of these situations will result in the need to suddenly ramp up production. Along with that ramp-up, you will inevitably need more manpower.

The question is how to handle that increased need. Should you pay your existing workers overtime or hire additional staff?

In the short-term, overtime may be your best option for a number of reasons. In a tough economy, particularly right before the holidays, workers appreciate the opportunity to fatten their paychecks. If you opt for this approach, however, you must do so carefully, as research has shown that employees lose their edge and a company will stop seeing any gains in productivity at a certain point. In 2011, the U.S. Department of Health and Human Services found an array of negative effects, such as illness and injuries, resulting from overtime and extended work shifts. In addition, studies have shown that extended periods of overtime can result in an unmotivated workforce, as employees begin to feel overworked and underappreciated.

This leads us to the second option: hiring more workers. Naturally, there is a cost to be had when bringing new people onboard. The hiring process itself can be costly. Then there is the training, along with benefits and insurance. And you have to accept the fact that a new employee is not likely to reach the performance level of a seasoned employee for a few weeks. If you don’t expect your boost in business to last, this is probably not the best solution for you. You’re unlikely to recoup the additional expenditures in a short time and hiring new people only to let them go so soon won’t do anything toward cultivating a reputation as an employer of choice.

The best solution may be to hire temporary workers. By definition, temporary workers understand that they are not likely to be brought onboard for the long-term – and many of them prefer it that way. What’s more, many temporary workers have already spent time on a similar job, perhaps even at your company, so they will be better prepared to hit the ground running, a definite plus when business is booming.

For more information on staffing strategies, contact High Profile today.

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