A report released by the U.S. Bureau of Labor Statistics last December found that manufacturing employees worked an average of 3.6 overtime hours per week. Another survey of shiftwork practices reported that while most 24×7 labor environments maintain moderate amounts of overtime (averaging less than 200 hours per shift worker annually), employees in a significant number of these companies can average up to 500 hours a year.
Manufacturing facilities are among those 24×7 operations. Many shift workers want to get as much overtime as possible to supplement their income, so overtime distribution is usually detailed in union contracts or specifically defined by work practice. While less than 10% of U.S. manufacturing employees are part of a union, plant managers note that many employees in non-union plants see their schedule (overtime included) as “absolute”.
When an employee requests overtime, or when peaks in production demand dictate the need, plant supervisors must distribute overtime fairly—and be able to justify the process if there is an employee grievance about not getting enough hours.
In addition to maintaining employee satisfaction, manufacturers must ensure overtime practices align with company policies and applicable regulations. Properly tracking overtime hours helps organizations maintain compliance while creating a more transparent process for employees who want additional earning opportunities.
Optimize Your Manufacturing Operation with Indeavor
How You’re Handling Overtime with Outdated Processes
Distributing overtime equitably relies on someone recording each employee’s overtime hours on a paper or spreadsheet. When the time comes for overtime hours to be issued, the supervisor manually flips through union contracts (if applicable) and/or chooses by seniority—whether this is done through tribal knowledge (“I know who my people are”) or by looking through a separate log of employee information varies from plant to plant. This process repeats every week, as a properly kept roster will help settle disputes between employees and the supervisor; the manual recording acts as an audit log.
Let’s say you’re at the point where your facility is pretty confident with its ability to keep track of overtime hours. That’s great—but that’s only part of the puzzle. It’s a retroactive process.
How do you limit unnecessary overtime before it happens? Paper processes in particular make this nearly impossible. Without real-time visibility into employee hours and how that matches with current demand needs, managers can’t accurately anticipate their overtime costs. They’re tracking OT hours, but they’re not really leveraging that information strategically beforehand or scrutinizing why the hours are being assigned in the first place.
The Hidden Costs of Manual Overtime Management
Tracking overtime hours with spreadsheets and paper records creates more than administrative work. Supervisors often spend valuable time reviewing schedules, calculating overtime eligibility, and determining which employees should be offered additional shifts. As overtime hours accumulate across departments, the risk of human error increases.
When overtime hours are not accurately monitored, organizations can unintentionally create inequities in distribution, miss opportunities to optimize staffing, or exceed labor budgets. Managers may also struggle to identify trends behind rising overtime hours, making it difficult to address root causes such as staffing shortages, absenteeism, or inefficient scheduling practices.
Manual processes also make it difficult to understand how employee overtime hours impact overall labor costs. Without a centralized system, leaders lack the visibility needed to make informed decisions about staffing levels, production schedules, and future workforce planning.
How To Reduce Unnecessary Overtime in Manufacturing
What if that audit log could be automated? And what if the OT management process could be proactive?
That’s where automated scheduling comes in.
Automated shift scheduling helps reduce unnecessary overtime in the manufacturing industry, driving overtime costs down by 19%. Perhaps this is linked to the finding that organizations that are behind on automation consider about 27% of their overtime costs to be unbudgeted?
This is because, with an automated employee scheduling solution, managers will be assured that when an employee has clocked in overtime, it will fit an anticipated, necessary need.
Here’s how it works: Your weekly schedules will always sync up with production demand. You input company restrictions based on your specific business needs to prevent unnecessary overtime. Each employee is then assessed by these rules as the schedule generates automatically.
Using Automation to Control Overtime Costs
Modern workforce management platforms provide real-time visibility into overtime hours across the entire operation. Instead of reviewing overtime hours after payroll is processed, supervisors can proactively identify employees approaching overtime thresholds and make schedule adjustments before costs increase.
Automated scheduling solutions can also help organizations comply with federal overtime laws by applying business rules consistently across the workforce. These systems ensure that overtime assignments are based on predefined criteria rather than manual decision-making, helping organizations demonstrate fairness and consistency.
In addition, managers can evaluate whether assigned overtime hours are tied to production requirements, skills availability, or workforce shortages. This level of insight helps reduce unnecessary labor expenses while ensuring critical work is completed on time.
As labor markets remain competitive, many manufacturers are looking for ways to create a better workforce opportunity wage without relying exclusively on excessive overtime hours. Strategic scheduling helps balance labor costs while still providing employees with opportunities to earn additional income when operational needs require it.
Organizations should also understand when an employee is covered overtime under applicable regulations and company policies. Having accurate records of overtime hours simplifies compliance efforts and reduces the risk of disputes or payroll errors.
The best part? You have an automatic log of overtime hours, making life that much easier if grievances ever occur. No manual entry here!
Because overtime hours are automatically tracked and reported, supervisors can quickly review historical records, identify trends, and make data-driven staffing decisions. This visibility helps organizations better forecast future overtime hours and allocate labor more efficiently.
The Indeavor Solution
Looking to stop spending so much time managing overtime and instead focus on driving operational performance? Indeavor can help. Request a demo
to see how automated workforce management can improve labor efficiency, reduce administrative burden, and optimize staffing decisions.
Indeavor is a workforce management platform built for complex, 24/7 operations. By aligning labor with production demand, workforce availability, qualifications, and business rules, Indeavor helps organizations create optimized schedules that balance operational requirements with workforce needs.
With demand-driven scheduling, automated overtime management, real-time workforce visibility, and labor analytics, Indeavor helps manufacturers proactively control overtime costs while maintaining compliance and ensuring proper shift coverage. Managers can automatically apply scheduling rules, track overtime distribution, monitor labor utilization, and make informed staffing decisions using real-time workforce data.
By replacing manual scheduling processes with automation, organizations gain greater visibility into labor demand, workforce capacity, and overtime trends, helping them improve productivity, reduce labor costs, and ensure overtime is distributed fairly and consistently across the workforce.
About the Author
Claire Pieper is the Digital Marketing Specialist for Indeavor. In her role, she specializes in crafting strategic and engaging content, ensuring that customers are well-informed. Claire is dedicated to enhancing the customer experience and optimizing the user journey through Indeavor’s solutions. To learn more or get in touch, connect with Claire on LinkedIn.
