IDear Workforce-I Should I Pay Overtime or Hire a New Employee

September 3, 2000

Dear Workforce:

Do you have any ideas on how to decide whether to pay someone overtime, or hire a new employee?

--Matthew, financial services company

A Dear Matthew:

On one hand, you'll want to weigh the effect that the overtime costs you, as well as the significant effect it may have on burnout and retention, particularly if the employee isn't happy about it.

On the other hand, you'll want to consider the costs of hiring the new employees, which involve management spending their time interviewing, doing other screening (skills or personality tests, coordinating background checks), negotiating, orienting, and training.

Also consider that the new person may be at a different level of productivity for the first couple of months than your veteran employee. Finally, consider the effect that a new employee may have on customer relationships.

For advice from others, try the Recruiting and Staffing Forum.


SOURCE: Online Editor Todd Raphael, The Segal Company, and the Saratoga Institute.

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