Measure the incremental overtime premium
Overtime cost includes the full overtime wage, but the incremental premium above straight time is the most useful figure when comparing short-term options. Keep both values visible.
Estimate the full cost of another worker
A new employee can add salary or hourly wages, employer payroll costs, benefits, tools, training and management time. Contractors can create a different set of costs and classification questions.
Compare capacity, not only price
Overtime may solve a temporary spike quickly, while hiring may create sustainable capacity. Consider fatigue, quality, schedule resilience and the time required to recruit or onboard.
- Duration of demand
- Required skill
- Current team workload
- Overtime premium
- Hiring lead time
- Benefits and overhead
Use scenarios instead of one break-even point
Model a short, medium and long demand period. The lower-cost choice can change as the duration and certainty of the workload change.