Lakshmi Raj: Take a break.
“Work hard and get rewarded.”

Americans tend to think of this as capitalism at its finest. We work longer hours and take less vacation than almost everyone. Devotion to our jobs has become part of our DNA, to the point that – in many companies – “workaholic” is a good label, even a desired trait. Combine that with technology that lets people stay connected to their work 24/7, and the “always on” workforce emerges.

That can seem great to managers who want the highest ROI from their people. But there are hidden costs. In fact, an “all work and no play” approach can have a negative impact on your bottom line.

Overwork can reduce productivity

Many employees gain the respect of peers and supervisors by having a “can do” attitude that puts work above all else, including personal time off. It may be true that some people genuinely thrive by operating this way, but others do not cope as well with the fatigue, poor health and stress that can result. Inevitably, this leads to more sick days, doctor visits, and hospitalization than would otherwise be necessary. And even if it doesn’t get quite that severe, general burnout from inadequate “time-off” can take a toll on productivity during “time-on.” These factors directly impact your bottom line.

If that weren’t enough, the always-on environment can also foster poor morale, lower intensity of work and higher-than-desired employee turnover.

Project profitability can suffer

Organizations with a lot of project-based work face additional risks. You want your team members to tackle each task with enthusiasm and hard work, but it’s possible for energetic workers to expend too many hours on projects. When employees misunderstand or are unaware of the hours budgeted for their tasks, they may easily spend too much time on them, resulting in cost overruns and inefficiencies.

So it’s important that you communicate with your teams about the specific time budgets and expectations of a project. It’s also helpful for you to assess which employees are the best fits for particular tasks. Ideally you should gauge this from historical data on similar projects, including which employees have the appropriate skills. But without good analysis tools, this can consume a lot of time.

Unused vacation creates additional liability

An additional impact is the possibility of having to pay employees twice: Once for their regular salary and later for the vacation they didn’t take. PTO policies usually allow for accruals but the balances need to be paid, typically at the end of the year or when an employee leaves the company. This is a huge and growing problem for many employers. You also may need to pay unexpectedly for a temporary replacement if an employee chooses to (or is forced to) use vacation all at once.

How can you avoid these problems?

While there’s no way to prevent these issues entirely, you can minimize them by keeping employees informed, engaged and supported. Managers should communicate with teams upfront about the hours, expectations and goals of each project, so employees understand clearly how their tasks contribute. And they’ll perform better if you also make it clear they’re expected to take the time off they need and have earned. Better still: Build this into your projects’ schedules from the outset, and share the dates with your teams.

That’s easy with online time tracking software, but many companies still use outdated methods such as paper time sheets and Excel spreadsheets. Those guarantee that information is days or even weeks old, and increase the likelihood of errors. By contrast, Web-based tools provide comprehensive, up-to-the-minute views of what’s happening with each project and employee. With this insight, you more easily identify worker inefficiencies (and help them improve); track productivity; manage hours and schedules; and ensure work/time off balance.

Boosting profitability

Conventional wisdom says that the more your people work the more profitable you’ll be. But as outlined above, that can come at the cost of ill health, added liability, or poor morale. The key to profitability is helping employees maintain an optimum work/time off balance. How?

A great way is to show them how they contribute to profitability. Let them see how their utilization (productive versus non-productive time) does exactly that. Again, emphasize that your schedules provide for them to take time off. Then they can take responsibility for their personal utilization rate and not feel that the only way to seem efficient is to work without breaks.

Time sheet applications make this remarkably easy. The time savings alone can offset the cost of the software.

Of course, there’s more value. Filling in a time sheet helps personalize business goals for team members. When a time sheet calculates and displays the range of activities they work on and how much time they spend on each, employees see immediately how well they’re performing relative to their targets. This can be remarkably empowering and energizing. It helps workers think and act more strategically.

While innovations in technology make it possible for people to work many more hours, it also means employees are sometimes less efficient. They can overwork projects, and themselves. Without an easy way to track and analyze negative impacts, you may have more than tired employees on your hands-you could also have a diminished bottom line.

Lakshmi Raj is Co-founder & Co-CEO of Replicon, which provides software-as-a-service-based time-and-expense tracking software.

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