Businesses, especially the more traditionally-run ones, often prefer employees to go on overtime, believing that more time spent at work translates to more output produced. Under-times are commonly penalized with pay cuts and reprimands. However, for knowledge workers (and even for other types of employees), this model may not exactly be the most optimal for companies to follow, given productivity concerns.
Recent studies have proven that productivity takes a sharp decline when an employee starts to exceed the 40 hour workweek. Hence, the marginal output, or the amount of extra units of work done decreases with every extra hour one works in a day on top of the prescribed eight—hardly reason for your staff to earn that extra overtime money.
What’s a business to do then, if it’s paying for people to be more conscious of the amount of time they spend at the office rather than the level of output they contribute? Business solutions experts are in favor of granting flexible working hours and work-at-home arrangements. In exchange, employees are to be compensated according to output. This gives them more incentive to exert an effort to meet targets.
While this may not necessarily be beneficial across all industries and types of professionals, company formation consultants advise would-be employers to consider flexibility in terms of its managing employee working hours.