Business Information for Entrepreneurs by an Entrepreneur

Overtime Pay vs. Comp Time

Overtime can be a costly expense that can cut into your profits. Because overtime often is the result of an unforeseen event, it can be difficult to include the correct amount of overtime into your budget.

Consider the Alternatives

One alternative may be offering comp time instead of overtime pay. First, it's important to point out that some states do not allow comp time in place of overtime pay, so you'll need to check the laws in your state.

Comp time is paid time off that the employee can take instead of earning extra pay for working overtime. Obviously, this is not going to work for every business - and some employees are not going to like the idea.

Still, if it will work for you and the laws in your area allow it, you can make it your policy that overtime hours will be paid in comp time.

How to Do It

As with overtime pay, comp time should be given in an amount equal to 1 ½ to 2 times the number of overtime hours worked. For example, if an employee worked 2 hours of overtime, he should receive 3-4 hours of comp time.

You will want to make it clear to employees BEFORE they work overtime that this is your policy. Be sure to have employees sign a copy of the policy. Keep the signed copy in each employees file.

Some businesses handle their overtime by using a combination of overtime pay and comp time. You could, for instance, decide that the first 10 hours of overtime per month will be paid and the remainder will be reimbursed through comp time.

Be sure if you offer comp time that employees are able to take it as long as they give reasonable notice.

You can save thousands of dollars a year by offering comp time. Just be sure that the laws in your area allow it, and that your employees understand your policy.

Getting Your Small Business Involved in the Community

Finding ways for your small business to get involved in the community can help motivate employees and it can be good for business too.

When you and your small business are active participants in the community, the name of your business can become well known, and you will be thought of highly by members of city council as well as by other small business owners in your area.

Time and Money

Community involvement does not necessarily mean making large monetary donations. Instead, donations of time are just as valuable.

Consider sending a team of employees to the next Habitat for Humanities build that takes place in your area. Or, you could select a local charity to sponsor during the holiday season.

When employees come to you with an idea about a specific charity that they would like to help, do your best to find some way for your business to help that charity.

Obviously, you may not be able to help every charity that is brought to you as a suggestion, but if you can act on an employee's request, that can do wonders to boost morale - and make the employee feel like an important part of the team whose suggestions are taken seriously.

Make Your Time Count

There are lots of ways that you can help your community without spending a lot of money.

• Hold a toy or food drive
• Spend an afternoon with some employees working in an elderly neighbor's home
• Make monthly or bi-monthly visits to a local nursing home or children's hospital

There lots of opportunities in every community for such giving. Find ways to become actively involved in YOUR community today.

Figuring Out a Bonus Plan for Your Employees

Many small businesses offer employees a bonus at the end of each year. Some base bonuses on the meeting of specific goals that were set at the beginning of the year.

Other employers offer across-the-board bonuses that are not merit based.

Some experts say that non-merit based bonuses can actually be bad for business, but others disagree.

You'll need to decide what is best for your business. One thing you need to keep in mind is if you give a bonus every year, employees are going to expect that bonus.

Proceed With Caution

You should make it abundantly clear each time a bonus is given that you are thrilled to be able to do it, but that you don't know if you'll be able to do it next year.

This could help soften the blow should a future financial situation prevent you from being able to offer bonuses.

Facilitating merit based bonuses are less tricky than across-the-board bonuses. You simply set goals for each employee.

Employees that meet their goals get the bonus. For some department, such as sales, it's easy to set goals.

Get Creative

For departments and jobs, such as administrative workers, you may need to be a bit more creative with your goal setting. Consider offering bonuses for those who do not use any sick days or who consistently arrive to work on time.

The amount of across-the-board bonuses can be based on length of service or on the amount of the employees' current salary. You could, for example, offer a bonus of 10% of the annual salary. Or, you could offer a set amount per year based on the employees' years of service.

In addition to being a nice way to reward employees for a job well done, you should also talk to your accountant about the possible tax breaks involved.