Part-time employees help service organizations extend their operating hours and provide extra capacity for peak demand periods. While this strategy tends to increase the number of employees needed to staff the system, part-timers usually earn less per week than full-timers because they do not work as many hours. However, escalating per capita labor expenses have increased the effective hourly wages for part-timers, threatening one of their key advantages. According to government statistics, service sector employers now obtain more labor from overtime work than they do from part-timers. Although the benefits of part-time scheduling policies are well understood, comparatively little research has focused on overtime scheduling policies. Typically, we think of overtime as a means of buffering service systems against supply and demand uncertainty. In this study, however, we demonstrate that scheduled overtime provides many of the same operational advantages of part-time scheduling policies. We evaluate the effects of alternative overtime staffing and scheduling policies on important performance measures such as total labor expense, labor utilization, and worforce size. Compared with standard (40 hours per week) employee schedules, we find that even small amounts of premium-pay overtime work provide significant savings. We also find that the ideal workforce size and proportion of overtime work for a given scheduling policy seem to be relatively insensitive to changes in per capita labor expenses. This means that employers may need much more aggressive overtime scheduling policies to mitigate the effects of rising per capita labor expenses.
