Time is money: how to calculate the value of working hours

13 of October, 2022

Within each work team, what is the value of each worker? Calculating the value of your employees’ working hours can help you make decisions that will contribute to your company’s productivity and profitability because sometimes it is preferable to delegate specific tasks or outsource them. Write down the following formula and learn how to find out the value of working hours. Time is money!

Steps to calculate the value of an employee’s hours  

Keeping track of tasks, time spent and working hours will allow you to distribute the workload appropriately. Only with information on your side will you be able to decide whether all staff should attend a meeting, or who is the best person in your team to train new hires. If you learn to calculate the value of working hours, you will be able to find solutions quickly and be certain that the work is correctly distributed. The following concepts are what make up the formula of the value of an employee’s working hours, so pay attention:

Annual salary + Monetary Value of Benefits / Hours worked annually = Value per hour

Calculate the monetary value per employee

All employees have a monetary value because time is money. As a business owner, you just need to calculate how much it is. Figures make it easier to find solutions to the problems that arise when it comes to managing talent attraction. 

Calculate regular hours

Using this formula to calculate the value of the hours of each employee together with the value of overtime you will get the starting point to know who is more profitable in the company and to make decisions regarding issues such as managing the workload or mentoring less experienced employees. Calculating overtime can be summarized in the following formula:

Gross annual salary including bonus payments / annual hours of the worker’s working day = value of the regular working hour

An overtime management software like Sesame HR can record your employee’s overtime in real time and choose how to compensate them.

Satisfaction questionnaire

The next step in finding out whether the value of employees’ hours is profitable is to ask them several basic questions that challenge their individual and work motivation, as well as their degree of satisfaction:

•  How satisfied are you with your job?
•  Do you enjoy the tasks you undertake on a daily basis?
•  Do you have a good reason for doing what you are doing in your career?
•  Do you realize the value of what you do in the long run?

To increase employee motivation you must align the interests of your staff with those of the company and you will get a more motivated and therefore more productive team.

Go for a time management software

On the other hand, the ultimate step in calculating the value of working hours is to go for a time management software like Sesame HR that can help you automatically record each employee’s working hours and overtime.

Determining the value of working hours is essential to optimize the time of each team member’s workday. Don’t forget that human talent is the most valuable asset you have and that if you work on their motivation and they are happy, they will be engaged.