Cookie and Privacy Settings

This website uses cookies to enable essential functions like the user login and sessions. We also use cookies and third-party tools to improve your surfing experience on preplounge.com. You can choose to activate only essential cookies or all cookies. You can always change your preference in the cookie and privacy settings. This link can also be found in the footer of the site. If you need more information, please visit our privacy policy.

Data processing in the USA: By clicking on "I accept", you also consent, in accordance with article 49 paragraph 1 sentence 1 lit. GDPR, to your data being processed in the USA (by Google LLC, Facebook Inc., LinkedIn Inc., Stripe, Paypal).

Manage settings individually I accept
expert
Expert with best answer

Andrea

99% Recommendation Rate

145 Meetings

854 Q&A Upvotes

USD 269 / Coaching

2

How would you calculate the economic value of overtime?

Hi all,

how would you calculate the economic value of overtime?

I see two ways to obtain the gross value:

-Based on my actual economic package: (net monthly value/(1-tax rate %)) x 12 months

-Value based: supposing I will do on average 1.5hrs/day of overtime (maybe this value has to be higher in most strategy consulting firms?), that's 30hrs/month (no weekends included). What is the real value of this amount of time spent working instead of living my private life? (opportunity cost)

What would be your approach?

Thanks,
Lorenzo

Hi all,

how would you calculate the economic value of overtime?

I see two ways to obtain the gross value:

-Based on my actual economic package: (net monthly value/(1-tax rate %)) x 12 months

-Value based: supposing I will do on average 1.5hrs/day of overtime (maybe this value has to be higher in most strategy consulting firms?), that's 30hrs/month (no weekends included). What is the real value of this amount of time spent working instead of living my private life? (opportunity cost)

What would be your approach?

Thanks,
Lorenzo

2 answers

  • Upvotes
  • Date ascending
  • Date descending
Best Answer
Book a coaching with Andrea

99% Recommendation Rate

145 Meetings

854 Q&A Upvotes

USD 269 / Coaching

The second of the two methods you outlined gives indeed the economic value for the worker.

Together the two methods determine the “goal posts” of how overtime pay is determined for workers (sometimes legislation comes into play where overtime must be a minimum of 1.x times regular time pay). The final determination of the exact amount takes in to account the economic value that overtime creates for the employer. That is usually estimated by understanding the incremental profitability (vs. Profitability of regular hours) these marginal hours of work generate.

hope it helps,

andrea

The second of the two methods you outlined gives indeed the economic value for the worker.

Together the two methods determine the “goal posts” of how overtime pay is determined for workers (sometimes legislation comes into play where overtime must be a minimum of 1.x times regular time pay). The final determination of the exact amount takes in to account the economic value that overtime creates for the employer. That is usually estimated by understanding the incremental profitability (vs. Profitability of regular hours) these marginal hours of work generate.

hope it helps,

andrea

Book a coaching with Josh

0 Meetings

20 Q&A Upvotes

USD 249 / Coaching

Hi Lorenzo,

I studied behavioral economics in college, so this is right up my alley. There isn't a right or wrong answer for this question- it entirely depends on how much you value an hour of time.

Here is another way to think about it- how much would you pay to get work an hour less each day?

Josh

Hi Lorenzo,

I studied behavioral economics in college, so this is right up my alley. There isn't a right or wrong answer for this question- it entirely depends on how much you value an hour of time.

Here is another way to think about it- how much would you pay to get work an hour less each day?

Josh

Related case(s)

MBB Final Round Case - Smart Education

Solved 16.8k times
MBB Final Round Case - Smart Education Our client is SmartBridge, a nonprofit educational institution offering face-to-face tutoring services. The client operates in the US. The mission of SmartBridge is to help as many students as possible to complete studies and prevent that they drop from the school system, in particular in disadvantaged areas. The client is considering starting operations for its services in the Chicago area. They hired us to understand if that makes sense. Due to the nonprofit regulation, SmartBridge should operate on its own in the market, without any partnership. How would you help our client?
4.6 5 592
| Rating: (4.6 / 5.0)

Our client is SmartBridge, a nonprofit educational institution offering face-to-face tutoring services. The client operates in the US. The mission of SmartBridge is to help as many students as possible to complete studies and prevent that they drop from the school system, in particular in disadvant ... Open whole case

Chinese Chess - Airline Business During COVID-19

Solved 3.8k times
Chinese Chess - Airline Business During COVID-19 Sky China, a government-backed Chinese airline, has recently seen profits plummet due to COVID-19. Profits are down 80% in the months of February and March, but are showing early signs of a rebound in April.  They've brought you in to first investigate what can be done immediatedly to prevent hemorrhaging cash and surive in the short-term. They are also looking to see how the current situation can be viewed as an opportunity, and what can be done to prepare for the future. 
4.3 5 110
| Rating: (4.3 / 5.0)

Sky China, a government-backed Chinese airline, has recently seen profits plummet due to COVID-19. Profits are down 80% in the months of February and March, but are showing early signs of a rebound in April. They've brought you in to first investigate what can be done immediatedly to prevent hemor ... Open whole case

Bain 1st Round Case – BlissOttica

Solved 1.6k times
Bain 1st Round Case – BlissOttica Our client is a BlissOttica, an Eyewear Manufacturer that is looking to reach a 10% increase in profits. How would you help our client?
4.3 5 79
| Rating: (4.3 / 5.0)

Our client is a BlissOttica, an Eyewear Manufacturer that is looking to reach a 10% increase in profits. How would you help our client? Open whole case