In today’s fast-paced, always-connected world, many businesses require employees to be on call to ensure smooth operations and quick responses to critical issues. However, compensating employees for being on call can be a tricky subject. It’s important to strike a balance between fairness, accountability, and incentivizing the right behaviors.

Let’s explore four common methods of compensating employees for being on call, along with their advantages and disadvantages.

1. Voluntary On-Call Basis

In this method, employees volunteer to be on call without any formal compensation structure.

Advantages:

• It’s flexible and allows employees to opt in based on their availability and willingness.
• It can work well in small teams or organizations with a strong culture of collaboration.

Disadvantages:

• Accountability Issues: Since it’s voluntary, it can be difficult to ensure consistent coverage or hold employees accountable for their availability.
• Risk of Burnout: Some employees may feel pressured to volunteer repeatedly, leading to overburdening and burnout.
• Uncommon Practice: This method is not widely used because it lacks structure and fairness.

While this approach might work in rare cases, it’s generally not sustainable for larger teams or organizations with critical on-call needs.

2. Fixed Monthly Fee for Being On Call

In this approach, employees receive a fixed monthly payment for being on call, regardless of the number of hours or incidents they handle.

Advantages:

• Simplicity: It’s easy to calculate and integrate into salary structures.
• Predictability: Employees know exactly how much they’ll earn for being on call, and employers can budget accordingly.

Disadvantages:

• Imbalance: If some employees end up being on call for significantly more hours or handle more incidents than others, it can lead to resentment and a sense of unfairness.

• Lack of Flexibility: This method doesn’t account for variations in workload or the actual time spent on call.

While this method is straightforward, it may not be the fairest option, especially in teams where on-call duties are unevenly distributed.

3. Compensation Based on Exact Hours On Call

This is perhaps the most common and fair method. Employees are compensated for the exact number of hours they are on call, ensuring that pay is directly tied to their availability.

Advantages:

• Fairness: Employees are paid proportionally to the time they commit to being on call.

• Transparency: It’s easy to track and justify compensation based on actual hours worked.

Disadvantages:

• Administrative Effort: Tracking and calculating on-call hours can require additional effort, especially in larger teams or organizations.

• Potential for Disputes: If tracking systems are not accurate or transparent, it could lead to disagreements over the number of hours logged.

Despite the administrative challenges, this method is widely regarded as the fairest way to compensate employees for being on call.

4. Compensation for Time Spent on Incidents

In addition to compensating employees for being on call, some organizations also pay employees for the time they spend actively resolving incidents. This approach ensures that employees are rewarded for their actual work during on-call hours.

Advantages:

• Fairness: Employees are compensated for the effort they put into resolving issues, not just for being available.

• Motivation: It can incentivize employees to respond quickly and effectively to incidents.

Disadvantages:

• Focus on Incidents: This method doesn’t encourage employees to proactively prevent incidents. In fact, it might unintentionally reward teams for having more incidents to resolve.

• Short-Term Thinking: It shifts the focus from long-term service reliability to short-term incident resolution.

A Better Alternative: Compensate Based on Service Availability

Instead of focusing solely on incident resolution, a more forward-thinking approach is to tie compensation to the availability and reliability of services. This method incentivizes employees to minimize disruptions and implement proactive measures to prevent incidents in the first place. It aligns compensation with the ultimate goal of maintaining high service uptime, which benefits both the organization and its customers.

Choosing the Right Method

There’s no one-size-fits-all solution when it comes to compensating employees for being on call. The best approach depends on your organization’s size, culture, and operational needs. However, whichever method you choose, it’s essential to ensure that it’s fair, transparent, and aligned with your business goals.

How PagerDuty Can Help

Regardless of the compensation method you choose, tools like PagerDuty can provide the data you need to calculate on-call hours, track incidents, and measure service availability. By leveraging such tools, you can ensure accurate and efficient compensation for your employees while maintaining accountability and transparency.

In conclusion, compensating employees for being on call is about more than just money—it’s about creating a system that values their time, effort, and expertise. By choosing the right method and leveraging the right tools, you can build a fair and effective on-call compensation strategy that benefits both your employees and your organization.