Are you blowing out your labour budget?
Whether you employ a tightknit team of 10 or a nationwide army of 5000, labour is a major expense for any business. So, it makes sense that you’ll want to keep your costs in check. For SMEs, this is not only desirable, but essential.
Of course, it’s not always as easy as it sounds. Even the most seasoned of managers can find themselves making rookie mistakes, and paying for them in the form of mushrooming pay packets.
That’s why in the lead up to the new financial year, we’ve put together an insider’s guide highlighting six ways you could be blowing out your labour budget. And we’ve backed them up with some clever tips on how to keep your wages in check, without compromising on productivity.
Ready to run a tight ship?
Be smart about scheduling
Generally, employees can be categorised into three tiers. At the top end you have qualified managers and supervisors, who should be getting paid higher rates. In the middle you have part-timers and semi-qualified staff. And bringing up the rear are casual employees, with basic skills and the need for constant supervision.
Smart rosters should factor in the position of every staff member, and avoid putting together an overqualified team. For example, your benchmark may be one manager and one duty manager for every 10 casual employees. This is a smart schedule that’s bolstered by top tier staff and fills in the gaps with lower paid employees.
Meanwhile, a similar business may roster on two managers, three supervisors and five casuals. This isn’t efficient, as it’s likely that one manager will take on most of the responsibility, while the second manager and three supervisors will perform at the same level as their five casual counterparts. Only on a higher pay level.
Ultimately, your roster should facilitate peak productivity without compromising on support. Find a balance that works for you, and try to stick to it where possible.
Optimise staff and forecast labour needs
Most businesses fluctuate, and rosters should reflect ongoing trends. Why? Because over or understaffing can quickly drain your budget. If your calculations aren’t spot on your ratio of labour costs to revenue is never going to deliver. For this reason, forecasting is an important part of minimising your labour budget and maximising profits.
For example, fast food restaurants usually experience a dinner rush, while downtown retail stores receive an influx of shoppers during lunch and a second wind after five. If you run a bar and don’t have enough staff to pour pints or shake cocktails on a busy Saturday night, your patrons will leave and you’ll lose profits. Similarly, if you schedule too many employees for a slow Wednesday afternoon you’ll be slapped with wages that surpass profits.
This is where Ento steps up. Used by a host of market leaders, the purpose-built workforce management software empowers you with visibility over your most valuable resources – your people and your data. With live reports and dashboards, you can strategically allocate your workforce by factoring in sales, trends, footfall and other stats.
Capture precise time and attendance
Time theft can plague any business, at any time. Whether it’s malicious or unintentional, chances are you’re regularly overpaying your employees. This means it’s essential to have a savvy time and attendance system in place. Make it easy for your staff by empowering them with smart technology that allows them to clock in and out instantaneously. Syncing your time and attendance data with your payroll provider will also help to minimise errors, and ensure you’re not overshooting your budget. What if your staff don’t work from a tangible HQ? Don’t sweat it. With Ento, you can take advantage of GPS time clocks that allow your team to clock in and out using their smart phone.
Welcoming new employees to the team is exciting, but it can also put a big dent in your labour budget. In fact, the national average cost per hire in the States is around $4129USD, depending on the industry. This is why it’s so important to support new hires with a strategic onboarding experience that gets them up to speed, ASAP.
Introduce cross training
Nope, we’re not talking about the Greg Glassman fitness phenomenon. We’re talking about training an employee in more than one role or skill, and building them up as a valuable member of the team. In some contexts, cross training staff can help boost productivity, and minimise labour costs. This increases their value, offers your more flexibility when it comes to scheduling, and allows you to complete more tasks with fewer workers.
Stay on top of complex pay rules
How do you currently manage award and pay rules? Pay rules can get complicated, especially for national enterprises fronted by thousands of employees. In order to minimise mix ups it’s essential to arm yourself with an in-depth understanding of complex awards and agreements. Ideally, you should be able to instantly recalculate any changes or adjustments. The end goal is to make sure all staff are receiving the right benefits, but at the same time avoid overpaying.
From small family run businesses to state-wide franchises and nationally run enterprises, labour budgets can be uncompromisingly tight. But the good news is, the solution for managing labour costs is relatively simple – better management.
It all boils down to smart scheduling, which means that you can maximise productivity, minimise your labour costs and keep your budget on point with the right approach.