Watching the news, listening to other business professionals talk, or reading your favorite website, you'll encounter one troubling word over and over again — inflation. The cost of doing business is rising. A Bloomberg survey of economists tells us that the average annual Consumer Price Index (CPI) is forecast to rise 5.1% in 2022, after increasing at a 4.7% pace last year.
As we see inflation beginning to surge in many areas of our lives, it's a natural reaction to try and cut costs elsewhere. In your organization, you can't control the costs of supplies, but you most certainly can get a better grip on labor costs.
Common Labor Costs and Budget Issues
The cost of labor is the sum of all wages paid to employees as well as the cost of employee benefits and payroll taxes paid by an employer. The money paid out to employees for their services is the biggest expense of any business. Labor costs can account for as much as 70% of total spending! Clearly, if you're going to cut down on excess spending around your organization, labor is a great place to start.
You may be making a few common mistakes that are leading you down a very expensive path. These include:
- Allowing too much overtime
- Not having an accurate picture of what you’re paying each employee
- Upsetting your employees to the point of resignation
- Assuming all employees cost your company the same in labor
- Operating with more employees on the clock than you actually need
How our Employee Management System Software can Help
What you need to do is control your labor costs. While the phrase “controlling labor cost” may lead you to imagine slashing wages and firing employees, these drastic actions probably are not necessary. Instead, make employee management a focus. It is time you look into how to manage costs, rather than cut them.
Employee management is essential to your short- and long-term success. We offer a number of employee management system and solutions to do so. Automated scheduling alone can be a huge game changer. Our solutions add speed and accuracy, and remove stress from your employee scheduling process.
Here are three major ways that SubItUp's employee management system can help you keep labor costs down. It will:
#1. Reduce Employees Being Paid Overtime
No matter your industry, time is money. It can feel impossible to stick to your budget if you have employees going into overtime and getting paid time and a half. If this extra payroll isn't approved or planned for, it can be a challenge to find the funds to cover it.
What's even more frustrating is that you may not have needed an employee to work overtime in the first place; it's the result of a simple scheduling error. One person is working 50 hours a week and another is working 30. If you had an easy way to view this, you could have made adjustments that ensured they both worked the proper 40 hours. One way we make this possible is with our Global Max Hours Settings. You can use this setting to prevent employees from picking up available shifts that would put them over their position or global max hour settings( over the maximum amount of hours they are allowed to work). This ensures your employees do not get scheduled for more than their daily or weekly hours across all the positions they work in.
#2. Understand Your True Labor Costs
Remember, labor costs are more than what you pay each employee in their paycheck. It's impossible to get control over your labor costs without an accurate picture of what you’re truly paying each employee, above and beyond their salary or hourly rate. What you're looking for is your "labor burden rate."
More than just what they're paid in their paycheck, this rate also tells you any extra compensation associated with this employee — such as overtime and bonuses, payroll taxes, health insurances, 401(k) match, and other employer contributions. A more seasoned team member may be costing your company extra when they're on a shift, more than someone who is brand new — even if their pay rate is technically the same.
It is quite possible that knowing the exact cost of each employee can help you detect, investigate, and correct areas of overspending you didn't realize were there. Creating your schedule in an Excel spreadsheet file isn't going to give you access to the numbers you need to make informed decisions.
Unite your organization with the power of SubItUp and our team management software! SubItUp centralizes critical worker information to make access to it simple. Unlike a simple spreadsheet, seeing your employees' availability, the hours they've worked, and their wages is all a click away when you're using our software.
#3. Cut Down on New Hiring Costs
It's much more expensive to hire, onboard, and ramp up a new employee than it is to keep your current team in place. According to Investopedia, small companies spend, on average, more than $1,500 on training per employee. Each time an employee quits, think of that as adding $1,500 to your budget for their replacement.
Reducing the number of team members leaving means you don't need to hire and train as often. You have more control over this than you may imagine, and so does your schedule. A happy employee is an employee who continues to work for your company for years to come.
SubItUp makes your team members happier! An obvious way we do this is by ensuring they're working a schedule they're prepared for. Just as making last minute changes to shifts are frustrating for you, these are even harder for the team members expected to work them. When you offer your employees Social Scheduling™, they can communicate directly with one another to ensure the shifts are covered and everyone is happy when they are working. Social Scheduling™ lets employees solve the problem instead of passing it on to you. That way, your employees won't get upset if you don't happen to build their ideal schedule
We'll Find the Right Solution for You
SubItUp offers a variety of different solutions, depending on what your exact problems are. Our employee management system makes it possible for you to manage overtime settings, reconcile time cards, and add precision settings to reports. Plus, it lets you analyze labor forecast and payroll costs easily. We offer 300 different methods of scheduling to ensure you find the solution that is just right for your unique needs.
While the cost of everything from the gas in the company's fleet of trucks to the chicken in the cafeteria is rising, your labor costs don't have to too. We can work with you to keep your labor costs low, steady, and predictable. Are you ready to learn more about what SubItUp can do for you? Schedule a consultation, and let's talk about your possible solutions.
