The fact is that when businesses strive to increase revenue, the cost of labor continues to rise and become one of the most substantial expense. As a result, take control of labour expense can be on one of the best way to increase the profit over time. Here are some tips that companies can use to lower their labour cost.
1. Optimize work schedule
Let’s face it, some costs associated with labor are due to scheduling complications. Have you seen that some of your employees starring at the laptop without working spirit in every morning. Or you are arranging too many employees during hours that don’t generate expected sales? Or you are scheduling enough staff to support the stores in customer traffic, then they have to work overtime? As a result, those hurt your business by killing your profit margins, and having negative impacts on the customer experience. However, it might not necessarily be your employees’ fault.
What should you do to solve this issue?
Take a hard look at exactly when you have people scheduled to work and why to evaluate labor schedules historically and find opportunities for increased efficiency.
Have a vision into the scheduling process to ensure that they’re functioning optimally and individually and at the department.
Use employee scheduling software that is provided by your HR services partner to forecast the right amount of labor needed down to the minute.
2. Make better hiring choice and retaining talents
It costs far more to lose an employee than to hire and retain great employees as there are many costs related to employee turnover: recruiting expenses, time, opportunity cost, replacement cost, working overtime to maintain goals,… Those hurt your net income.
So at the first step, you must do a better job in hiring employees which has a direct effect on labor costs. Set a high standard, provide a clear job description and pass on candidates who have a willingness to learn and fit in your company’s culture.
Take the time and money to invest in keeping your employees happy. You can conduct monthly survey to find out how much your staff are satisfied with your policies and draw some solution to change the position.
3. Cross-train employees
Cross-train employees mean paying one employee to do a wider range of tasks which seems to be the best practice to grow your employees’ skill set as well as get more done with fewer people per shift. Thus, it saves on labour cost.
The insteresting thing of this idea is that rather than having to pay for an outside trainer to coach your people, it could give benefit of empowering your employees to train the rest of your staff on their skills. That also leads to the collaboration and the feeling of respect which makes staff see the opportunities to excel in any fields in your organization.
Are there any other ways can you think of to control and reduce labor costs? Let Faro know by leaving comments on this post. Faro ensures that we are the best HR collaborator of your company.