How to save on labour costs: grab that low-hanging fruitJune 1, 2016
So many HR managers concentrate on the long game, missing serious savings that are right in front of us. We think that any return on investment — whether that’s overhauling processes or acquiring new software — will take at least five years to pay off.
When HR managers focus on the long game, they’re thinking about changes that typically require:
- Deep cultural change: shifting entrenched attitudes and habits across your workforce, often battling inertia all the way
- Major investment: hiring new teams, or making a massive capital outlay.
Now, the long game could be 100% worth pursuing. But there are quick wins you can go after at the same time.
What if we told you that there are changes you can make to your workforce where the pay-off is measured in months not years?
At easyEMPLOYER, we’ve seen clients achieve immediate savings through a simple four-step process.
1. Cost rosters accurately
Visibility is the first step to controlling labour costs. How much do you expect to spend? With easyEMPLOYER, you can see exact labour costs as you are building rosters. Senior management can see projected labour costs for any roster period.
2. Maintain accountability
Once you know what you’re projected to spend, you can hold your people accountable. Track whether line managers are staying within staffing budgets. Or track their performance against labour-related KPIs, including labour as a percentage of sales.
3. Track time accurately
Massive cost blow outs are hard to miss. But slow-leaks can pass unnoticed for years. Time creep is one of these slow-leaks: staff work slightly less than the hours they record. That’s why automatic time-capture technology is an essential part of the overall solution.
4. Check actual costs
Now that you know what you expected to spend, use the data to determine actual costs. Drill down to business units or locations, to see how each team is performing in real time. With this data, you can be proactive in managing labour costs.
These savings can be achieved across sectors, from pharmacies to community services to child care: wherever you have a mix of casual and permanent employees, there’s opportunities to make serious savings.
How does this play out?
Here’s just one example from an easyEMPLOYER client. One pharmacy group (with 18 locations and 300 staff) saved 12.5% of their annual labour costs ( approximately $1.5 million) in the first 12 months after rolling out easyEMPLOYER. They achieved this by implementing the four-step process outlined above. What was critical to achieving that success was getting all site managers on board.
There are major savings to be made, starting now. What are you waiting for?
Get in touch with us to schedule a free workforce management health check