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How to Save on Labor Costs at Your Business

Carol Wood

Carol Wood is the People Operations Director at Homebase, helping provide HR solutions for the over 100,000 businesses that use Homebase to make managing hourly work easier. Prior to Homebase, Carol helped businesses navigate the tricky waters of human resources, working with companies across the retail, food service, oil and gas, and healthcare industries through her roles as HR Director at Fuddruckers and Achilles Group, a Houston-based HR consulting firm.

Latest posts by Carol Wood (see all)

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Whether you are opening a new business or yours has been around awhile, one of your biggest expenses is almost certainly labor. Managing your labor costs is a key way to achieve profitability and make sure you stay in business. Here are ways to save on labor costs in your business.

Can software help automate work and save you money?

There is software out there for everything, and that includes helping keep labor costs down. Find software that can automate some of the busy work that you and your managers do on a daily basis. If, say, you pay an assistant manager $15 an hour, eliminating paperwork that takes them five hours a week would save you almost $4,000 a year.

How should you track your employees’ work time?

Having software that can help you manage your team’s clock is a great way to save on labor expenses.

For instance, with software, you can prevent early clock-ins and convert excess paid breaks into unpaid breaks to make sure you are paying your employees when they are actually scheduled and on the clock working. Although your savings depends on the number of employees your team has, it can really add up, if each employee is clocking in just a few minutes early every day. This is a huge way to save money—we find businesses save about $2,500 a year by preventing early clock-ins (sometimes referred to as “time theft,” though usually it’s just a mistake).

Implementing the use of a mobile time clocks for offsite events can save time as well by not requiring your employees to clock in at the main office and then drive to the work site, using their phone’s GPS.

Using software to help your managers schedule shifts will cut down the amount of time they are spending on a necessary but tedious task. You’ll also get the added benefit of easier compliance with labor laws, like the Fair Labor Standards Act.

Can you automate the onboarding and training process?

Systematizing your onboarding process will make sure your employees are trained correctly and up-to-date with any new policies and procedures. This will eliminate most of the time it takes another employee or even a manager to train a new hire.

Use training software—or even your computer’s camera and YouTube—to record your onboarding process and train your employees on the company’s expectations on what will be asked of them. This will provide consistency in the workplace and help you figure out which employees may need extra training in certain areas.

This is a great way to implement continued training, as well. Test your employees in certain areas regularly to make sure everyone is knowledgeable about products and services.

Most importantly, a better onboarding experience will usually translate into a more welcoming experience for new hires, and happy employees mean you can save time and money on recruiting staff. The labor market is tight, and finding replacements is a time-consuming process.

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Should you cross-train staff?

Cross-training your staff is not only a great way to make your employees feel more valuable to the business, but it will also allow you to place your employees where needed and avoid being short-handed.

Employees who are cross-trained can help with overseeing new employees as well and helping out when teaching. This will take these tasks off your plate so you can focus your efforts on building the business.

The more responsibilities you give your employees the more they will feel like they are contributing to the business, they will have a sense of fulfillment when coming to work. This will keep your employees happy and wanting to work hard for you.

Training your employees to do multiple roles will give you the opportunity to see how an employee does in certain roles. This enables employers to hire internally and put their team in the best position to succeed in their business.

You’ll also save on overtime. If you have only one or two people trained for a critical role, you’ll probably be forced to call in someone and potentially put them into overtime if the other person isn’t able to make it to their shift. Cross-training your staff means you have more options if something comes up.

How can technology help you cut down on labor costs?

Depending on the type of business you run, there are a lot of ways software can help automate tasks that would normally take an employee’s time. If you run a restaurant, investigate restaurant reservation and food delivery services, to see if they might be a good fit, rather than paying someone to answer the phones. Likewise, if you operate a hair salon or barber shop, you can use software to manage the appointment booking process.

Which cost more, new employees or happy employees?

Employees who are happy with their employers tend to stay longer. Keeping your employees happy may not seem like it will save on labor cost at first, but keep in mind how expensive it is—in both time and money—to hire a new employee.

The time it takes for interviewing, the cost to train, and the cost if they don’t work out can really add up. It may be worth the investment to do everything you can to keep your most productive employees happy.  

You can give out a bonus to employees who perform well, give them extra vacation days, or increase their benefits packages. Happier employees often lead to happier customers and repeat business. Your employees are your brand, and how you treat them ripples throughout your business.  

Carol Wood

Carol Wood is the People Operations Director at Homebase, helping provide HR solutions for the over 100,000 businesses that use Homebase to make managing hourly work easier. Prior to Homebase, Carol helped businesses navigate the tricky waters of human resources, working with companies across the retail, food service, oil and gas, and healthcare industries through her roles as HR Director at Fuddruckers and Achilles Group, a Houston-based HR consulting firm.

Latest posts by Carol Wood (see all)

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