3 Tips to Reduce Labor Costs and Optimize Business Performance

Jun 27, 2018

Growth in employee compensation is expected to accelerate for the balance of 2018 and through 2019. A thinning workforce is driving business owners to raise wages to attract and keep good people. But with increasing labor costs, growing profit margins becomes challenging. The industry struggles to increase its profit and lower labor costs at the same time. Employers may find some cost savings by reducing overall headcount, although this can impact the business in other ways, for example, diminishing the brand’s reputation when the quality of guest service is inconsistent.

Today, the focus lies in optimizing labor costs with these simple, yet effective tips:

  1. Building an Effective Labor Scheduling Framework- A well-structured scheduling framework prevents under staffing or over staffing, and creates the ideal balance with service quality. An integrated, web-based scheduling system allows managers to create schedules according to an employee’s specific skills. Using prior periods sales trends, managers can forecast labor needs more accurately, considering historical performance when creating schedules. An effective labor scheduling tool ensures guest needs will be met without overextending labor costs.
  2. Minimizing Time-clock Misuse- It’s important to measure the number of scheduled staff against total sales to maintain the ideal balance of labor, and to maximize operational efficiency. A sometimes overlooked factor that contributes to poor staffing is inconsistency between the actual and scheduled hours. Tracking the abuse of the time clock, such as early clock-ins and late clock-outs, will keep labor costs from skyrocketing and causing an imbalance in margins. Leveraging integrated POS with labor management tools will help reduce early clock-in losses by letting employees clock-in only during their scheduled shifts Actively managing fraudulent hours helps managers keep the business profitable.
  3. Leveraging Intelligent Technologies- Eliminating extra costs like early clock ins, clocking under the wrong job codes, absenteeism or over staffing all add up to help keep costs under control. Implementing an intelligent scheduling system that validates employee job codes prevents erroneous clock-ins. It also limits the uncertainty of absenteeism with flexibility and support for shift-swapping, and creates reports for overtime expenses. An intelligent solution allows managers to adjust schedules well in advance. Balancing the demand with the available staff and creating ideal schedules in advance helps manage labor costs and improves overall business performance.

November 02, 2023

2024 Hospitality Industry Conferences You Shouldn't Miss

The year 2024 promises a vibrant tapestry of innovation, knowledge sharing, and networking opportun .....