Top 3 Reasons Your Labor Costs Are Too High
The article identifies three main reasons for high labor costs—paying employees for unworked time due to time theft, unnecessary overtime expenses, and implies a third reason not fully shown—while recommending solutions like biometric time clocks with WorkforceHub integration, GPS tracking for mobile workers, and strategic overtime management to reduce these costs effectively.
While labor expenses are not something that business owners can completely eliminate, there are always ways to reduce them. A reduction in labor costs provides an immediate monetary benefit, making the ROI easy to measure. Since a variety of factors contribute to labor costs, it's often not difficult to find areas for improvement. Here are three reasons your labor costs may be too high:
Paying Employees For Time Not Worked
Employee time theft is a widespread issue. This costly form of employee theft can be essentially eliminated by implementing a biometric time clock integrated with an automated Workforce Management system like WorkforceHub.
Biometric clocks use physical attributes—such as fingerprints, palms, irises, or facial recognition—to authenticate employee punches. This makes buddy clocking virtually impossible. Before implementing a biometric employee time clock, consult your state's employee privacy laws, as some states prohibit requiring fingerprints for punch-in, even if the information is not retained. Check your state laws and seek guidance on legal options for your business and company culture.
Scheduling enforcement tools in WorkforceHub address issues like early clock-in, late clock-out, and failure to punch out for unpaid breaks.
For mobile personnel, time theft can be easier. WorkforceHub offers mobile capability with GPS tracking to verify the location of punch-ins and punch-outs. For example, if an employee runs deliveries, their manager can see the location of the punch-in and compare it to the first delivery location.
Unnecessary Overtime
Without a well-defined plan for managing overtime, it can account for a larger-than-necessary percentage of labor expenses. Reducing overtime has a greater impact than reducing regular-pay hours due to the time-and-a-half compensation for overtime.
Many businesses have maintained productivity and client satisfaction while minimizing overtime. Here are some ways to reduce overtime:
- Use temporary employees during peak production periods to save on benefits.
- Cross-train employees so part-time staff can fill in when full-time employees need to clock out to avoid overtime.
- Ensure workers aren't clocking in early, clocking out late, or buddy clocking to accumulate overtime hours.
- Analyze which departments accumulate the most overtime and how workforce distribution affects this. Automatic time tracking and scheduling software can provide these insights and reveal inefficiencies in human capital management.
WorkforceHub offers tools to help manage overtime, such as auto-alerts (via text or email) to notify managers when an employee is nearing overtime hours.
High Admin Costs Due to Inefficient Processes
If HR and payroll processes haven't been evaluated recently, there's likely room for improvement. Look for manual data entry and paper-based processes like time cards or handwritten reports. If an automated system can capture this data, manual entry is unnecessary. Relying on spreadsheet-only scheduling applications is outdated.
TimeSimplicity from Swipeclock is more than a spreadsheet app—it's a Workforce Management solution that helps optimize employees, saving money and easing the workload for supervisors and HR teams. This can also reduce the need to hire additional admin staff as the organization grows.
Swipeclock offers WorkforceHub, a unified Human Resources portal that helps optimize the performance of managers, employees, and the organization. WorkforceHub includes TimeWorksPlus, TimeSimplicity, TimeWorks Mobile, and ApplicantStack, with features for recruitment, onboarding, benefits enrollment, performance reviews, and employee engagement. It's designed for busy employers who need to reduce cost-per-hire, streamline scheduling, automate time tracking, maintain regulatory compliance, and decrease labor costs.
Contact Swipeclock to request a demo or learn more about becoming a reseller.
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