Top 3 Ways to Control Labor Costs
Control Labor Cost
One of the largest costs of any company is the salary or wages that its employees are entitled to and they can be challenging to control as well.
Typically, labor costs are calculated via the following formula
Payroll / Total Sales = labor cost percentage
In most restaurants, a labor percentage lower than 20% is considered ideal. However, paying employees less than they worked for when costs begin to rise will result in labor law violations or hefty fines that can result in bankruptcy. You can increase productivity and improve the way you schedule work hours, but you can make those tasks even easier if you know how you can avoid overstepping your authority or break the law.
In order to schedule as precisely as possible, create a budget that can help you maintain necessary costs such as labor and yearly sales. Use the budget you prepared to cover the labor expenses and also create a work schedule for your staff that relies on it. The following are 3 ways you can do this accurately
Break Down the Yearly Budget
By breaking down the annual budget monthly, you can divide your schedule into weekly budgets. This can aid you in determining labor costs owed to each employee and ensure accurate staff scheduling . In other words, this method will ensure you do not overpay undeserving employees, underpay deserving ones and calculate overtime pay accurately as well.
Keep an Eye On Shift Times
In order to ensure employees adhere to the schedule you have planned out for them, check whether they are timing in and out accordingly each day. Doing this manually can result in errors but with an attendance system you can keep an eye on their clock punches . You can also alter and monitor changes and information on such systems with ease.
Discuss Schedule Change Requests in Advance
If you are a restaurant manager, then you probably have part timers on the payroll as well as fixed wage workers who work overtime. Switching shift timings for them can be a challenge if you rely on manual methods. When staff start to working more hours that your set budget can allow and break the law as a result, it can result in costly labor law violations. This can be avoided if you are aware of any requested changes in set shift schedules and a more active control over labor costs .
The above mentioned tips can aid you in violating labor laws and control labor costs but to make the process easier, download time keeper software such as Zip Clocks. This tool allows managers and supervisors to control and maintain employee compliance with set work schedules via up-to-date time sheets and a shift management screen that managers can use to maintain shift schedules in accordance with set budgets.