Why Are My Labor Costs So High?

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While labor expenses are not something that employers can completely eliminate, we have yet to encounter a business that cannot find ways to reduce them. A reduction in labor costs provides an immediate monetary benefit, so it’s easy to measure the ROI. One reason that it’s not difficult to reduce labor costs is because a variety of factors contribute to them. This article examines three reasons your labor costs are too high.

Paying Employees For Time Not Worked

Study after study reveals how common this type of employee theft actually is. This costly form of employee theft can be practically eliminated by implementing a biometric time clock integrated with an automated Workforce Management system like Workforce Management Suite.

There are several types of biometric clocks available for business owners. They use a variety of physical attributes to authenticate a punch: a fingerprint, palm, iris, or the whole face. When a non-transferable and non-duplicatable body part is required to confirm the identity of each employee, it makes buddy clocking virtually impossible. Call MegaPay USA for more information on biometric clocks including prices.

We recommend that you perform due diligence before incorporating a biometric employee time clock by consulting the employee privacy laws in your state. Some states ban employers from requiring a fingerprint for punch in, even if that information is not retained in the system. Check your state laws, and then call MegaPay USA for information on the clocks that are legal for employers in your state. We can also guide you on the best biometric clocks for your particular business and work environment.

The scheduling enforcement tools in Workforce Management Suite eliminate the problem of early clock in, late clock out, and failure to punch out for unpaid breaks.

Mobile workers can get away with time theft easier than onsite staff members. Workforce Management Suite has mobile capability with GPS tracking to verify exactly where an employee is when punching in or out. If Dave runs deliveries for your business, he can’t punch into an online portal from home twenty minutes before he actually begins working. His manager would be able to see the location of the punch in and compare it to the location of the first delivery.

Unnecessary Overtime

If you don’t have a well-defined plan for managing overtime, it might account for a larger than necessary percentage of your labor expenses. By making a few changes, you can lower the amount of overtime your staff works. This has a greater impact than reducing regular-pay employee hours because of the time-and-a-half compensation of overtime hours.

You might be worried that production or customer service will suffer. Actually, many SMBs have kept their productivity stable and clients satisfied while reducing the amount of overtime their associates work. Here are some ways you can reduce overtime:

  • Use temps during peak production periods (you will save on benefits, as well).
  • Cross-train employees so that you can utilize part-time employees whenever you need to have a full-time employee clock out to avoid overtime.
  • Make sure your staff members aren’t clocking in early, clocking out late, or buddy clocking to accumulate enough hours to enter the overtime range.
  • Look at the big picture. Which departments rack up the most overtime? How is the entire workforce distributed among departments? Automatic time tracking and scheduling software can make it easy to see these types of things at a glance. You may be surprised at how inefficiently you are managing your workforce.

Workforce Management Suite has easy tools to help you limit overtime. By setting auto-alerts (either text or email) supervisors can receive a heads-up when an employee is on the verge of entering time-and-a-half hours.

High Admin Costs Due to Inefficient Processes

If you haven’t analyzed your HR and payroll processes for a while, it is almost a certainty that there is room for improvement in this area of your business. Look for manual data entry and anything that’s done on paper such as time cards or handwritten reports. If an automated system is capturing the data in these documents, there is no need for a human to be filling anything out. Creating schedules with an application that only does spreadsheets was cutting edge thirty years ago, but it’s pretty much archaic now.

TimeSimplicity from MegaPay USA is so much more than just a spreadsheet app. It’s a Workforce Management solution that helps you optimize your employees; just as you would optimize manufacturing or distribution. This saves money and makes life much easier for your managers and HR personnel. Another plus: you may not need to hire more admin staff as your organization grows.

Contact MegaPay USA for information regarding WorkforceHUB™UPGRADE TODAY

MegaPay USA offers WorkforceHUB, the Human Resources Management System (HRMS) that makes it easy to optimize the performance of your supervisors, employees, and company workflows.

WorkforceHUB includes TimeWorksPlus, TimeSimplicity, TimeWorks Mobile, and ApplicantStack. We’ve just added applicant tracking, onboarding, benefits enrollment, performance reviews, and employee engagement! WorkforceHUB was designed for busy employers like you who need to reduce cost-per-hire, streamline scheduling, automate time tracking, maintain regulatory compliance, and decrease labor costs.

How much can you save? Check our MegaPay USA ROI Calculator.

We can get you up and running with WorkforceHUB immediately. Contact us today to book a demo.

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