According to a Paycor survey, HR professionals only spend 15% of their time managing labor costs. That is a worrying fact because labor accounts for as much as 70% of total business costs.
The key to determining true labor costs is effectively tracking staff labor hours. Labor costs include employee wages, benefits, payroll, and other related taxes. The famous quote goes “If you can’t measure it, you can’t manage it”. That’s why it’s important to have a system in place to keep an eye on the actual labor costs.
The more granular you get with data, the more efficient and profitable your business can be. Knowing your true job costs enables you to spot issues and take corrective action. Effective profitability measuring for every business requires a thorough understanding of your true people costs. This needs to be accompanied by labor costs allocated correctly to each job and task.
Do you want to determine true job costs, and feel more confident in estimates? Our article will give you 6 tips that will have a positive impact on your bottom line. They will teach you how to keep track of labor time and costs.
Forecast and optimize labor costs while scheduling to ensure that you stay on budget. Compiling a complete budget will allow you to measure progress. It will also ensure more accurate forecasting of labor requirements and associated costs.
Analyzing the data
Once you start tracking labor time the next step is analyzing your labor data and optimizing your spending. Track labor costs to find a reasonable explanation for the difference that occurred between the recorded total time related to your payroll and the time logged in production.
You can also find out if you capture all of your direct and indirect labor costs. Get labor reports for periods ranging from one day to the whole year. Quickly spot inconsistencies and trends to make smart scheduling decisions for your business. From the time card report to the current payroll data, you should have all the information you need to make better decisions.
Play to your employee’s strengths
Recognizing the talents of your employees while analyzing your labor cost will allow you to reward them. This will optimize your labor costs. Use information about employees’ strengths and weaknesses to satisfy their wants and needs.
Break Down Jobs into Smaller Parts
You should have an idea of how much time individual aspects of projects are costing you. It’s essential to break down larger jobs into their parts. This is true from the standpoint of providing accurate estimates. Additionally, it helps with identifying inefficiencies.
This method will let you understand the variety of labor tasks required. It will record and allocate time accordingly. You’ll be better able to find glitches in the process. moreover, you’ll be able to see which areas are costing you the most. Providing more accurate future estimates is another benefit.
Get a Free Time Tracking Software that Tracks Your Labor Costs
Managing employee schedules doesn’t have to take up a tremendous amount of your time. Finding a time management software provides easy solutions to enter labor input data. These solutions usually feature customizable fields and templates. Features like this ensure flexible entry of the required data, suited to your needs. Some businesses have many field employees. In this case, mobile solutions are the best option.
A mobile tracker eliminates the need to travel to a time clock or computer to log in and out. It also reduces systemic errors. You can use free tracking software like Time Analytics to save yourself time. Additionally, you’ll get greater insight into your labor costs.
You will also know the time utilization rate per employee at all times. Finally, a tracker helps you discover and reduce unproductive behavior based on tracking billable hours and costs.
With these tips in hand, you will be better equipped to adjust your workforce to your workload. You will be able to effectively monitor this substantial cost. Hence, you won’t pay the employees you do not need. Finally, you will not overload employees by giving them too many projects.
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