The Biggest Cost of Doing Business: A Closer Look at Labor Costs
company-employees

The Biggest Cost of Doing Business: A Closer Look at Labor Costs

HR Co-owns Labor Costs

As any company leader knows, the biggest cost of doing business is often labor. Labor costs, which can account for as much as 70% of total business costs, include employee wages, benefits, payroll or other related taxes. Yet, according to a Paycor survey, HR professionals only spend 15% of their time managing labor costs. Attracting top talent, engaging new employees and developing them over the course of their career are always top of mind for HR professionals, but herein lies a critical opportunity for HR to step out of its comfort zone and contribute much-needed value to an area typically owned by Finance.

The cost of employee benefits, which can account for up to 30 percent of overall labor costs, are a significant expense as well. According to Mercer’s 2017 survey of employer-sponsored health plans, the average increase over the past five years for large employer-sponsored health plans has hovered around 3 percent, but in 2018, costs were expected to increase 4.3 percent, the largest increase since 2011.

Operating with Fewer Resources and Smaller Budgets

In the face of rising costs, it’s understandable that companies are looking to reduce their labor spending and total benefits costs. In fact, SHRM found that 46 percent of employers are taking steps to reduce the cost of medical plans in 2018 by offering lower-cost, high-deductive plans. Many organizations are feeling the pressure to do even more with less—fewer employees, fewer resources and smaller budgets. So, what can you do to confront the labor cost issue head-on and find solutions?

labor-cost-reporting

Gain better visibility into payroll costs

As the saying goes, “Know your enemy.” Understanding the root of the problem is absolutely necessary to finding a solution. Having an accurate picture of your labor costs allows you to identify trends and pinpoint the issues. Start by asking questions like: Are we overspending on labor? Are we underutilizing our workforce? Are we properly managing overtime? If your overtime costs have been unusually high lately, uncovering the root cause will depend on having accurate payroll data that is easily accessible. From there, you can identify trends and insights into when the most overtime hours were being logged, which departments or employees were working overtime and whether a similar peak occurred in the past. Armed with the right data, you will be able to create a strategy to correct the problem.

In addition to solving current issues, having access to labor information allows you to plan for the future and help your organization make more informed decisions. When you have a clear understanding of employee compensation and benefits costs, you can plan better for annual wage increases and additional headcount as your company grows.

Answers to Your C-Suite’s Most Pressing Questions on Employee Labor Data

The C-level wants to uncover gaps. Who’s at risk for resigning? Which locations are experiencing the most turnover? With Paycor Analytics, we can help you answer the right questions about your workforce by transforming complex data into clear, direct answers.

labor-cost-analyis

Labor costs are rising, counteract with workplace efficiencies

Once you have a solid understanding of your current labor costs and trends, you’ll probably be looking to reduce them. Here are a few ways to increase overall efficiency and make a positive impact on the bottom line:

  • Implement a time and attendance solution to ensure employees are clocking in and out correctly, reducing time theft, properly managing overtime expenses and mitigating compliance risk.
  • Select a unified solution for HR, payroll and timekeeping to increase process efficiency and guarantee accurate and complete labor data.
  • Find the right HR solution to streamline administrative processes and free up time for value-added tasks, helping ensure that labor is worth the cost.
  • Automate benefits administration so you can help guide employees through benefits selections and identify the packages and plans most attractive to your workforce. Armed with this data will help ensure that you’re not wasting resources and money on plans employees are not utilizing.

Labor costs are rising, and executives are on the lookout for areas where they can reduce spending. The right technology can give HR the visibility into key labor metrics and help you maximize efficiency, enabling your business to achieve its goals. Plus, by taking on greater responsibility in helping to manage and forecast labor costs and collaborating with Finance leaders will help you be seen as a strategic leader within the organization.

About Paycor

More than 30,000 medium-sized and small businesses trust Paycor to help them manage their most valuable asset – their people. Paycor is known for delivering modern, intuitive recruiting, reporting & analytics, HR and payroll software, but what distinguishes us is our singular focus on helping business leaders, entrepreneurs and HR professionals make a real difference in their organizations. Contact our team today to learn how we can help you make an impact in your organization.

Contact Our Team Today

Sources: Bureau of Labor Statistics, Reuters, National Business Group on Health, Deloitte

More to Discover

Webinar: How Paycor Time can Solve your Attendance Management Challenges - (Paycor Customers Only) 3/18/20 @2pm ET

Webinar: How Paycor Time can Solve your Attendance Management Challenges - (Paycor Customers Only) 3/18/20 @2pm ET

For Paycor Customers OnlyTo meet the unique needs of our customers, our products are in a constant state of evolution. And one of our latest product enhancements is around Paycor Time. Register for this upcoming webinar to learn about new features and functionalities of: • Points & Incidents • Attendance • And more! Speaker: Lyle WeissingerWednesday, March 18, 2020 2pm ET

Webinar: Goodbye Reports. Hello Insights. Meet Paycor Analytics

Webinar: Goodbye Reports. Hello Insights. Meet Paycor Analytics

At Paycor, our goal is to empower HR Leaders with the latest technology advances, so they can focus on what really matters, their people. With Paycor Analytics, say goodbye to messy spreadsheets, time consuming data analysis or making assumptions without the data to back it up. Give us 30 minutes of your time and we’ll show how Paycor Analytics will change the way you answer important questions about your workforce.Speaker: Kelly Silverman and Kyle Baker

Banker

CFOs’ Biggest Challenges in 2020

CFOs’ Biggest Challenges in 2020

It’s never a bad time to look forward to changes that might have an impact on the business… especially financially. Many CFOs find that they’re faced with four primary areas of focus in 2020: People, money, data and technology, with some overlap among the four. Here we’ll briefly cover our predictions for the challenges heads of finance will likely face in the coming year. Challenge 1: Attracting and Retaining Talent Finding new ways to thrive despite a very tight labor market continues to plague businesses overall in 2020. But the finance department is discovering that it’s increasingly challenging to find people to build out their teams. Ten years ago, the three areas finance hires were judged on were accounting, auditing, and...

Webinar: How Paycor Can Take Blackbaud's Payroll 7 Clients To The Next Level

Webinar: How Paycor Can Take Blackbaud's Payroll 7 Clients To The Next Level

Blackbaud’s Payroll clients have been asking for a more robust payroll offering and we’re excited to announce a new partnership between Blackbaud and Paycor.An industry-leading HR and payroll provider with nearly 30 years of experience serving small to medium-sized businesses, Paycor will not only deliver more robust payroll functionality, but also a suite of products and services to help Blackbaud clients better serve their mission.Join us as Paycor Senior Vice President, Rick Chouteau, showcase why Paycor can be chosen to replace the Payroll 7 module, helping your organization improve operational efficiencies while reducing risk.In this webinar, we’ll share: • A comparison between Payroll 7 and Paycor’s Payroll platform • A review of...