Nearly half of HR leaders in medium and small businesses doubt that what they do impacts the bottom line. Learn how HR can help predict and manage an organization’s most important expense.
For most organizations big and small, labor costs are the biggest expense. Labor costs generally fall under two categories—the cost of labor which is dedicated to making things (that is, the stuff your company sells, be it a product or service) and the cost of labor dedicated to supporting roles (otherwise known as overhead). Historically, HR was removed from labor costs, but in today’s rapidly changing and complex business environment, the C-suite and finance leaders turn to HR’s expertise to help them figure out how to track and optimize labor costs.
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Labor Costs, Overtime, Turnover and More
Labor costs, especially if you’re not tracking them, have a way of getting out of control. Employee wage growth (or lack thereof), overtime, employee turnover and time theft are just a few of the ways things can go off the rails. Yet, according to a recent Paycor survey, HR professionals only spend 15% of their time managing labor costs. So, why isn’t it more of a priority?
There’s a number of ways HR can help reduce labor costs. Overtime expenses tend to wreck the most havoc on a budget, which is why it’s important to figure out the culprit and create a plan to deal with it. Try hiring temporary workers during peak times of productivity or streamline the overall process. You can curb time theft and buddy punching with technology and modern time and attendance software/products. In the restaurant industry, margins are already thin but optimizing schedules can help reduce labor costs.
And that’s just a start. HR can use workforce analytics to obtain key information about talent and how it influences current and future business strategy. As an HR pro, you have the power to predict what’s going to happen—it’s all in the data.