How To Reduce Labour Costs

Labour costs are an inescapable part of owning a business. Whether you’re in the retail or hospitality industry, you’re always going to need a well-trained staff to help you keep the business running. 

While sparing no expense on your staff would certainly lead to a better reputation and customer experience, in reality, we must keep a level head and only take on the costs we can afford. If the business is underwater financially, there’s no pedigree of staff that could save it. 

With this in mind, this blog will be focused on how you can get the most out of your staff while reducing labour costs. Your bottom line will be sure to thank us. 

What are labour costs? 

In short, labour costs (or cost of labour) are the sum total of all your employees' wages, benefits, bonuses, and taxes. For many businesses, this will be one of the largest parts of their outgoing finances. Basically, the larger number of employees you have, the higher your costs will be. 

The two types of labour costs are direct and indirect labour. Direct labour cost is for employees directly employed by the business, whereas indirect labour costs are for contractors and maintenance workers that keep the business running. These costs, if not managed correctly, can eat into your profit margins.

Reducing labour costs

For many business owners, lowering costs associated with labour is high on their list of priorities. Unfortunately, this has led to the downfall of more than one entrepreneur who decided they would cut costs at the expense of their staff. 

Cutting the cost of labour and maintaining a good working relationship with your employees can be like walking a tightrope. If you choose to implement our tips, be sure to consult your staff first. Remember that they are selling you their labour and they’ll be more than happy to sell it to someone else should their positions become untenable. 

Streamline processes 

It’s a secret to everybody how most work in a retail or hospitality environment is busywork. By streamlining your processes, you free yourself and your staff of those thousand little jobs that eat up time like a termite in a rafter. 

Technology can be a huge help with this, especially if you employ the help of an electronic point of sale (EPOS or POS) system. These systems, like the Epos Now Complete Solution, come with a suite of features designed to automate the little jobs and make things easier for everyone. 

As part of their system, Epos Now offers a collection of leading applications in their App Store. This includes the staffing integration Workforce.com. Using smart data, it completely automates staff rotas and management. This means that your staff are exactly where they need to be and crucially, reducing labour costs.

Reduce staff turnover

There is a certain level of staff turnover that you will have to make peace with as a business owner. Sometimes your staff will leave for a million different reasons and there’s little you can do to stop it. This has a knock-on effect to your labour costs, as training a new staff member costs more than retaining an old one. 

To reduce turnover, you need to build a positive working environment that helps retain staff. Ways you can do this include:

• Building a strong onboarding system
• Offering growth and training opportunities
• Staff recognition and rewards
• Keeping staff in the loop
• Offering a genuinely competitive salary (this means offering an actual living wage rather than a government recommended one)

In addition to the tips above, be sure to sit down with your staff and ask them what they think could be improved. This will help them feel valued and heard in the business, in turn giving them a better sense of pride in what they do. 

Train your staff

A highly trained staff can make the difference between a failing business and a successful one. By keeping your staff motivated to keep improving, your costs will fall as there will be fewer mistakes and the business will run together much smoother. 

It may also be worth exploring cross-training your staff. This means that your staff would be trained to become jack-of-all-trades that could fulfil multiple roles in the business. Cross-trained staff can help carry the load of their fellow workers and boost productivity. It also means that you’re better prepared for unexpected absences. 

Reduce conflict

Unhappy staff breed an unhappy environment and an unhappy environment can be very expensive. To this end, it’s important that you tackle any fermenting discontent in your business before it becomes a problem further down the line. 

Make it clear to your employees that the company is there for them and this includes times where they may have an issue with the business or another staff member. Listen to their concerns, act on them, and put processes in place to alleviate future tension.

A POS system that helps keep costs down

Getting a handle of your outgoings and overheads is essential. Epos Now offers a range of specialised POS systems to do just that. Their systems streamline processes and make managing your staff a breeze. 

If you’re interested in finding out more about how Epos Now can help your business, get in touch with our expert team below.