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5 Ways to Better Manage Your Labor Costs

Labor costs generally account for the greatest percentage of money that’s being spent in order to run your business. That’s why managing labor costs is important when it comes to optimizing these costs and make sure that you are running a tight ship.

This is especially true for small business, where money is usually fairly tight and cutting costs is not only desirable, but often a priority.

Here are some tips for improving the way in which you pay your employees that will hopefully enable you to save money wherever and whenever possible.

Keep Your Schedules Error-Free

If your weekly work schedules are not precise and error-free, this is probably the number one reason that you are losing a lot of money when adding up your labor costs. Whether you are scheduling too many people to work a shift, or too little, both examples of poor scheduling habits can lead to losing money over an extended period of time.

Also, when you create accurate and foolproof schedules, you are better able to forecast your labor costs and plan your budget more effectively. Keeping Excel spreadsheets or pen-and-paper schedules is definitely no longer the best way to manage your staff. With an intuitive cloud-based scheduling tool (like ours) you are able to adjust shifts on-the-go when needed, and create precise and conflict-free schedules every time.

The importance of accurate scheduling cannot be overstated when it comes to managing labor costs.

Break Down Your Costs

Business analysis is an important part of running any company. And if it is not something that you are familiar with or excel in, it wouldn’t hurt to have someone in the company who is a “numbers person.”

Taking a look at your business vitals and keeping good records of your spending not only allows you to catch mistakes in what you’ve been doing and correct them, it also allows you to forecast your labor costs better.

Being able to pull up your labor data and analyze it to forecast potential labor costs gives you a great starting point for planning and optimizing your labor budget. It can show you where you have been spending frivolously, places you can make cuts, and ways you can get the most out of your workforce.

Take the time to crunch the numbers.

Optimize Your Staff

Over-staffing and under-staffing can empty your wallet quickly. If you have more people working a shift than you need, your ratio of labor costs to revenue is never going to be optimal. The same goes with not having enough staff scheduled.

For example, if you are running a bar and don’t have enough workers to cover a busy Saturday night, your service will be slow and patrons are eventually going to leave. And if you have too many employees working a slow Monday afternoon shift, you’ll be paying to have staff members stand around and doing nothing, basically.

Optimizing your staff ties in with the first two points of this article as a business process that leads to better labor management.

By first forecasting labor costs better according to business data you have acquired and then scheduling your staff accordingly, you are putting yourself in a better position to make more money.

Implement Cross-Training

While this might not be applicable for every business or position, it is certainly something that can be implemented in many. If you’re running a restaurant, why not train your hostesses to join the waiting staff when necessary? Why not make sure that your prep cooks are able to man the grill or skillet when needed?

If you have someone on your marketing team who is a blogger, why not give them training courses to learn how to manage your social media networks as well?

This is a great concept for both you and your staff. As an employer, you are now able to get more tasks done while employing fewer workers. And the employees receiving this training are learning something new and adding to their range of professional skills. It’s a win-win situation.

Start Using a Sprinter attendance management system

Many employers don’t quite understand how much money a time clock can save them until they start using one. Even if your scheduling is pristine, people coming in late or leaving their shifts early will definitely cost you money over time.

Improving punctuality really makes a difference, and having a way to monitor employee attendance habits keeps your team honest. It also provides a great way to perform employee reviews and audits. Having clear attendance data at your disposal allows you to plan better as well.

For example, if you notice that an employee is constantly coming in late on Wednesdays, reach out to them and ask them why this is happening. Perhaps it is something that can be fixed. If they have a problem coming in on time on Wednesdays, look to switch their shifts with another employee’s – someone who wouldn’t have a problem coming in on time that day.


The solution for managing your labor costs better is simple – better management. And guess what? Humanity can help you in just about every facet of this problem.

It helps you make better, more intuitive schedules, it allows you to track employee time and attendance data, and it enables you to contrast and compare your business data to forecast better budgets and schedules, ultimately helping you to save on labor costs across the board.