7 (of the Most Important) Ways to Control Labour Costs…

By David Hunter of the Bowden Group

Straight from the horse’s mouth … but the order of importance and significance will vary according to your particular business.

The most important ways to control Labour costs would be … in Summary:

1. Match more closely the number of staff you put on duty with the Sales that you are expecting to do at that time.

Use your business’s trading history … previous years’ business numbers, to predict what your sales are hopefully going to be in any one week, and then put onto the Rota the number of staff at any one time that you think are right for that predicted level of business.

Break it down to the number of staff on duty (ie being paid) on an hour-by-hour basis … and try very hard not to have on duty any more than you need at any one time.

This will certainly mean employing more people working less hours each …. But that will pay dividends as you have more to call on when you need extra help.

2. Think not just about Wages cost as a % of Sales … but also think about Wages cost in Money terms … how much £££ money is it costing you.

And don’t forget that Employer’s N.I. and Employers’ Pension Costs are all part of that overall cost.

Lots of operators have the idea that it is JUST all about Wages % … ie what your total wags cost represents as a % of your Total Nett Sales (nett of VAT … ie after the VAT has been take out). It is NOT just about that.

3. Train your staff on an ongoing basis …

Despite belief to the contrary, staff do like being trained, as it gives them the ability to do a better job, which usually means higher earnings … AND it enables them to aspire to an ever better job next time they make a change … whether still with you, or with a new employer.

4. Think laterally about how much to pay people.

Incentives and commissions always work well in Motivating staff.

The rate per hour, or the salary that you pay a person depends on so many things.

Yes there is the Minimum Wage, and the Living Wage, as a guide, but it will always be worth paying a bit more if staff are not that easy to replace.

It will almost always be better to pay someone what they are worth, rather than what you can get away with.

This is especially true with the younger staff. If they are doing the same job, and as good a job, as a person who is over 18 … pay them as it theyWERE over 18 … because … if YOU don’t, someone else WILL pay them more … and you will lose them.

5. Look after your staff … it is better to retain the ones that you have spent time and money training than needing to replace them too often. Be a good employer … be nice to work for … and CARE about your staff. The best employer in Hospitality that I know actually puts his staff before even himself.

When the Covid 19 Virus hit hard, both he and his wife took the biggest pay cuts, to show solidarity with staff. The kind of Loyalty that that behaviour earns just cannot be bought anywhere.

6. Induct your new staff fully … don’t just throw them in the deep end.
How many times do we see it … a waiting person explaining to us that this is their first shift ever and that they don’t know what they are doing yet.

Try getting them to work WITH a more experienced team member who can ‘’show them the ropes’’ … and who can answer the many inevitable questions that will arise in their first week or two.

7. Try to stick to a Wages Budget … which means doing up a full Budget of course.

So many people think they can run a business without a Budget,

Yes, you CAN … but it IS foolhardy to try and do that.

Firstly … it is incredibly helpful to know what Sales you are expecting to take, and how much you might spend … and what the‘’bottom line’’might look like .Train your staff on an ongoing basis too … make that a very part of the culture of the organisation.

But secondly and even more importantly … for a Bank or an Investor in that business, their confidence in you will soar, if they can see that you are ‘’on the ball’’ and have done your homework in advance.

If you want to talk through any aspects of this article or discuss how it affects you and your business, just call me:

David Hunter of The Bowden Group, on 07831 407984.

You can call me any time, but preferably 09.00 am – 09.00 pm on any day, weekends included.

Or just send me a text message asking me to call you.