Managing labor costs is a critical aspect of running a successful business. Because these are often an organization’s largest expense, when labor expenses spiral out of control, it can seriously impact your budget and bottom line. Fortunately, there are powerful tools available today that can help you rein in labor costs and improve operational efficiency. Employee scheduling and time tracking software can help you enforce money-saving policies with practically zero effort and prove to be a huge time saver. Read on to understand some of the biggest labor budget busters businesses face and how software can help.
1. Out of control overtime
Do you find yourself constantly dealing with excessive overtime costs? Without proper monitoring and controls in place, overtime expenses can quickly get out of hand. To gain control of overtime costs, you must first have an easy view of employees and teams who are working the most overtime hours and assess why. Is it due to a temporary busy season or do you need to hire more people? It also helps to ensure managers have a clear view of scheduled overtime. Employee scheduling and time tracking software can be your ally in this battle.
How Software Helps: With time, attendance, and scheduling software, you can set overtime limits and track employee hours in real time. It enables you to see who is approaching their overtime threshold and take action accordingly. Additionally, you can require employees to get approval before accepting a shift that would result in overtime, ensuring better control over labor costs.
2. Time theft
Time theft, including practices like buddy punching (where employees clock in or out for each other), can cost your organization more than you may think. The American Payroll Association states that 75% of companies experience time theft through buddy punching, the most common form of time theft. One study by the Robert Half Institute found that companies lose up to 4.5 hours per week per employee in time theft. If your business uses a point of sale (POS) system for tracking employee time, it’s easy for employees to clock in and out for each other, busting your labor budget a few minutes at a time. And relying on paper timesheets or spreadsheets also leaves you at great risk of time theft, as employee time is easily mis-reported. While employees may not see much harm in adding a few extra minutes onto their timesheet, they don’t realize how much these add up on a greater scale.
How Software Helps: Invest in biometric time clocks integrated with your time tracking software. Biometric verification makes buddy punching nearly impossible, ensuring that you pay employees for the hours they actually work. And on the flipside, you are assured employees are paid everything they are owed.
3. Missed punches leading to overpayment
Missed clock-out punches can lead to large overpayments if not caught in time. Whether intentional or not, you need a solution that will alert you to errors and exceptions like these. Basic time tracking systems, like an old-school punch clock or POS system, make you particularly susceptible to these errors.
How Software Helps: Modern software solutions come equipped with alerts for missed punches and other exceptions. These alerts notify managers so they can address issues promptly, preventing costly overpayments.
4. Lack of clarity around company policies and labor laws
Are your company policies regarding work hours, shift rotations, overtime, and break times clear to your employees? More importantly, are these policies being enforced consistently? Ensuring employees understand what’s allowed according to policy and fairly and transparently enforcing these policies can protect your organization from a legal, ethical and cost perspective. One policy that should be absolutely clear is overtime. Employee overtime can get out of control and bust your labor budget without clear policies. Employees need to know whether or not it is allowed or if a manager have to approve it.
Ultimately, achieving this compliance can be challenging when there is ambiguity around these policies and laws. For example, some organizations have policies that forbid employees from working “clopen” shifts, where they close one night and then open the next day. Other industries even have restrictions around the number of hours an employee is allowed to work each day or on the amount of time off required between shifts.
How Software Helps: Employee scheduling and time tracking software not only helps in enforcing company policies but also helps ensure adherence to labor laws. It provides a platform to document and communicate these policies and regulations clearly to employees. With built-in features for labor law compliance, such as maximum daily working hours or mandatory rest breaks, software helps ensure your scheduling practices align with company policies and legal requirements, minimizing the risk of violations and associated penalties. This clarity around both company policies and labor laws safeguards your business's reputation and labor budget.
5. Inadequate labor budget tracking
If your business operates with a fixed labor budget, it can be challenging to ensure your schedules align with your budget constraints without the right tools. Without even realizing it, managers could be building employee schedules that fall outside the constraints of your budget or changes made after the initial publication of schedules could inadvertently lead you to exceed your labor budget. For organizations that use labor tracking or job costing for the purposes of billing clients, exceeding labor budget agreements can be especially problematic.
How Software Helps: Employee scheduling software provides real-time visibility and analytics so you can easily see if a schedule exceeds your labor budget. These insights enable you to make necessary adjustments to stay within budget. Additionally, you can use timesheet reports in your time tracking system to see if the previous pay period’s labor costs exceeded budget and easily adjust future schedules to get back on track.
6. Time wasted on manual processes
Are manual processes like using spreadsheets for employee scheduling or paper timesheets for employee time eating up valuable managerial time that could be better spent on strategic tasks? Employee schedules are constantly in flux, despite managers’ best efforts, so scheduling managers sometimes spend an inordinate amount of time just ensuring shifts are covered. When spreadsheets are used, it takes a lot of effort to communicate changes and ensure everyone has access to the latest version of the schedule. And on the payroll side, processing payroll from paper timesheets or even spreadsheets isn’t just time consuming and complicated, it’s extremely error prone.
How Software Helps: By automating these processes, you free up managerial time and reduce the risk of errors. Employee scheduling and time tracking software can streamline these tasks, ensuring everyone has instant access to the latest schedule and allowing managers to focus on more critical aspects of their roles. TCP customers often tell us our software has helped them cut time spent on employee scheduling by 50% or more and cut time spent processing payroll by as much as 90%.
Data-driven decisions made easy with scheduling & time tracking software
Do you think you’re making the right labor management decisions for your organization, or do you know? Employee time, attendance and scheduling software easily delivers key workforce data right to your fingertips. Whether you’re looking to avoid overtime at all costs or simply want to monitor your labor spend against your labor budget, automated software solutions can either show alerts as you’re building schedules or deliver custom reports to help you make data-driven decisions for your organization or business quickly and easily.
Trying to get your labor budget back on track or keep it on track? These labor budget busters can be a significant drain on your business's finances and operational efficiency. Employee scheduling and time tracking software can be your solution to these challenges. With the ability to enforce company policies and labor laws, prevent time theft, monitor overtime, and provide real-time insights, this software empowers you to take control of your labor costs and optimize your workforce management. By investing in the right technology, you can improve your bottom line and position your business for long-term success.
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