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How to Reduce Hidden Labour Costs

For most companies their workforce is their greatest asset but also their greatest expense. Labour costs can account for as much as 70% of total business costs, but it’s not only wages that make up these costs, additional hidden labour costs such as absenteeism, unapproved overtime, questionable sickness absences, lates, finishing early and long breaks all contribute significantly to this figure.

So how can you reduce hidden labour costs? The first step is to identify the makeup of your labour costs. Automating employee Time & Attendance and Scheduling gives complete transparency in relation to workforce and payroll costs. Workforce management Technology will uncover and reduce hidden costs, drive efficiencies, improve processes and shave up to 5% off payroll costs annually – based on 100 employees that’s an impressive £206,171 per year.

There are 4 ways to reduce hidden labour costs in your organisation.

1. Reduce overpayments

Employees are routinely overpaid by as much as 30 minutes per day. This happens because of late starts, early finishes, long breaks and unauthorised overtime.

In a company with 100 employees, reducing overpayments by even just 15 minutes per day per employee based on an average 230 working days a year adds up to £76,483 in cost savings each year.

2. Reduce absenteeism

The indirect costs of absenteeism often exceed the direct costs with effects such as increased overtime, reduced service levels and reduced morale among employees who are left to cover.

Reducing absenteeism by just 1% per year could save £25,938 annually in a company with 100 employees.

3. Improve employee scheduling

Automating scheduling and empowering supervisors to schedule staff can deliver
savings of 5%-20% on your organisations’ overtime bill. This is through a reduction in manual processes and unintentional overtime, time saved on administration and the ability to match schedules to forecasted demand.

In a company with 100 employees reducing overtime by even 10% has the potential to save £38,906 per year.

4. Standardise pay rules and policies

Building pay rules and policies into a workforce management system has been shown to reduce payroll costs by  2.5% – 5%. The benefits of standardising pay rules include reducing potential errors in payroll as well as the ability to implement complex pay rules with precision and ease.

Reducing payroll costs in a company with 100 employees  by even just 2.5% could save an impressive £64,844 per year.

Total annual potential cost savings by installing a workforce management system to uncover and reduce hidden labour costs and to drive efficiencies is estimated to be £206,171 based on 100 employees.




To find out how Softworks Workforce Management software makes employee management easier, more productive and saves you money get in touch today or request a Demo

Email:  Tel. +44-1527-888-060


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