10 and a half tips to save 10% on your staffing budget
Do you feel like your profits are being held back by the staffing costs in your business? Maybe every July you take a deep breath to work how you can possibly afford yet another award wage increase. Let’s start thinking of staffing costs less like fixed costs and more like the variable cost they should be.
Here’s some ideas to get staff costs down.
1. Use data to drive your decisions
Proactively planning your wage costs by mapping out the rosters and hourly rates paid to each employee based on their contribution to your business is a great way to look for where you are over staffing and understaffing. Most accountants and bookkeepers will have this sort of spread sheet, you just have to input the numbers and think long and hard about who you really need to do what and when.
2. Check you are paying the right rate
Awards can be really confusing to read. When it comes to classifying jobs, all awards do use a similar approach. As the task gets more complex or more responsible or qualifications are needed, the wage rate increases. I find many employers put everyone on the same level without thinking about exactly who takes full responsibility for getting the job done. Use the classification levels to your advantage.
3. Check you are using the right award for the right job
Many of my clients like the simplicity of paying everyone under the same award. However, the work of staff within a business can cross over a number of awards. Although rates and conditions are often similar between awards, penalty rates can vary greatly. Relying on just one award can result in overpaying staff.
4. Have a list of jobs to be done when it’s quiet
I’ve lost count of the amount of times I’ve walked into a business and seen staff trying to look busy. Often it’s because there hasn’t been a discussion about the task priorities in or for the role. For example, a sales cashier may think their job is to serve customers, but to use them more effectively I’d give them a list of top priorities.
For example, priority one serve customers (and include to what standard), priority two is to clean and restock and priority three let the supervisor know you have some spare capacity. None of us can afford to have staff sitting around waiting for work to happen. Utilise your staff fully.
5. Think about using part time workers
There’s an army of qualified, committed mums and older workers that want part time work out there. I’ve met so many accountants, bookkeepers, even physios and ex general managers that are more than willing to take a lower level role for the flexibility of part time work. The bonus is the employer gets all that talent for a fraction of the cost.
You can also use part time agreements to roster hours up and down, as your business requires it.
6. Take on the poor performers quickly
Ideally staff should be making money for you. When they are underperforming they start costing you money. Yet the vast majority of employers don’t tackle performance issues with staff.
I find putting a dollar figure on under performance motivates managers to learn how to act on poor performance. If you are paying someone $50,000 a year they should be delivering 3x that for your business. If they are underperforming they are costing you their salary and the loss of opportunity; that’s’ a whopping $200,000 every year.
8. Make staff use entitlements in the year they accrue them
If you have permanent staff they’ll be accruing leave. Every time their wages go up, so does the cost of the accrued leave. Better to pay for leave in this year at this year’s value rather than pay for a stack of leave in the future at the higher rate of pay.
8. Think long and hard about a workforce full of casual staff
One of my clients operates a 7 day a week business and used to employ mainly casuals. I say used to, because once I did the numbers on the cost of an award casual rostered on a weekend / public holiday versus a part time employee with a slightly higher base rate and more commitment to the organisation the savings were considerable.
9. Don’t motivate with money
Incentives and bonuses are a terrible motivator (unless you are dealing with sales people). Sure you might get an initial bounce in performance but longer term money incentives become an expectation you have to manage. The better bang for your buck is to create a really great working environment. One where people feel good about coming into, and that energises them and brings them together. Way more effective.
10. Consider introducing Roster Days Off (RDO)
Sick leave is a major money drain. Often staff use sick leave because they need some time out or have things that need to be done that just don’t’ fit in with their roster. A great way to get sick leave use down is to introduce an RDO.
The idea is that staff increase their daily hours to accrue enough hours to have a paid day off. You decide on the frequency to suit your business needs. There’s a bit of administration involved in rostering the days and some rules need to be put in place but overall the benefits outweigh the initial work.
While you are at it, give yourself an RDO once in a while. A “doona day” is a fabulous recharger.
10.5 Bring in help
At the start I said you could find 10% in savings through these ideas. One of my greatest achievements was finding over $1M in savings in a larger business. Just last month I found $130,000 in annual savings for a small business client by using some of these tips. In reality there is much more than 10% in savings to be found by doing things more strategically.
Maybe it’s time we had a chat you can email me email@example.com and let’s get your staffing costs down.
I’m Andrea Tunjic, the founder of People Strong. I’m a people management strategist, mentor and author. I help managers in all sized organisations to become more effective at leading and managing people ,redirect everyone’s effort towards achieving the business goals, help reduce the time and effort you are spending on solving management problems and ultimately increase profits.