Labor costs are usually the biggest cost item for a
service business, and the second biggest cost for a business that sells
products. But rarely does the owner make
a serious attempt at controlling it.
They may work at controlling overtime and insurance costs, but they
seldom do a staffing review to ensure they are not overstaffed.
The business owner should be doing a review at least
once a year.
- Scrutinize every job in your company to determine how
it fits into the entire operation in accordance with your company’s long-term
objectives. Probe all aspects of each
job—its basic function, the level of work being performed, its relationship to
other jobs, and so on.
- Decide if any job should be eliminated and those
responsibilities shifted to someone else in the department. Can this job be outsourced? Has anyone been performing work that lies
well outside of his or her assigned responsibilities? Do all positions require full-time workers or
can one or more be filled with part-timers?
- See if you need to hire additional employees so that
critical jobs are being staffed properly.
Don’t get lazy and don’t dodge the tough
decisions. The key to running a
profitable business is keeping your costs under control.