Y2.U3.3 Controlling Labor Costs

Questions How do labor costs affect cost control? What factors effect labor cost? How is effective scheduling achieved?

Budgeting Labor Costs Labor is a semivariable, controllable cost Controlled by budget and scheduling Too many staff Wasted money Too few staff Poor quality product and service Unhappy customers Disgruntled staff/turnover

Factors Contributing to Labor Costs Business Volume As business increases, fixed labor (salaried) decreases. Variable labor (hourly) increases Employee Turnover Generally higher turnover is higher cost, newbies are being trained but not producing much during training Quality Standards Type of operation determines number and skill level of staff, and, in turn, determines cost Operational Standards If product doesn't meet operational standards both product and labor costs increase

Scheduling Sales histories and projections are used as a baseline to create a Master Schedule: spreadsheet showing the number of people needed in each position for a given period of time Variables Office opening Plant closing Weather Holiday

Scheduling Based on Master Schedule, create a Crew Schedule: shows employees’ names, dates and times to work

Scheduling Develop Crew Schedule with flexibility in mind Have a clear policy (handbook) Post schedule far enough in advance Maintain open two-way communication Cross-train employees: Each recipe, technique or task should be practiced and understood by at least 3 employees Identify and train shift leaders: across shifts or kitchens Have on-call employees: prepared to answer call or call in Phone/text tree Have emergency plan