Y2.U3.3Controlling 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