Avoid the missing schedule mark
It’s a common proverb in sports: to miss by an inch is to miss by a mile. If you’re aiming at a target – be it a hole, hoop, net or line – not hitting that target is a miss, even if you miss it just barely.
The same holds true when it comes to scheduling your hourly workforce. Most managers are required to hit a labor cost percentage target, but finding a balance between labor costs and sales driven by expected customer demand is not easy. And missing that target by just one percent can have a big impact on bottom-line profitability.
In a $500,000 unit, if a manager misses a labor cost percentage target by one percent – say, labor costs come in at 20 percent of sales instead of the targeted 19 percent – the operator will lose $5,000 a year.
Labor cost percentage targets are so fragile that they’re easy to miss, and sometimes it’s hard to feel it until it’s too late to avoid losses. Schedules are built to avoid overtime, but let’s say an employee swaps a shift with a peer. A manager may approve the change without realizing that this new shift will bump the peer to overtime. Or a shift swap may result in a higher-paid employee working more hours than you had planned.
The only way to keep a laser focus on your labor cost percentage target is to build a schedule that takes into account each employee’s pay, hours worked and skill sets (lest you forget the impact of good customer service on bottom-line profits). But manually developing this complex schedule can take considerable time, and managers usually have to produce schedules quickly and often on the fly as things change.
The best way to build a schedule quickly that will help you hit your labor cost percentage target is to invest in scheduling software that will give managers a bird’s eye view of all influencing factors but that will also highlight the impact of even the smallest adjustment to the schedule.
Look for scheduling software that:
- Stores critical information on your workforce. Knowing the particulars – such as skill sets, performance scores and wages – for each employee helps managers create the right mix of skills and wages for every shift.
- Displays employee availability. Keeping tabs on when each employee is available helps avoid shift swapping which can throw off a schedule’s skills and wages balance.
- Keeps track of sales forecasts in the same space. Having sales forecasts built into a scheduling tool makes labor cost comparisons easier.
- Provides a daily labor cost as a percentage of sales in real time. Seeing the impact on labor costs as the schedule is being developed or changed allows managers to move employees around as needed to hit the daily target without dealing with cumbersome equations.
- Tracks the impact of employee shift swapping. Knowing if a shift change will push one employee into overtime or will negatively impact the targeted labor cost percentage allows managers to make informed decisions on the fly.
Achieving targeted labor cost percentages in the hourly industry is like trying to make a 60-foot putt, half-court shot or 50-yard field goal. One percentage point off – or one inch off to stick with the sports analogy – and your result could be miles away from your target. Scheduling software can give managers the tools they need to get a better grip on labor budgets and more efficiently build a schedule that effectively manages the labor pool.