Whether you’re running a restaurant, a cafe or a burger van, wages are one of our biggest costs. It’s easy to underestimate just how important getting the right wage balance can be for your business. I see it often, inexperienced managers simply think that a busy premises requires as many staff as possible to make things go smoothly, but that simply isn’t the case.  I learnt this the hard way. 

A common mistake I’ve seen with managing staff costs is that people simply underestimate how much your staff are actually costing. If you’re paying someone $22 an hour it can be easy to think adding a couple of extra staff for a few hours each shift won’t cost much. But these costs do add up, and your wages will undoubtedly be one of the highest financial burdens in your business. The real way to manage things is to trim hours and cut staff costs wherever possible – not at the expense of quality and productivity, but so your business can stand in good financial stead and be ready to grow.

How do you cut staff costs without reducing the quality of service on offer? These are my suggestions.

Be wary of “wasted” time

Make sure your staff are clocking off at the right time and are being productive right up until they “stop” working. If you’re using timesheets, keep a close eye on them, and have people cross check actual events with stated times on the timesheets daily. Nearly everyone adds a few minutes or “rounds up” the time. It might only be a few minutes each day for every member of staff, but that soon adds up. It’s also not uncommon for staff to feel more and more confident when they know these times aren’t being crosschecked.  Whilst having a manager oversee each member of staff as they sign out might be counter-productive – make sure you’re keeping track of things.

I’ve also seen how many employees can “down tools” and stand around as they wait for the end of their shift. As things might be less busy towards the end of the night and as home-time approaches, staff can treat the last half an hour of a shift as an exercise in socialising. If they aren’t working, they shouldn’t get paid. Make sure your staff are signed off appropriately, as soon as they’ve finished their job.

Have staff finish at staggered times

This ties in with the previous point. You don’t need all your employees working right up until “home time”. If business tends to trail off towards the end of the evening, then have some staff scheduled to finish before others. You’d be surprised how many employers forget about small details like this and have everyone working until the end of the night. If you notice staff members standing around doing nothing towards the end of their shifts, then you could probably alter their finishing hours.

Make sure you don’t overload your closing staff though.

My managers especially fall victim to thinking that shaving a few minutes here and there isn’t worth it, but they forget how much staff costs can add up. Lets say for examples sake you employ ten people per shift, paying them each $20 per hour. Chances are that you could finish a couple of them an hour earlier than you do by sharing duties amongst remaining staff and eradicating wasted down-time. That’s $40 saved per shift, or $480 a week if you’re running two shifts a day. That’s a saving of over $24,000 a year, just by making a few small efficiency changes.  If you’re lucky enough to be running a business in Australia, consider that the above example doesn’t account for savings in Superannuation, workcover, or payroll tax.

Increase volume without increasing staff members

I came across most bizarre and confusing paradox when I began employing staff.  More staff does not lead to greater productivity.  In fact I found there was a point in any business process of equilibrium and maximum productivity before putting more staff on relative to working space available and turnover where productivity actually decreases.  Wages increase and productivity decreases.

Chances are that right now your staff are being under-utilised.  In actual fact knowing what I know about staffing productivity and tightening the bolts on wage costs on a regular basis in my business.  I can honestly tell you that every six months my wage costs creep up unnecessarily.  Extra hours and staff just creep in and I have to tell my managers to once again tighten the bolts.

 Most of the time your business will probably be running under capacity. What this means is that bringing in extra customers doesn’t necessarily need extra staff. I know all businesses are trying to grow and get new customers, so it isn’t as simply as saying “increase customer volume”. But you should be aware that any extra marketing you do, and any extra customers you bring in, doesn’t necessarily mean you need to increase the numbers of staff you have working.

Try them out on a busy shift and see if they cope with slightly fewer staff. Chances are, they’ll do the job just as well if not better than they did when there were twice as many of them.

Find ways to increase your customer base whilst limiting additional staff members.

Make sure the people you do employ are productive and motivated

 Hard-workers are a treasure for any business I’ve often caught myself calling these team members ‘work horses’. I’m not exaggerating when I say that I’ve seen people work twice as hard as others. Those are the people you want in your business. If you’ve got staff who work twice as hard as others, then you only need half as many of them – and that’s going to save you big time. Keep them motivated and pick the right employees – then you shouldn’t need as many of them.  You only get what you accept when it comes to staff, so be picky.

Hopefully you’ve seen some ways to reduce staff costs without necessarily reducing the quality on offer. From efficiency savings to having a motivated workforce, a successful business must make the most of the staff they do have – whilst not overspending on them.  Keep a close eye on your total employee expenses as a percentage of your net turnover, set a KPI that is in line with what you have found to be the most productive staff level relative to predicted turnover and keep tightening the bolts.