Workforce costs guide

10 simple ways to reduce staffing costs

This guide sets out ten ways to bring staffing costs down without cutting jobs or pay. It is written by Computime, a Leeds company that has supplied clocking and time and attendance systems to UK businesses since 1989, so where our own software helps we say so, and where it does not we say that too.

10 ways to reduce staffing costs

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   1. Pay for the hours people actually work

   When hours come from a handwritten timesheet, or from memory at the end of the week, small roundings add up: ten minutes here, a quarter of an hour there, across every person and every shift. A time and attendance system records the actual start and finish, so payroll is based on hours worked rather than hours remembered.

   You still decide the rounding rules. The difference is that they are applied the same way to everyone, every time.

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   2. Approve overtime before it is worked

   Overtime is often the largest labour cost a business can control, and much of it is unplanned: a shift runs over, or one person picks up hours that could have been covered at the normal rate. Make overtime something that is agreed before it is worked, and check during the week who is close to their contracted hours, not after payroll has run.

   If overtime is guaranteed in someone’s contract, changing it needs their agreement. Acas explains how to change an employment contract properly.

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   3. Get on top of short-term absence

   Long-term sickness is usually handled with care. Frequent short absences are where cost builds quietly, because each one brings cover, overtime or lost output. Hold a short return-to-work conversation after every absence, and look at patterns rather than single days.

   The Bradford Factor is one way to spot frequent short absences; we explain how it works, and where it can mislead, in what is the Bradford Factor. Absence management software keeps the records without a spreadsheet.

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   4. Plan holiday cover early

   When two people in a small team book the same week, the gap is usually filled with overtime or agency staff, both at a premium. Seeing every request on one calendar before you approve it, with entitlement worked out for you, lets you spread leave across the year and spot clashes while there is still time to plan around them.

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   5. Cross-train your team

   If only one person can run a machine, open the site or process the payroll, their holiday or sickness costs more than it should. Training two or three people in each critical task means absences are covered from inside the team. It takes time up front, and it suits people who want to progress.

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   6. Keep the people you already have

   Replacing someone costs far more than the job advert: recruitment time, training, lost output while a new starter gets up to speed, and the strain on the colleagues who covered the gap. Fair rotas, holiday approved quickly and pay that is right first time sound basic, but people notice when their hours are wrong, and it wears away goodwill quickly.

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   7. Cut the admin around hours and holiday

   Managers and payroll staff lose hours every month answering “how much holiday have I got left?”, chasing timesheets and keying hours into payroll. Letting staff check their own hours and entitlement on their phone, through employee self-service, and exporting hours straight to payroll takes most of that away.

   Syncro Connect, our cloud software, exports hours for Sage, Xero, QuickBooks, BrightPay, IRIS, ADP and Pegasus payroll, so nobody has to type them in again.

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   8. Compare labour cost with the work done

   A rota that suited the business two years ago may not suit it now. Compare hours worked by day, shift and department against what was produced, sold or delivered. Quiet periods that are fully staffed, and busy ones covered by overtime, both show up quickly once hours are recorded properly.

   You do not need a data team for this. Most time and attendance systems, ours included, let you build the report yourself and run it every week.

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   9. Spend less on recruitment and agency cover

   Agency staff cost more per hour than your own, and recruiters charge for each hire. Referrals from your own staff, a small pool of trusted casual workers, and earlier notice of busy periods all reduce how often you need either. Agency cover still makes sense for peaks nobody could have predicted.

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    10. Offer perks that are not pay rises

    Pay matters, but it is rarely the only reason people stay. Flexible start times, an extra day’s holiday for long service and a say in their own shifts cost little and are valued. Employees can ask for flexible working from their first day in a job, so it is worth having a fair way of saying yes where you can.

What not to cut

Some savings cost more later. Do not let pay fall below the National Minimum Wage once unpaid time and deductions are counted. Do not stop keeping the hours and holiday records you are required to hold, and do not change contracts without agreement. A saving that ends in a tribunal claim is not a saving.

Where to start

If you only do two things this month, look at overtime and short-term absence. They are usually the largest costs you can change quickly, and both are far easier to see once hours are recorded by time and attendance software rather than on paper. To see what that costs, our clocking in system pricing page sets out every option.