How to reduce labor costs and attract quality staff in a post-Covid market

The challenge of attracting quality staff while trying to reduce labor costs is one that has taken on fresh urgency in the post-Covid labor market. This is particularly true where hourly shift work is concerned, as staff question their priorities after a year in lockdown.

Thankfully, there are several ways to find – and retain – good workers while still controlling your labor costs. It just requires a little recalibration of how you think about incentives and staff management.

Use flexible working rather than salary incentives

One myth that we can dispel quickly is that the only way to attract quality staff is by offering larger salaries. That’s been the assumed wisdom for decades but is now an outdated view of what people want from a job.

Increasingly workers are saying that flexible working hours are now their priority, with multiple studies showing that the ability to fit work around other areas of their life is a key consideration when job hunting. One pre-pandemic study found that if given the option of a job with flexible hours and one without, 80% of workers would choose the job with flexible hours. The same study found that 30% considered flexible working more attractive than extra vacation days or a prestigious job title.

Offering flexible hours not makes your company more attractive to workers, but it makes staff more likely to stay with you for the long term. A survey for FlexJobs found that 80% of workers would be more loyal to their current job if it gave them more flexibility.

The reason for this is that the way we perceive value in work has changed. “If you’re a parent and you have three kids to pick up from school every day at 3:30, then flexible working actually adds a lot of value to you”, explains Josh Cameron, Workforce’s Chief Strategy Officer. “If you can pick or swap out of the shifts, that’s more important to you than getting an extra $2 an hour, because you have to pay someone to pick up and look after your kids. The extra dollars are not adding value.”

Systems such as shift bidding are an excellent way to incorporate flexibility into a business, help reduce labor costs by not adding additional expense on your payroll, and are easily managed using staff management software such as Workforce.com.

You don’t need to cut wages to reduce labor costs

It’s a mistake to think that the only way to reduce labor costs is to cut staff or lower wages. One of the best ways to save money is by getting more value for what you already spend, and one of the most common ways that businesses fail to do this is by losing track of productivity against wages.

You can save money in real terms by ensuring that hours worked and hours scheduled match up, cross-referencing with hourly income using workforce analytics to check you are getting the productivity you’re paying for. It may sound basic, but you’d be surprised how many companies still have their data spread across multiple files or systems and simply assume the numbers match at the end of each day.

“Most people never check the schedule matches what people actually work,” says Josh Cameron. “They might have a really good shift plan, and that’s in one system, but then the attendance data is in another system, and people are clocking in and clocking out of that. And the manager is basically just blindly ticking things because that’s what was clocked. If they even wanted to cross-check that, it would be a big exercise. People don’t do it. What’s much better is to have the schedule and the attendance in one system, so you can tick these things off throughout the day or at the end of the shift and if there are differences, you can go see why that happens.”

Listen to feedback to stop staff churn

Once you’ve attracted good workers with flexible hours and made sure you’re getting full value for those hours worked, it’s important to remember that you can help to reduce labor costs by keeping those staff in your business. Replacing employees costs money in advertising the vacant roles, onboarding and training, and lost productivity as working routines are disrupted. Gallup found in 2019 that US businesses lose a trillion dollars every year simply from the cost of replacing staff.

How do you stop staff from leaving? Listen to what’s bugging them about their job, and fix problems wherever possible. The idea of employers giving performance feedback to employees is widely accepted, but it’s also important for employees to be able to give feedback on the company.

“If you’re asking why people quit, by allowing people a way of giving feedback on their shifts, they feel ‘Hey, I have a way of being heard in this job, I actually am important,’” says Josh Cameron. “Managers can look at that feedback and analyze it and be like, ‘This is what’s causing problems. We’ve got these structural things that make it hard to work in this shift and that’s making it hard for people.’”

This is why Workforce.com allows staff to give feedback not just in general, but on the specific shifts they work. This allows managers to identify the pain points that cause staff to leave, and make changes. It may be something as common as a particular manager being hard to work with. It may be that a certain location gets uncomfortably hot on summer afternoons. Whether the answer means shuffling the staff roster, or something as easy as investing in an aircon unit, you’re empowered to spot the leaks in your staffing and plug them before they cost you any more revenue.

Think beyond the hiring process

There will always be sledgehammer approaches to reducing labor costs, but the current labor market conditions where potential employees are empowered to say “no” to jobs that don’t work for them, require a more nuanced approach. Companies save money when they hire the right people and get the best out of those people, and that means making sure they want to stay with you for the long term. From offering more flexible working arrangements to identifying the problems that drive staff away, Workforce.com can help at every stage.