For business owners, one of the biggest expenses that you need to keep a handle on is your employee wages. It can help ensure a healthy cash flow and allow you to reduce your accounts payable balance. Business owners have to learn how to keep their payroll under control to cash in on every opportunity that comes their way. 

The fact is that the wage paid to hourly workers has been on the rise across the United States. This is why you have to make sure that you can cut down on costs to keep your business strong. Otherwise, you may have to use your credit card to pay employees. Although you can reduce wages, lay off employees, and reduce employee benefits policies, there is no need for you to take such drastic and damaging actions unless absolutely necessary. 

If you take such strict actions, employee morale will plummet which will definitely affect the quality of service provided to your customers. To gain better control of your business payroll, consider the following tips. 

1. Determine Your Labor Burden Rate

The first thing that you need to do to keep payroll under control is to determine your labor burden rate. Find out what you’re paying to every employee to cut down on labor expenses. Determine what you provide on top of the hourly rate or basic salary. The total value is considered the employee burden rate. 

In order to calculate the employee burden rate of each employee, you must add their annual hourly wages or salary, extra compensations like bonuses and overtime, mandatory insurance, payroll taxes, and other employee benefits such as health insurance and 401(k). When you have an idea about how much you are paying every worker, you’ll be able to determine where you’re overspending.

 2. Optimize Employee Scheduling

Another tip that businesses should consider is optimizing employee scheduling. When there is a clear schedule, everyone knows exactly what to expect.  This decreases schedule conflicts and helps prevent the need to pay overtime. With a proper understanding of employee costs, you can focus on dialing in your schedule to maximize your productivity within a reasonable number of employment hours used. It will also provide you with the added advantage of a happier workforce as they never have to deal with late, unclear, or shifting schedules. Overtime is necessary sometimes, during emergencies, illnesses, special events or sudden expansion opportunities. But when you plan ahead, you can minimize the times when overtime becomes a necessity. 

3. Employee Retention

Focusing on employee satisfaction and retention increases productivity, morale, and longevity. If you key in on hiring well from the start, you’ll avoid problems later with unsatisfied or disgruntled employees leaving. If you’re losing talent regularly, you’re spending a lot of money on training new people. 

Make sure you’ve got the right people in the right jobs to maximize on their talents and skill sets. Look for opportunities to promote from within to keep upward momentum going for talented individuals who want to help your organization grow and succeed. Pay close attention to the relationships between your staff and their managers, something that has a great impact on the desire of employees to stick with you. Work on improving communication between employees and supervisors and between departments. 

4. Look at Communication and Redundancy 

Looking closely at your organization’s effectiveness when it comes to internal communication and possible departmental redundancies is a fantastic way to refine your processes and save payroll. How well are department heads, project leaders and others communicating? Is vital information clearly and efficiently shared? Or are there gaps in their exchanges leading to missed opportunities and repeat meetings? 

Is your marketing department handling jobs better suited to sales or vice versa? Is R&D handling too much admin? Are two or more people repeating work…doing essentially the same job with only minor variances? It’s time to really dive deep and look at how well your people connect, share information, divide work, and execute on initiatives. 

5. Develop Greater Productivity

Do you have the right technology in place to equip your people for success? Outdated programs and hardware can lead to slower production, late orders, lost communications, and confused team members. All these lead to a greater burden on payroll from the increased demand on staff to fix these problems. 

Also, look at new ways to accomplish old jobs. Are there new training programs, new philosophies, new ways of organizing or performing some of your primary functions that would kick them up a notch? Research what other companies are doing that seem to be relieving their stress, lowering their payroll, and upping their output. 

Below, you’ll find a few more tips on increasing productivity.

• Ensure Employee Retention: To boost productivity, you have to attract and keep the right people. It should be at the heart of your payroll strategy. 

• Cross-Train Employees: Another great way to increase productivity is by cross-training employees. You need to teach each employee different skills so that they can take on more work which will ensure you don’t need to hire more people or ask someone to work overtime. 

• Automate Tasks: To improve productivity, you can sometimes turn to automation. Review different procedures and find out if you can automate them. It will allow you to cut down on labor costs. You might not even need as many employees in a certain department. 

• Get Employees to Work Overtime Instead of Hiring New Employees: As a last option, you might need to get your workers to work more hours to cut down costs. The reason behind this is that hiring more employees would only cost more money as you would have to pay for employee benefits for them as well. In such a situation, overtime would prove to be a more affordable option.

6. Consider Outsourcing Some Things

Another way to keep payroll under control is to find certain tasks that might benefit from outsourcing, specific administrative, communications, media, marketing, or other jobs that outside contractors can perform part-time. With the right contracts and oversight, this can cut down on your payroll, benefits burden and increase productivity in the process. 

7. Become Agile

Lastly, you should consider becoming agile to conquer employee cost challenges. The agile philosophy requires you to rethink everything and focus on finding a better way to do things while ensuring that you remain flexible. This mindset helps you break down large goals into accessible steps. This can improve your workflow and cut down on wasted hours. 

Conclusion

Controlling employee costs is often one of the most difficult things to manage as a business owner. It can affect your employees’ level of satisfaction, your quality control, and your staff retention.  There is a lot that you need to consider when attempting to get it just right. You want to make changes that give you the most productivity for the labor hours used while maximizing on employee talent and improving team member satisfaction. You might want to seek the help of an expert. A payroll and bookkeeping service provider will be able to provide the best advice so that you can keep costs under control.

Sound Accounts helps businesses make sense of payroll, maximize on resources and spot opportunities for growth. Contact us today to learn more about partnering with us. 

To learn more about keeping payroll under control, see our frequently asked questions below. 

FAQ

How do I save money on payroll?

There are lots of ways. Organize your employee schedule more efficiently, study your departments to find redundancies or inefficient communication, update technology to give your employees an edge, rethink certain perks, consider outsourcing some tasks, and focus on hiring great talent and keeping them happy so you can avoid the cost of unnecessary hiring and training. 

How do I keep the payroll process from becoming overwhelming for me?

One of the first things you can do is get a great payroll service. Services like Paychex, QuickBooks Payroll, Gusto and others, offer countless options, superb organization, automated payouts and updates, and a range of other features to streamline the process and put your mind at ease. 

Next, consider partnering with a great bookkeeping service provider to look over your payroll and finances. They can provide you a higher level of management that frees you up to focus more on leading your team and capitalizing on your people’s talent. 

Is controlling payroll always about reducing hours or laying people off?

Definitely not! In fact, if you can avoid this, you definitely want to try. Choose other solutions first like focusing on hiring the right people, refining production practices, streamlining communication between departments, getting better trainers to help reduce training time, becoming more agile in your approach and uncovering places where certain tasks or meetings are being repeated.