Reduce Your #1 Expense, Labor - 4 Tactics
Labor Savings Tip #1 – Mobile or Telephone Timekeeping
Managing labor is the name of the game in the janitorial industry. 60%+ of our expenses are tied directly to labor. If you can properly manage this labor, you will maximize your profit potential.
The first step to managing labor is accurately tracking how much labor is being spent on each job. Prior to the onset of the tech revolution, most companies used time cards that were either filled out manually or punched via a time clock on the job. In the janitorial industry, time clocks were not often present, so workers were on the honor system to fill out their time cards accurately.
Even giving most workers the benefit of the doubt, rounding up and a few deceitful employees could impact your nightly hours by a decent amount. Just two hours per night of “false time” would cost a company about $6,000 over the course of the year. This is no small amount.
To limit the amount of “false time,” every janitorial contractor should make full use of electronic timekeeping. Many systems are available that require employees to clock in via a landline or mobile device (tracking the location), to ensure time recorded is actually being spent on the job. For every employee that saves 10 minutes per night, this equates to over $500/yr in savings.
Labor Savings Tip #2 – Timekeeping Reports & Budgets
While tip number one helps you reduce “false time” and maximize labor accuracy, tip number two focuses on managing those hours actually being worked. Nearly every mobile or telephone timekeeping system generates labor data that can be tracked daily. Each day, managers should review reports of the previous day’s labor, broken down by job. Each job should have budget hours that you compare actual hours to.
For instance, if a job is budgeted for 6 hours per night, you want to ensure the hours being worked consistently stay at or below six hours per night. If you don’t monitor these hours on a daily basis, you can’t make corrections before its too late and you’ve lost money. The goal of daily hours reviews is to ensure labor doesn’t go over budget, while at the same time workers aren’t neglecting an account, leading to a quality issue.
One additional benefit of hours reports is being able to compare labor hours across jobs, looking for potential efficiencies. If two facilities of similar size and density are cleaned at different rates, this should indicate a potential labor savings at the less efficient account.
Labor Savings Tip #3 – Watching For Exact Hour Amounts
Image this scenario: you have an employee who is working at a building and they are logging exactly six hours per night. What is potentially going on in this situation? It is very possible that the employee has in his/her mind that they are allotted a certain amount of time and they intend to get paid for that amount of time each night. As a wise manager once said, “Work expands to fill the time you give it.” One of the advantages of a mobile or telephone timekeeping system is to pay only for the hours worked. So when you see exact hours being worked on a consistent basis, likely an employee is working less than the amount recorded.
Now to be fair to our hardworking people, I don’t want to encourage you to beat them up and unnecessarily cut their hours. Many of our workers are under-appreciated and need our support and encouragement. However, we also can’t afford to pay for unnecessary hours. Be fair, treat your people with dignity, but don’t allow hours to be wasted.
Labor Savings Tip #4 - Holiday Savings Plan
With labor accounting for roughly 60% of total costs, any chance to save labor will be a chance to increase profits. And major holidays are a perfect place to make that happen. When you consider the main holidays that often fall on weekdays (Christmas, Thanksgiving, Labor Day, Memorial Day, New Years Day, and Independence Day), you find six opportunities to save on labor. However, this goes beyond saving money on the holiday alone.
Most every customer you serve observes these six holidays and allows their employees time off during them. Likewise, they rarely expect cleaning on these days. However, many companies are flexible with their employees on the day before major holidays, giving them the opportunity to leave early. Knowing their expectations can be lower on these holiday eves, contractors can coordinate with their customer contacts to inquire about a one-time limited service scope. Such a limited scope could include such things as spot vacuuming traffic areas as opposed to full vacuums, spot mopping instead of full mops, etc.
Let’s do a simple calculation to show how the types of saving you can gain. Assume a janitorial contractor has about 200 labor hours each evening and could save 25% with a holiday savings plan. With six holidays per year and $12/hr per employee, this would equate to an annual savings of $3,600.
Implement these labor saving tips and YOU WILL save money!