Unapplied labor is one of the key things to watch for when operating a small business. Having off task employees not only means work is not getting done, but it could also mean paying them more for less labor.
We’ve already talked applied vs unapplied labor, so let’s focus on what causes the onset of unapplied labor.
Causes of Unapplied Labor
- Employees taking longer than industry standard to complete a task
- Could be because they are unapplied or just bad–either way this is a problem
- Improper hour application
- Are you assigning the right allotted time to complete a task?
- If multiple employees are working a job, the normal time said job takes to complete should be adjusted
- Poor scheduling
- Make sure the supply you provide is meeting demand
- Ensure that work is evenly divided amongst employees (who operate in same field) and not unequally split
- Do you need to schedule more appointments to fill in the gaps between peak operating hours?
- Inspect employee schedules with accounting software to cut down on indirect labor and ensure effective time management
- Compensation strategy
- Are your employees on the best wage strategy?
Now that we know why unapplied labor occurs, and why it can be so high, let’s try to mitigate unapplied labor and improve efficiency.
How to Beat Unapplied Labor
Using Punchey’s services that calculate labor cost, billable hours, and unapplied labor, you can figure out just how much unapplied labor is hurting your business. The next step is cutting it down and maximizing efficiency.
If your unapplied labor is no more than 10% then you’re probably ok to stay put and continue thriving. If it’s greater than 10%, consider taking these steps:
- Review your overall service process to find wasted time
- Revisit scheduling and appointments to maximize your time and energy
- Track time and attendance to make sure you have the best solutions in place
- Make sure you have the best tracking systems in place
- Check the availability of proper/required tools for your employees
- Make sure to not overschedule employees–too much work will decrease their productivity and decrease their motivation
- Use your Punchey software to identify areas to improve and cut down on labor costs
Unapplied labor can be a massive burden for businesses, but with your business savvy, Punchey’s software, and a little bit of work, you–and small business owners everywhere–can get the best out of your employees.
