For many businesses in Mass (Massachusetts), managing time and attendance is often one of the most complicated, time-consuming and expensive tasks – and with the rising popularity of telecommuting and outsourcing, it’s getting even more complicated.
Still, controlling the labor expense is one of the most important roles of a business. In industries that are highly automated – such as manufacturing or energy – labor is a relatively small expense, accounting for perhaps less than 10% of total costs. But for labor-intensive industries – such as hospitality and food & beverage – labor costs can account for 20% to 40% of total costs. In the trucking industry, for example, payroll costs typically account for 60% of all expenses.
Providing the State of Mass with Time and Attendance
For most businesses, managing the labor expense is directly related to profit and loss. Many other expenses are fixed costs: The cost of raw materials, overhead, energy costs, and so on. But labor typically is a variable cost. The challenge to management is to find the exact amount of labor that a company needs to accomplish its goals – whether it’s the production of products, the creation of services, or something else – without spending too much on workers or payroll that aren’t essential.
There are many paths to achieving optimal payroll balance for a business, but one of the most common and effective is determining payroll as a percentage of gross revenue.
Complicating this, however, is the concept of “labor margin”. In a perfect world, a business may calculate that the amount it costs on labor should be a certain percentage of its total revenues. For example, a company that manufactures widgets may understand through historical data that they need to spend $.10 on labor for every $1 of widgets they sell – or, in other words, a labor percentage of 10%.
But this isn’t a perfect world. Invariably, workers are going to quit, get fired, call off sick, or be unable to work for a variety of reasons. So managers need to build in a certain “labor margin” to account for these unexpected developments. In the case of our widget factory, it may be 0.2%. So the actual amount of real dollars spent on labor is actually $.102 per $1 of widgets sold, bringing the real labor percentage to 10.2%.
Time and Attendance Scheduling – Massachusetts (MA)
Once the real labor percentage is known, businesses can then create work schedules that reflect this anticipated spending. While the actual amount of revenues is impossible to know due to the many variables that can affect this figure – including weather, what competitors are doing, market seasonality, and so on – most businesses can forecast relatively accurate projected gross revenues.
Managers can then take this figure and multiply it by the real labor percentage to come up with how much they can spend on labor during any given period – whether it is per year, per month, per week, per day, or even per hour. This information can then be used to assemble the work schedule.
While the work schedule represents a business’s labor spending in the abstract, time and attendance systems are used to measure labor spending in the real world: In other words, how many hours did each worker actually work and, consequently, how much should they be paid from the pool of labor funds.
Accuracy and Flexibility
When it comes to effective time and attendance management, there are two things that are of primary importance to any business: Accuracy and flexibility.
Labor is a commodity just like anything else that goes into building your products or providing your business’s services. In the same way that the raw material of producing a widget have real value, so does the labor that goes into making that product on an assembly line – or selling it to your customers in the field. You wouldn’t allow your employees to go home with their pockets stuffed with your raw materials. In the same measure, your business can’t afford to allow your employees to steal time by being paid for labor they didn’t actually perform.
That’s why the accuracy of the time and attendance system is critical. To successfully manage your labor budget, you need a foolproof system that accurately records when each particular employee is working and when they are not. The time and attendance system also needs to be able to easily and efficiently differentiate between dozens or even thousands of different employees working at different hours often in different locations and at different pay rates – some hourly, some salaried, some on commission.
It also needs to be able to accurately calculate such things as accumulated vacation and sick pay hours, bonuses, benefits, and owner draws.
Complicating the Picture
Today, this task is becoming even more complicated due to the increase in the number of workers who telecommute and the hiring or freelance subcontractors who are sometimes paid by the hour, sometimes by the task, and sometimes at a one-time fee.
Then there are scheduling challenges to consider, including bid schedules for union members which have to take into account a variety of factors, including seniority, performance values, and many others. The days of sitting down with a pencil and a sheet of grid paper are long gone. Successful businesses now need sophisticated systems that can handle all of these complicated tasks and more with literally the push of a button.
A Real-World Solution
Now there’s a time and attendance solution that takes all these complications into consideration and many more. The Mitrefinch time and attendance software system allows managers to effectively control their labor scheduling, monitor employees’ time and attendance, and calculate labor expenses against revenues in real time.
Best of all, Mitrefinch is a Boston-based company, so Massachusetts businesses have the added benefit of having all of their support and customer service assistance literally in their own backyard.
In order for your business to succeed, it needs a top-quality time and attendance software system that provides the accuracy and flexibility that are necessary to control labor costs effectively in order to maximize profitability. Many businesses in Mass that use time and attendance software find it an ideal solution for improving business efficiency and productivity.
Businesses in Mass who chose Time and Attendance Software from Mitrefinch also downloaded the complete Guide to Selecting A Time and Attendance System