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Today\u2019s finance leaders are facing a pressing challenge; how to continue to manage rising labor costs without compromising on worker quality, levels of service offered, productivity, compliance, and revenue.<\/p>\r\n
To do these things, those finance leaders need to adapt and consider data-driven strategies that will allow them to generate cost savings, including, if necessary, the use of contingent workers<\/a>.<\/p>\r\n Read on, as we explore the factors leading to these rising costs and what businesses can do to mitigate them.<\/p>\r\n Labor costs is an umbrella term which covers all staff-related expenditures. This includes everything from recruitment, to wages to benefits, to agency fees, to training expenses. These can account for as much as 70% of the total cost of being in business<\/a>.<\/p>\r\n A variety of factors have combined to increase labor costs today:<\/p>\r\n With the cost of being an employer steadily rising, businesses are naturally looking to reduce the number of people they employ, to bring that cost down to a more comfortable level.<\/p>\r\n According to CIPD research, around a third (32%) of businesses plan to reduce their staff numbers<\/a>, either through redundancy or by implementing hiring freezes.<\/p>\r\n However, with a strategic approach and the right tools, such as Flex Plus<\/strong><\/a>, organizations can offset rising labor costs without putting their long-term objectives at risk.<\/p>\r\n A key consideration for finance leaders searching for ways to carefully manage their labor costs is the labor cost formula, which is as follows:<\/p>\r\n Labor cost per employee (total compensation + benefits + taxes) \u00f7 total hours worked<\/strong><\/p>\r\n The results of this labor cost formula can be used to:<\/p>\r\nUnderstanding the factors contributing to increased labor costs<\/h2>\r\n
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The labor cost formula: what it is and why it\u2019s important<\/h3>\r\n
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The role of the Employment Cost Index<\/h3>\r\n