Two top priorities for any company need to be keeping labor costs in check, as well as ensuring compliance with all labor and other business laws. While you can’t get around paying your employees a fair wage or paying to stay in compliance with the law, there are ways to keep these costs in check. Labor costs should be recognized in all divisions and departments in an organization. Oftentimes companies neglect the proper training to management that could reduce these costs through time. Here are some strategies to keep costs under control and keep your business a profitable one.

Know What the Market Will Accept

Workers want to be paid a fair wage that is in line with their skills and experience. If they are underpaid, they may be more likely to leave. However, if they are overpaid, they may not provide enough value to stay with the company. For those who are overpaid, it may be a good idea to hold off on raises and other increases in compensation until their salaries are more in line with market expectations.

Cross Training and How Get More from Your Employees

With larger companies, mitigate risk of workflow fluctuation by training teams to be more flexible and remain competitive. Cross training improves capacity and keeps workflow as steady as possible through change. Key employees may move in the company, leave the company or create vacancies in other ways. In order to keep things moving, employees need to be trained on how to pick up slack and function outside of their current roles. While this definitely keeps productivity, it also can improve efficiency and reduce cost. You may end up cutting fat in certain areas.

One employee who can perform two tasks is more valuable than two people who can perform one task each. These people are generally the ones who are motivated to succeed and pay attention to detail. Therefore, they may be the ones who are most likely to take action with an eye toward staying in compliance with the law while reducing costs at the same time. It is these employees who you should think about promoting to leadership positions as soon as they are ready for them.

Make Use of Technology Whenever Possible

Automation can increase efficiency and keep costs to a more manageable level. HR software can keep track of how many hours an employee has worked, how that affects their benefits and otherwise keep relevant information on file. Keeping everything on one file or in one place within a company server makes it easier to ensure that the company is in compliance with relevant employment and business tax laws. If there is ever an issue with an employee, it is easy to document that issue and keep previous instances on file for future reference if necessary.

Keep Your Workers Happy

A happy worker is a productive worker and one who doesn’t need to be replaced. When an employee leaves, it costs money to train a replacement. It also costs money to wait until that replacement gets up to speed and can produce at the same level as the previous employee. Therefore, keeping turnover to a minimum can keep labor costs to a more acceptable level. When workers are content with their roles, they are also less likely to steal or damage merchandise through theft or incompetence.

Consider Commissions Instead of Wages

As an alternative to terminating those who cost too much for the company to keep around, it may be better to let employees earn their pay. Each time that the employee makes a sale, gets a certain number of leads or takes some other predetermined action, that worker gets paid. It benefits the worker because it allows that person to make an unlimited amount of money. It benefits the company because the worker only gets paid when he or she brings in revenue that can be used to make that payment. Depending on the arrangement between the company and the worker, it may be possible to convert employees to independent contractors and save on insurance and tax costs.

Managing labor costs while staying in compliance with the law can be a tricky balance. However, with efficient pay policies, companies of any size can keep labor costs in check and make sure everyone has a job to look forward to.

Malcolm Rowlings evaluates businesses through independent consultant work, with core focuses around; bigger ideas, bottom-lines and better business.