Wages costs and productivity are everyone’s big issue. To track performance, you need figures that are accurate, easy to find, and easy to explain to people they affect. Managers need them to benchmark rostering and hiring decisions. Staff need to understand the productivity that’s expected, and how they contribution to business success.
Important Staff KPIs:
- Total cost of labour – wages plus all on-costs. Some aren’t paid at the same time as wages, but are still a part of the weekly cost eg workers compensation premiums.
- Labour costs as % of total sales: the raw figure that most people watch.
- Labour cost per customer: this can look frightening, but it’s real! A great way to make an impact on managers who don’t understand the impact of their rostering.
- Labour cost per hour: it shows up the less profitable times.
- Fixed and variable wage costs: the staff you must have, and those you can call in as needed. For a large business, a flexible and permanent workforce gives the greatest productivity, but it needs work to create the structure.
- Number of hours worked: total hours, and measured by department.
- Number of staff: full-time, part-time and casual/hourly staff. Ideally, we want fewer people working more hours – what’s your pattern?
- Labour cost compared to budget or forecasts for each department: the variation shown as a gross figure and as a %.
- Amount of accrued annual leave: the cost that’s ‘waiting in the wings’
- Amount of accrued tax deductions: another cost to be placed in your cash-flow calculations.
Measuring Staff Productivity:
- Staff output per hour: eg 2 sandwich staff should be able to handle 100 customers over 2 hours. Bar staff should be able to do $1000 of sales per hour in the peak period, and 4 waiters look after 100 customers on a restaurant shift. These are hypothetical figures, but you can see the thinking behind them. What are the numbers for your place?
- Sales increase if an extra server is used: by how much do sales increase if you add one more good server?
- Speed to complete tasks: how long should it take a barista to make 4 lattes and 2 espressos? How long does it take an efficient housekeeper to make up a room, or a function waiter to set up a banquet for 100 people? Time to set some measurable standards.
- Labour cost as % of each department’s sales: kitchen, bar, restaurant, functions etc. It’s essential to give each department feedback on their performance and roster effectiveness.
- Number and % of complaints: if work is rushed and errors increase, output falls and costs rise.
- Return on Investment for labour-saving equipment: how quickly would you pay for a fully-automatic espresso machine, if it sped up morning queues? How much labour could be saved with new slicing and dicing equipment?
You probably already have the figures needed to make smarter decisions, now it’s time to put them to work!