High labour costs are a huge challenge for employers, particularly in the security industry. According to Statista, labour costs are equal to over 70% of overall organizational expenses. That means you cannot ignore their importance, irrespective of your business size.
How to reduce labour costs without compromising on service quality? This question is commonly asked by supervisors while managing security teams. Traditionally, they can look towards various options to cut down their expenses. These may include reducing the team size, reviewing compensation plans, or upskilling security officers to make them more productive.
However, all these are short-term solutions only. For sustainability, security companies should prefer viable solutions with long-term implications for business growth.
Hence, this article brings four proven strategies for UK security companies to cut down their labour. Let’s explore them to find out what suits your organization.
An Overview of Labour Costs
Everything employers spend to manage their team is included in labour costs. It includes salaries, bonuses, overtime, payroll taxes, hiring and training costs, and additional compensation expenses.
Labour costs are unavoidable; they are an essential part of organizational management. Nevertheless, business owners can take a few steps to bring them down and achieve long-term financial benefits. To achieve this goal, they need to be proactive and vigilant with their HR strategies.
Type of Labour Costs
Labour costs have three major categories:
1. Direct and Indirect Labour Costs
Direct costs refer to expenses related to employees who are directly involved in delivering services. In the security industry, for instance, salaries paid to security guards are termed as direct costs. Conversely, wages paid to support the team are indirect labour costs. These may include the salaries of HR, administrative, and training staff.
2. Fixed and Variable Labour Costs
As the name suggests, fixed labour costs remain constant throughout the service delivery lifecycle. Common examples include employee pay rates, benefits, and health insurance premiums. On the other hand, variable labour costs keep changing with varying business activities. For example, if a security guard works four extra hours in addition to the assigned shift, the company shall pay them overtime and performance bonuses, etc.
3. Tangible and Intangible Labour Costs
Tangible expenses can be observed and measured quite easily. Typical examples include the cost of equipment, employee wages, etc. However, intangible costs can’t be predicted or calculated easily. They include productivity losses, absenteeism, and costs associated with vetting, hiring, training, and onboarding new staff due to high turnover rates.
Proven Methods to Cut Down Labour Costs
Here are the four best ways to bring down labour expenses while maintaining staff productivity and efficiency:
1. Optimize Staff Schedules and Work Hours
Predicting the estimated work hours in advance is the best way to cut down labour costs. Employers should carefully understand the client’s requirements and project details.
Based on their assessment, they should forecast the labour demand and calculate the approximate time required to complete that task before the deadline. Similarly, they should build flexible work schedules. A cloud-based workforce management software would be a more feasible option.
Following this approach will significantly decrease job stress among security guards. They can plan their shift time by evaluating their ongoing engagements. Eventually, predictable work schedules will encourage employees to become more productive and ultimately reduce labour costs.
2. Eliminate Time Theft with Geofencing
Time theft is a common issue in the UK security industry. Over 90% of employers accuse security guards of misusing the assigned shift timings by misrepresenting work hours or staying idle. In some cases, they become absent from the client’s site while their shift is running.
To address this problem, security companies can use an automatic HR solution with biometric and geofencing capabilities. With this tool, security officers must reach the designated location and use their fingerprints to start their shift.
In addition, they must ensure their presence within the service area until the shift ends. If they go outside the predefined radius while the shift is running, the system will immediately inform the supervisor.
As a result, there is no possibility of stolen time. The technology can save employers up to $1,500 per employee every year.
3. Reduce Unplanned Overtime with Time Tracking
Another key factor behind rising labour costs is unplanned overtime. If a shift can be completed in eight hours, why pay for any additional time? Most HR professionals call overtime a silent contributor to labour expenses. It adds a sizable chunk to HR budgets.
Effective scheduling can minimize unplanned overtime. An employee must be informed of their scheduled work hours before the start of the shift. Once the limit of the maximum number of weekly or monthly hours has been reached, the manager should calculate wages accordingly.
The data can be managed on digital timesheets via cloud-based workforce management software. The tool enables employers to track accurate work hours, make calculations instantly, and keep records for future use.
4. Focus on Employee Retention
High turnover rates also contribute to increased labour costs. Companies with low turnover rates can cut down their labour expenses by 30% on average. Additionally, a happy and satisfied workforce delivers remarkable results and exceeds clients’ expectations.
To retain great employees, make wellness a priority. Start by offering competitive compensation based on the skills and expertise of your security guards. In addition to regular wages, give them performance-based bonuses for motivation.
Similarly, take care of the safety of your security team, particularly lone workers. Security guards patrolling alone in high-risk areas are vulnerable to various threats. Hence, use patrolling management and automated welfare checks to ensure lone workers’ safety and win your employees’ loyalty.
Rising labour costs can disturb the overall budget of an organization. Most businesses in the UK security industry struggle to bring these expenses down while improving their service quality. Achieving this milestone, however, is not an easy task.
We have discussed four proven strategies security companies must use to cut down their labour expenses. These include optimizing staff schedules, eliminating time theft, reducing unplanned overtime, and reducing turnover rates.
A cloud-based workforce management software is the best solution to implement those strategies. Features like automated scheduling, time tracking, biometric attendance, and geofencing can be extremely useful in reducing labour expenses. Similarly, patrolling management and welfare checks can help security companies comply with lone worker safety regulations and make their teams more productive.