Quick Tips for Reducing Restaurant Overtime Costs
Keeping restaurant labor costs in check is hard work that needs to be done, not only by an owner, but also by managers and shift managers. Everyone overseeing staff on a day-to-day basis has to work together to keep labor costs in check, often by reducing the amount of overtime costs the business incurs. Here are three ways that restaurants can reduce overtime costs, without increasing the number of employees on the payroll.
More often that not, overtime is caused, not by a shortage of labor, but by a shortage of labor trained in a specific area. It may seem like you have enough people on staff until someone goes on vacation the same week another person resigns. You might then be left with only two employees with a specific skill-set, covering every shift until you can get another employee trained in this outstanding skill.
One of the best ways to prevent this is by cross-training staff. It not only reduces instances where you knowingly have to schedule employees for overtime (as in the example above), but can also prevent unplanned overtime. Having a large number of cross-trained employees can mean having the ability of send staff home during slow periods, when the ones you keep on hand are well trained in many aspects of the business. Cross training also demonstrates to employees that you are willing to invest in them, and when done as part of an ongoing effort to promote from within, can aid in retention.
Scheduling staff is time-consuming and difficult to get right. The most common way we see operators create schedules is to open a spreadsheet with last week’s version, tweak a few items and then re-save it with a new name. Repetition like this leads to waste as people fall into the trap of making the same mistakes each week instead of starting fresh. Using scheduling software like LiveHR (more on LiveHR here), that takes into account historic sales and an organization’s desired labor and productivity standards is faster. But can also reduce occurrences of overtime and flag areas of potential concern (for example a lack of staff trained in a particular area) – all while optimizing the number of staff on hand during a given shift.
Decreasing Intentional Overtiming
Some employees, especially during slow seasons, may try to trade and pick up shifts outside of what they were scheduled for. For example, by trading a shift in next week’s pay period for the one a day before (in the current pay period) they may be able to push themselves into a state of overtime. This can not only result in an increase in labor costs, but also has implications in terms of other benefits that a restaurant may be obligated to cover. A busy shift manager might not realize this is happening and welcome the extra hands on deck. Especially because the employees who do this are often a businesses’ hardest workers.
If your HR platform has automatic alerts, set it to notify the shift manager via text message if an employee is approaching a state of overtime. These sophisticated systems can also notify managers if an employee is still clocked in a set period (say 15 minutes) after their shift has ended. This provides a busy manager the reminders they need to keep shift labor costs down, decreasing the overtime accumulated in the run of a week. Some systems, can also notify a manager if their shift is in a labor overage because there are too many staff present and not enough sales occurring. Again, giving them the opportunity to correct the problem in the moment, instead of finding out at the end of the week that labor cost were too high.
Reducing and even eliminating overtime costs can be a tough goal to achieve. But with better use of HR and Payroll systems, restaurant owners and managers can dramatically impact this drain on resources.
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