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Workforce cost management
Blog Post

Optimise labour costs in your business with RosterElf

2 min read · July 21, 2014 · updated October 15, 2024

Understanding the importance of managing workforce costs

Defining workforce costs for effective management

Workforce costs refer to all expenses associated with employing staff, crucial for evaluating overall business profitability. These costs include:

  • Wages
  • Salaries
  • Employee benefits
  • Taxes
how to control labour costs in real-time by setting daily sales targets, tracking labour costs, adjusting rosters, aligning staff with demand, and comparing budget vs actual hours

Understanding these elements is essential for effective financial management. Key points include:

  • Significant expense: Workforce costs represent one of the largest expense categories for many companies.
  • Impact on profit margins: High staffing expenses can erode profit margins, making it vital to monitor and manage them effectively.

How to calculate workforce costs efficiently


To control costs effectively , it’s crucial to understand how to calculate total workforce expenses and the components involved:

  • Direct costs: These include hourly wages and salaries.
  • Indirect costs: This encompasses benefits, training, and taxes.

By understanding these components, businesses can improve financial performance and allocate resources more efficiently, keeping workforce expenses in check.

workforce image showing different icons representing people management and labour costs in Australia

Workforce cost standards across industries

Benchmarking workforce costs effectively

Different industries have their benchmarks for ideal workforce cost percentages. For example, in hospitality, businesses typically aim to allocate 30% to 35% of total revenue to staffing costs, a balance that helps maintain quality service while ensuring profitability.

Other industries have varying standards:

  • Retail: Often targets workforce costs around 10% to 20% of revenue.
  • Manufacturing: Companies may aim for 15% to 25%.

Understanding these benchmarks allows businesses to evaluate their staffing expenses and identify areas for improvement.

Avoiding common workforce cost management pitfalls

Mistakes to avoid in cost management

Many businesses face challenges in managing staffing costs effectively, often falling into common traps , such as:

  • Overstaffing: Scheduling more employees than necessary, especially during slow periods, increases workforce costs and diminishes productivity.
  • Lack of real-time data: Without accurate information, businesses struggle to make informed decisions about scheduling and staffing needs, leading to inefficiencies.
  • Poor communication: Inadequate communication about shifts can result in last-minute adjustments, overtime pay, and staffing inconsistencies.

Recognising these pitfalls empowers us to implement effective strategies for workforce cost management.

industry professional explaining labour costs to a room of people in an educational session

Enhancing cost management with our platform

Streamlining workforce management

Our platform simplifies workforce cost management for businesses, particularly in the hospitality sector. Its user-friendly interface allows managers to create and adjust employee schedules while maintaining budget constraints.

Key features include:

  • Real-time cost tracking: Keep an eye on staffing expenses as they occur.
  • Automated adjustments: Modify rosters based on sales targets effortlessly.
  • Individual budgeting capabilities: Tailor budgets to specific sites for greater control.

These functions empower businesses to make informed staffing and resource allocation decisions, ensuring that costs remain within industry standards.

Key features for optimising workforce costs

Our platform offers powerful features to enhance workforce management and streamline operations:

  • Budgeting tools: Set daily sales targets and allocate a specific percentage of revenue for staffing.
  • Real-time updates: Automatically calculate hours worked versus budgeted hours for immediate adjustments.
  • Intuitive scheduling interface: Easily create and edit rosters while considering employee availability and skill sets.

These features enhance operational efficiency and help minimise staffing issues.

User-friendly design for better management

The design of our platform enhances user experience and efficiency, making it easy for managers and staff to navigate.

Taking action for effective workforce management

Initiate your journey with us

Now is the perfect time to explore our platform. Discover how its powerful features can transform workforce management processes. With user-friendly tools designed to:

  • Streamline scheduling
  • Control costs
  • Enhance operational efficiency

Our platform empowers businesses to make informed decisions that drive profitability. Whether in hospitality or another industry, we offer tailored solutions to meet unique needs.

Don’t miss the opportunity to optimise your workforce and improve your bottom line. Start your journey with us today and see the difference it can make for your business.

RosterElf software screenshot showing financial summary of labour trends, helping businesses optimise workforce costs

Experience our free trial for cost management

Getting started with our platform is easy. Take advantage of our free trial to experience the benefits firsthand. To sign up for the free trial:

  1. Visit our website.
  2. Click on the "Start Free Trial " button prominently displayed on the homepage.
  3. Complete the straightforward registration form with your basic information, such as name, email address, and business details.

Once you submit the form, you will receive a confirmation email with a link to set up your account. After confirming your email, you can log in and begin exploring the features.

The trial typically lasts for 14 days, allowing ample time to test various functionalities such as scheduling, budgeting, and real-time cost tracking. During the trial, access helpful resources, including tutorials and customer support.

This ensures you get the most out of your experience. Experiment with different settings, input your data, and see how our platform can optimise workforce management practices.

By the end of the trial, you will understand how our platform can benefit your business. You can then make an informed decision about subscribing.

Support and resources for effective management

We are committed to ensuring a smooth onboarding experience for new users. We offer a range of support and resources to help maximise the platform's potential. Upon signing up, you can access a comprehensive knowledge base that includes:

  • Detailed articles
  • FAQs
  • Video tutorials covering various aspects of the software

This self-service resource enables quick access to answers for common questions and information about features at your own pace. We provide dedicated customer support through multiple channels, so you can reach out to our team via email or live chat for immediate assistance.

Our support team is well-trained and ready to assist with any queries or issues that may arise during your trial or subscription. For those looking to dive deeper, we also offer Webinar and training sessions.

This allows for interaction with experts and insights into best practices for managing workforce costs. These sessions cover various topics, from basic features to advanced strategies for optimising costs.

With these robust support and resource options, you can confidently navigate our platform and harness its full capabilities to enhance your management practices.

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Important Notice

The information contained in this article is general in nature and you should consider whether the information is appropriate to your needs. Legal and other matters referred to in this article are of a general nature only and are based on RosterElf's interpretation of laws existing at the time and should not be relied on in place of professional advice.

RosterElf is not responsible for the content of any site owned by a third party that may be linked to this article and no warranty is made by us concerning the suitability, accuracy or timeliness of the content of any site that may be linked to this article.

RosterElf disclaims all liability (except for any liability which by law cannot be excluded) for any error, inaccuracy, or omission from the information contained in this article and any loss or damage suffered by any person directly or indirectly through relying on this information.

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FAQ

Frequently asked questions

Rostering and Payroll Software Questions? We have the answers.

  • Labour cost refers to the total expenses a business incurs for employing staff. This includes direct costs like wages, salaries, and overtime, as well as indirect costs such as employee benefits, taxes, and training. Managing labour costs is essential for maintaining profitability.

  • Standard labour costs are industry-specific benchmarks for how much a business typically spends on wages and related employee expenses. These standards vary by sector, such as hospitality aiming for 30-35% of revenue and retail targeting 10-20%.

  • A normal labour cost refers to the typical percentage of revenue that a business allocates to employee wages and benefits. This varies by industry, with some sectors like manufacturing averaging 15-25%, depending on the nature of operations.

  • A reasonable labour cost is an amount that allows a business to balance employee wages with profitability. In many industries, reasonable labour costs range between 10% to 35% of total revenue, depending on factors like industry type and operational needs.

  • The cost of labour per hour depends on the industry, region, and the skill level of employees. It typically includes not just wages but also benefits, taxes, and overheads. Businesses often calculate this to ensure profitability and compliance with wage regulations.

  • Labour costs are calculated by adding direct costs like wages and salaries to indirect costs such as employee benefits, taxes, and overheads. To get the total labour cost, sum up these components for each employee or group of employees over a set period.

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