In the 43 months I was on the road as a small business consultant, I trained clients to reduce expenses and plan for a profit. One area I found savings was in labor waste. This was especially true with construction and service companies whose employees drove to different job sites. There were actually categories of recommendations that I wrote for clients.
Three recommendations to stop driving up hours:
- Clock in at the Job Site
- Scheduled employees when you need them
- Gas up at the end of the day
Clock in at the Job Site
This particular savings applied to construction companies of all sorts. They often allowed employees to come to the office so they could ride along in the company truck. This usually resulted in their employees clocking in at the office even though my clients had no work for them until they got to the job site.
Unless the company required them to show up at the office to ensure they had a full crew before the driver left for the job site, the company could establish the requirement for employees, other than the drivers of the company vehicles, to show up at their job sites and to leave from the job sites. You could allow them to ride along so as to not use their own gas provided they didn't clock in until they got to work.
If the supervisors or drivers need to pick up the vehicle or attend meetings at the office before beginning work, then they will clock in at the office.
Scheduled Employees When You Need Them
This sounds obvious until you see how it works in reality. Many companies have a supervisors meeting first thing in the morning before the crews depart for the job sites. If that meeting starts at 6:30 AM and runs until 7:00 AM, don't allow crewmembers to clock in before 7:00 AM, +/- 10 minutes.
This applies whether you want them at the company's yard to ensure you have full crews or whether they show up at the job site. If the job is a long way out of town, you need to provide transportation to the job site. Check with your human resources for what distance is reasonable to require them to show up at the job site.
Gas up at the End of the Day
One client's crews worked as much as 60 miles away so they all rode together. The driver would pull into a convenience store for gas. Everyone was on the clock while he got gas. As this was during rush hour, the station was busy so they had to wait to get a pump.
While he filled up, everyone else got coffee and snacks or breakfast. The company thus paid for the crew to have an unofficial break. Here's an example of the cost of this break:
- 3 laborers excluding driver who pumped and paid for the gas
- 10 minutes to wait in line, pump the gas, and pay
- 5 days a week x 50 weeks/year (allows for holidays)
- $12.50/hour for fully burdened labor*
3 x (10/60) x 5 x 50 x $12.50 = $1,562.50/crew in labor savings
Assume three crews: $4,687.50 saved annually.
On $1,000,000, that is 0.5%. But if your net profit is 2%, this is a quarter.
I recommended dropping the employees off after returning to the office. Then the supervisor/driver would fill up the vehicle. Employees are eager to go home at this point in the day.
*Fully burdened labor includes FICA, Medicare, SUTA, Workers Compensation, and cost of paying for holidays and vacation. There was no insurance, 401K contributions or other benefits. It also included an annual bonus of $370 plus $16 for shirts. They had 5.51 hours per week overtime. The basic labor rate was $8.50 per hour. When all labor burden was added, the effective labor cost per hour was $12.69.
While you may not have the exact same things driving up your payroll hours, I have seen enough to suspect you have similar padding. Correct these three leaks will make you more profitable.
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