4 min read

How Smart SMB Operators Save Thousands in Annual Wages

Unlock an overlooked way to organize your employee rostering schedule that helps you reduce expenses and improve margins.
How Smart SMB Operators Save Thousands in Annual Wages

Overtime costs you money.

Overtime can be caused by a common practice that is easily overlooked. What if you were creating avoidable overtime simply through the way you structure your work week?

Use this tactic to reduce or eliminate excessive overtime expenses. Simply saving 10 hours a week is worth $7,800 a year at $15 per hour.

In many businesses, the pay week runs from Monday to Sunday, but Friday and Saturday are the busiest nights. It is understandably easier to deal with payroll after the weekend rush but this structure can automatically raise your payroll costs.

If you are heavy on hours by the time you get to Friday, you are in trouble. You cannot reduce labor on the weekend because you need everybody you can find to handle the demand, so you are forced into scheduling overtime.

It is easy to rationalize weekend overtime because you are making more money and can afford a few extra bucks in payroll. Still, you should never waste time solving a problem you can eliminate. Why spend the money if you can avoid it?

The answer is simple: change your work week.

If your pay week started on Wednesday or Thursday, you would get your busiest sales period out of the way. Then you have plenty of flexibility on hours for Monday and Tuesday. Your quietest period where you can more afford to be lower on staff.

After the busy weekend, if you found that you were a little over budget on labor, you could more easily trim hours on those slower midweek days with less risk of reducing the level of service to customers.

Simply changing your work week can save on staff hours and even more expensive overtime hours. You can potentially save thousands in yearly wages with a simple tweak to how you manage your rostering.

WIIFM: What’s in it for me?

Which businesses is it for? This tactic can be adopted by small businesses in any industry that has hourly workforce and a predictable period during the week where the business is busier and requires more staff. This includes food service and hospitality, any retail business and many other businesses with hourly workers.

What is the potential benefit? Using this tactic businesses can reduce or eliminate excessive overtime expenses, simply saving 10 hours a week is worth $7,800 per year to a business with an average hourly wage of $15 per hour.

How much does it cost to implement? There is upfront work required to plan for the initiative, make minor changes to processes and to communicate the change to stakeholders. Otherwise there is no upfront or ongoing cost associated with this initiative, or investment required to put it into practice.

How often should I revisit this? Once.

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Instructions for running this play

The goal of this project is to assess your work week to determine whether you have the potential to optimize your planning and pay cycle and save money on overtime, and then make sure you implement the change smoothly.

Step 1: Analysis

Start by checking your sale history and staff roster to determine:

  • Which are your busiest days?
  • Do your staffing requirements align to your busiest days?
  • Are there 2-3 consecutive days where business is typically slower?
  • Are there 2-3 consecutive days where business is typically busier?
  • What is the current work week you use for planning and rostering purposes?

Once you answer these questions, you can determine whether there is a  2-3 day window with lower business and fewer staffing requirements.

If this window aligns with your current work week, congratulations, you have good alignment between demand and your work week and have already optimized your planning and pay cycle.

If not, you can potentially consider changing your work week to align better to peak periods of customer demand, and you should move on to Step #2.

Step 2: Planning

Time to plan for the change to make sure it all runs smoothly.

  • When will you make the change?
  • Have you created a plan for the elongated and shortened work weeks as you make the transition (the change will create one longer work week in your cycle and one shorter week)?
  • What systems and processes will be impacted by the change?
  • Which people will be impacted by the change?
  • What is your plan to communicate the change to employees?

Once you have a roadmap for switching your work weeks you can move on the implementation and execution of the change.

Step 3: Update Systems & Processes

Map out the systems, processes and people impacted by the change. Then make sure they have been updated on the change.

  • Update finance systems with the new calendar.
  • Update human resources systems with the new calendar.
  • Create your roster for the three-week around the change.

Step 4: Execution

If your systems and processes are ready and your stakeholders have been communicated to about the change, it’s time to switch your work week planning cycle and get started.

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Final takeaways

Now that you have a baseline, how often will you review your work week? Are there any other considerations you need to make?

I recommend running through this exercise with your managers and advisors to guide your analysis, design and make sure any transition is well managed and communicated.

Before you go...

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