Cost of labour critical for small business

One of the key components to a small business is labour, or more commonly, people.

Getting this right is one of your key objectives, as staff costs are directly tied to productivity.

• Staff can result in your costs being too expensive if corresponding productivity gains are not achieved. It’s often said that they should create three times their cost.
• Staff could damage the business both inside and outside the workplace with poor attitude, and only doing what they must until its 5pm and then walk out the door.
• Good staff can, on the other hand, suggest improvement, ideas and champion systems and customer service.

It’s important that small business re-evaluate staff performance in terms of value and attitude. Eventually they will show up in your results.

Once you suspect staff are not worth what you’re paying them then take remedial action ranging from training to warnings. If you implement training often this will be a good barometer.

Some staff are never going to get it – it is often the more experienced ones who should have had the training. Against this, some staff with little training and experience can rise fast, as a result of having an exceptional attitude towards working for your business.

Look for leadership in staff, and support management and systems. Conversely, those that have an excuse or want to argue on a regular basis, it’s perhaps time for them to go for the greater good of the business.

Having effective and simple systems is the best way to get the most from people.

For more information, speak to one of our TaxAssist Accountants today.

Date published 24 Jul 2017

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.