How to Reduce Labour Costs

It’s been an interesting time in the care sector as workforce recruitment, pay and retention is challenged yet again for employers. A 6.5% rise in living wage from April on the surface of the announcement sounds like a good thing, which it is of course for the brilliant employees. Yet, is a cause of huge worry for the Care Homes and Home Care suppliers as their spiralling labour costs look set only to increase this year, particularly in light of the COIVID19 crisis. Often overlooked too is the knock-on impact of the living wage on staff whose pay is set above this level. As the living wage rises, so too must their pay if this important ‘differential’ is to be maintained.

 

At Marr we work with a range of Care Homes and labour costs and retention are consistently number 1 on their worry list. We have specialists in our team who focus solely on labour procurement for clients and we’ve tapped into their considerable experience to share our tips on reducing labour costs and staff retention.

 

Reducing Agency Costs

 

  1. Aim to use less temporary labour. Set clear KPI’s on this and measure monthly to ensure sustained focus. Work on staff retention, detailed below, to reduce the need for temporary labour.
  2. Consider switching recruitment agencies rather than sticking to one or working with multiple agencies. Renegotiate your terms with existing agencies, even to make small savings that accumulate over time.
  3. Understand your cost base – what are your temporary staff being paid, and what is the agency receiving? Where could savings be made?
  4. Use technology to automate systems and make processes more efficient. Invest in ways to understand your cost base better – online timesheets are a very effective way to do this
  5. Consider options to convert temporary staff to permanent – most agency agreements will contain specific clauses governing this. After 12-13 weeks it should be free of charge to employ a temporary staff member
  6. Consider working with a procurement specialist such as Marr Procurement. We work closely with agencies to negotiate competitive costs and find economies of scale over time.

 

Retention and Reduction in Sickness Leave

 

  1. Onboarding Stage
    • Improve your interview and vetting techniques to improve the chances of hiring the right person up front.
    • Be clear on what staff will earn as you employee them. False expectations will increase the likelihood they will leave.
    • Assign them a mentor from day 1 to support them.
    • Perfect your induction process.
  2. Support & Mentorship
    • Clear and open communication and support channels should be in place from the moment they start with you. People who feel listened to will not bottle up issues and leave.
    • Managerial training in temporary workforce management is key. It’s a tricky job that requires particular focus on keeping the workforce engaged in your company’s policies and operational style. There’s much that is true in the adage that people leave managers and not companies.
    • Don’t just tick the wellbeing box, make sure employees look after their wellbeing. Work on a workforce wellbeing strategy that’s realistic to implement and measure.
  3. Maintain Engagement
    • Drive employee engagement with strategies in training, mentoring and clear career progression. Make sure every employee is clear on these and is on a documented path with them.
    • Generate a sense of pride in working for your business. Internal marketing is key in making sure that even temporary labour understand what you stand for and how to deliver your way. This should be a key part of your induction programme for all employees temporary or permanent.
    • Develop a recognition and rewards system, deliver on it consistently and use social media to celebrate your temporary and permanent team members.

 

Don’t Forget To Sell The Positives

 

Whilst all of this is going on in the background at a managerial level, make sure you sell the rise in minimum wage as a positive in your internal marketing to your workforce. Showing you care and that you want to educate workers and make sure they know what their new pay levels will be will reflect very well on your business.

 

Can We Help?

 

On average, we save our clients at least 12% on their labour costs.

 

If labour costs are an ongoing issue for your Care Sector business, we’d love to chat to you about how we can help reduce them for you.

 

www.marrprocurement.com

01206 328888

info@marrprocurement.com

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