Labour cost analysis and modelling: understanding your labour cost drivers, testing roster scenarios, predicting cost impacts, and optimising cost-to-service ratio.
The Challenge
You don't know what your labour costs really are (including on-costs)
You can't predict cost impacts of roster or staffing changes
Labour costs are creeping up and you don't know why
You make staffing decisions without understanding cost implications
You don't know if your staffing levels are optimal
What's Included
Analysis of your current labour costs: base wages, penalties, benefits, taxes, superannuation, on-costs.
Identification of cost drivers: what factors drive labour costs (staff mix, shift patterns, penalties, benefits).
Models of different roster scenarios: impact on labour cost, service delivery, staff satisfaction.
Analysis of labour cost per unit of demand (per transaction, per patient, per customer), identifying efficiency.
Analysis of cost trends over time and forecast of future costs under current practices.
Recommendations for cost-saving changes that don't sacrifice service or employee satisfaction.
Why It Matters
Labour is often the largest cost in a services business. Understanding and managing labour cost is critical. Labour cost modelling helps you understand what costs what, test different approaches (roster changes, staffing mix, pay approaches), and identify cost-saving opportunities. It also helps with budgeting and forecasting—you can predict how wage increases or staffing changes will affect costs. Modelling also helps with strategic decisions: should you hire more staff, invest in training, change roster patterns, etc.? Decisions are better when you understand cost implications.
Clear visibility of labour costs and cost drivers
Ability to test roster scenarios and predict cost impacts
Identification of cost-saving opportunities
Better budgeting and forecasting of labour costs
Balance between cost efficiency and service quality
Data-driven decision-making on staffing investments
The Process
Current labour costs analysed: hourly rates, benefits, taxes, penalties, on-costs
Cost drivers identified: staff mix, shift patterns, penalty rates, benefits
Roster scenarios modelled: different staffing levels, shift patterns, pay approaches
Cost implications assessed: cost per demand unit, total labour cost, cost trends
Optimization opportunities identified: cost-saving changes without sacrificing service
Scenarios presented with cost impacts, allowing strategic decisions
Best For
Growing businesses wanting to understand and manage labour costs
Services businesses where labour is the major cost
Organisations needing better budgeting and cost forecasting
Businesses looking for cost-saving opportunities without sacrificing service
Complementary Services
Data-driven rostering that aligns staffing levels to actual demand: analysing demand patterns, forecasting staffing needs, creating rosters that match demand, and avoiding over-or under-staffing.
Roster design that incorporates Modern Award requirements from the start: minimum rest periods, maximum weekly hours, penalty rates, break requirements, and special conditions. Avoids breaches and expensive corrections.
Correct calculation of penalty rates for weekend work, evening work, and special periods under the Modern Award. We ensure employees are paid the correct penalty rates and you're not underpaying or overpaying.
FAQ
Hourly pay, penalty rates, superannuation, payroll tax, training, recruitment costs, benefits (if any). Total cost is often 30-40% higher than base wages due to on-costs.
Improve efficiency: roster to match demand, reduce overtime, improve scheduling. Reduce on-costs: review benefits, payroll tax liability. Increase productivity: training, systems, tools.
Options: increase prices/revenue, improve efficiency, reduce service level, grow demand to spread fixed costs. Cutting staff isn't always the answer.
Model both: cost per unit of service. Low cost with poor service creates retention and reputation issues. You need the right balance.
At least annually as wages change. More frequently if there are major business changes or if monitoring shows costs diverging from forecast.
Can't find the answer you're looking for? Get in touch
We can help you implement labour cost modelling and start seeing results. Book a consultation to discuss your specific needs and explore how this service can transform your business.