Modernize labor tracking: 5 tips for small businesses

Labor tracking is a divisive topic, but time and labor management are critical to the financial well-being of any small business. Getting the right labor tracking software can help you stay on top of the time—and pay—that goes into meeting your customers’ needs.

A first great step to lowering operating costs is knowing how much labor is costing your small business. But before diving into the “how” of labor tracking, let’s get into what labor tracking is—and what it isn’t.

What is labor tracking?

Labor tracking is the act of logging the work completed by your employees. Distinct from time tracking, labor tracking involves taking note of all the human activities that go into getting your product or service to the customer, including warehouse receiving, processing, assembly, and marketing.

Labor tracking software—sometimes referred to as workforce tracking software—can help small business owners see how much their teams are working… and how much it costs to get your product to market. With labor costs for private industry workers averaging $43.11 per-hour in 2023, it should come as little surprise that smart businesses are interested in labor productivity tracking.

Depending on the labor tracking software, it might log hours worked per employee. Other workforce productivity software might help you track per-project productivity instead.

Is labor tracking right for you?

Because of high labor costs and the often thin margins of running a small business, time and labor tracking might sound like a tempting idea. But to some members of your team, any kind of labor tracking system might seem like a breach of trust.

Fortunately, as a small business owner, you have the unique opportunity to smooth over ruffled feathers on your team. If you decide to use labor tracking software, involve your team in its implementation and make it clear why and how you’re going about its use. Remind your team this isn’t about micromanaging employees, but ensuring the business is healthy, and provide time for them to ask questions.

After all, reduced costs means more stability. By using a workforce tracker and keeping an eye on labor metrics, you’re taking steps to stay on top of spending and ensure your business is around for a long time. And that’s something your entire team can get behind.

How to make tracking hourly employees a breeze.

Whether introducing time tracking or labor tracking for hourly employees, consider the following steps to implement tracking without sacrificing employee experience.

Set expectations during onboarding.

As new members join your team, have a formal plan for broaching the topic of labor tracking. Whether in your employee handbook or during your new-hire meetings, mention that you use labor tracking software to help the business stay healthy. Note what the tool is, how it’s used, and how it affects your team.

Onboard current team members to the tracking software in a similar manner. Remind everyone on your team that this software isn’t due to a lack of trust, but about helping your small business stay healthy for the long haul.

Deliver schedules consistently.

Play your role in labor activity tracking by consistently delivering work schedules so your employees can plan ahead.

Life happens—people get sick, cars break down, and global pandemics break out. Delivering schedules as early and consistently as possible allows your team to plan for their shifts.

Consistent schedule delivery also makes it easier for you to anticipate labor expenses and build a healthy financial foundation.

Don’t struggle with building an employee schedule. With Homebase, learn how to make an employee schedule with ease.

Communicate regularly.

Regular communication helps you run your business and helps your team meet your needs. Maintain clear, open lines of communication between you and your team so any scheduling issues, discrepancies with time, and/or time-off requests can be handled with ease.

Use GPS-tied clock-ins.

Automatically record punch-ins and punch-outs with a GPS-tied clock-in system. GPS-tied systems use an atomic clock to ensure their time clock function is always accurate.

Many GPS-tied systems make it easier to manage distributed teams, which is especially useful if your business has more than one storefront or remote employees.

Lots of employees on the move? Consider a system that offers mobile time tracking, too.

Track break policies.

Offering a generous break policy can go a long way to keeping your team happy. It helps you stay compliant with labor laws, and everyone needs a breather every now and again.

Labor trackers can help you learn when employees are taking their breaks—and when they’re not. Both are equally important to the health of your business. If you notice certain employees aren’t using their breaks, reach out and talk to them about it. The last thing you want is a team that burns out.

It’s also important to raise when your employee is taking too many breaks. Not only does it cost your company, but it can reflect issues with workflow. Are employees over-resting as a result of their duties, or are they just not motivated to complete their tasks?

Failure to use breaks can also indicate issues with workload. Tracking breaks can give you information on your business’ labor standards and how to meet your team’s needs while they’re helping meet yours.

Track productivity against labor metrics.

Go beyond simple measures like “hours worked.” Labor tracking can generate business metrics on things like:

Sales quotas
Units per transaction
Projects completed per week
Revenue per employee
Overtime hours

Your business is unique—think about what else it would make sense for your business to track. Get your team on board by involving them in the discussion: what information and quota metrics would be useful for them in their day-to-day tasks?

Audit time records at the touch of a button.

Auditing time records periodically is a great way to stay on top of your business expenditures.

Look at your employee time use, both individually and as a whole. Are people frequently logging overtime? What are people accomplishing during a typical day? Are certain activities eating more time than others?

You’re not simply looking for discrepancies between when people say they worked and what records show. Labor activity tracking can show workflow discrepancies and make sure your business and staff are in a good place.

Don’t sacrifice employee experience—involve your team.

If you’re rolling out a new labor tracking system, gaining your team’s trust is paramount. This can take time, and overbearing labor tracking policies can easily breach that trust.

Part of delivering a healthy, beneficial work experience can be involving your team in new work policies. Open communication is good news from your business. If your team feels comfortable airing concerns, it can help you collaborate to come up with a real solution to meet your needs and theirs.

5 tips for tracking (and lowering!) labor costs

So: you’ve learned the benefits of labor tracking and you’re ready to get started. Here are a few ideas for how to implement a labor tracker in a way that strengthens your business and gives you new insights into your business’ operations.

1. Rotate your schedule over time to make sure your employees are all working equally.

Especially if your business is busier on some days than others, rotating your schedule can help balance your team’s workload. Labor activity tracking can identify heavy labor times and tasks so the tough stuff doesn’t always fall on the same person.

Rotating schedules can also help avoid overtime costs. A rotating schedule and time card calculator can help ensure your hours are being distributed equally across your team.

Remember to keep lines of communication open with your team. If someone can’t accommodate a rotating schedule for a certain reason, work with them on it and find a solution that works for you both.

2. Use free software that tracks your labor costs, sales, and warns you when costs rise.

Trying to manually track costs with a labor cost calculator can be a huge time suck. When you’re trying to run a business, that’s not sustainable.

Free employee scheduling and time tracking software like Homebase can integrate scheduling and time tracking with your point of sale system so you can monitor labor costs and sales.

Homebase lets you hire new employees, build your team’s schedule, track labor hours, and export your timesheets to payroll—all in one place. It even notifies you when a schedule you build is too costly for you, or if an employee is approaching overtime.

3. Use sales forecasts to figure out how many people should work in a week.

Avoid overstaffing with sales forecasts.

Following sales and workforce forecasting best practices can help you determine how many people you should have working at a given time. This can reduce the likelihood of having too many people working when your business is typically slow. By reducing labor costs, you can potentially offer great benefits to your amazing team.

Simplify sales forecasts with the right help. Use software like Homebase to predict your sales for a given day using past sales data. With that information, you can determine how many people should be working so that you’re appropriately staffed.

4. Track uses and misuses of company time.

With labor tracking, you know when your team is working hard and when they’re hardly working. If your team is clocking in early, having a friend punch their card, or deciding not to take a much-needed break, you want to know about it so you can make your expectations clear.

With Homebase, employees can’t clock in early. Our tablet time clock app takes a picture of employees when they clock in so you know when it happens. You might also consider mobile GPS tracking for your team members in the field or at different sites.

A proper time-tracking solution allows employees to clock in using a mobile app on their phones. That way, you have access to all the right data in one place.

5. Automate your scheduling process.

Sometimes, business owners spend too much on labor costs because they can’t find a low-cost scheduling option that works. Automating the employee scheduling process ensures labor needs are met, but not exceeded, saving you and your small business time and money.

Use an online schedule maker and save yourself an average offive work hours every week. That’s money in your pocket!

Go beyond labor tracking with Homebase.

There’s enough on your plate. Streamline labor tracking with Homebase and save time, money, and endless headaches.

Automate payroll, schedules, and team notifications in one place with Homebase and focus on driving your business forward. Superpower your business today.