Every business wants to reduce costs while maximizing profits. That doesn’t just happen overnight! Gathering your company’s financial data is key to making better decisions and growing effectively.
Understanding employee costs
Employee costs go far beyond employee salaries. Being aware of the true cost of employees can help an organization move in the right direction. You’ll be able to effectively delegate work, meet profit goals, and grow your workforce correctly.
Employee costs can come from a variety of areas. This includes fringe benefits, administrative costs, employee tools, and office space or alternative workspaces.
So how can you take advantage of your financial and workforce data?
In this article, we’ll go over five tips to do so. The first tip is dedicated to our newest finance tool that can do most of the work for you: Our Financial Workspace.
Use our Financial Workspace
One of the best ways you can reduce and manage your employee costs? Really know what’s happening month after month! Factorial’s Financial Workspace has all the essential data you need in one place.
What is The Financial Workspace?
The Financial Workspace is the newest addition to the Finance app on Factorial. It holds financial data and information for CFOs, managers, and decision-makers. It does a lot of the work for you by updating on its own and gathering real-time data.
Get insights on company costs. This includes headcount analysis and projections and team and management costs. This allows you to make better hiring decisions, make changes when necessary, and manage future costs. You can do all of this and more without being a finance expert!
What The Financial Workspace brings to the table
You, your CFO, or anyone else who has access to the Financial Workspace will be able to get answers to important questions like:
- Number of people reporting to you this month
- Monthly team costs with a timeline view
- How the company cost is balanced among direct reports
- The company costs managed by your direct reports
- Detailed view of reports with name, role, company cost, cost center
Calculating employee costs
Understanding employee costs can help you budget and make better financial business decisions, no matter the size. The Financial Workspace automatically generates employee cost data when payroll summaries are uploaded.
Payroll summary makes things much easier, but it may not always be available. If that’s the case, the Financial Workspace will provide an estimation based on the contract gross salary of each employee multiplied by 1.33 to get the estimated cost.
Track hours worked and overtime
If you have hourly employees, keeping track of hours worked and any overtime can help you assess any extra or unnecessary expenses. Keeping track of these hours can be done in a variety of ways. Many companies use timesheets or excel, but the most practical and effective way is with a time-tracking software.
While timesheets may seem like the simpler choice, they’re less accurate. With a time-tracking software like Factorial, your employees can clock in and out at the correct moment and not have to guess or round to the hour and minute.
Factorial makes it simple to track hours worked and overtime. In addition, you can analyze metrics like absenteeism to help you make better business decisions.
Make retention a priority
Is it surprising to hear that employee turnover is an undeniably large expense for most companies?
In fact, according to SHRM, just one resignation can cost a company up to a third of an employee’s annual salary. And with companies losing about 12% of their workforce to voluntary turnover, it’s estimated that in 2022 alone, the overall cost of voluntary turnover was over $1 trillion.
If you want to reduce the cost of employee turnover, you must prioritize employee retention. Some effective ways to improve employee retention include:
- defining their EVP and communicating it
- revisiting employee benefit and compensation plans
- having strong leadership
- offering a healthy work-life balance
- gathering and listening to employee feedback
- recognizing and rewarding employees
In fact, Factorial makes it simple to keep in touch with teams and gather feedback. Using Factorial’s Survey feature, managers within your organization can easily create and send out surveys when necessary.
When creating the surveys, choose the frequency, start date and time, end date, participants, whether or not it will be anonymous, and more. Add the types of questions that make the most sense for the survey.
Whether it’s a text answer, a number, rating, or single choice, the options are there. But it doesn’t stop there! Managers and admins can assess the survey analytics once it has closed.
Devote time to headcount planning
Headcount planning, also known as workforce planning, is the process of understanding the employees you have on an organizational level and developing a plan to hire new staff that fit within the structure.
There are a few reasons why a company should implement headcount planning.
If your recruitment initiatives aren’t doing well, turnover is increasing, business growth is consistently being over or underestimated are just a few reasons headcount planning is the next step.
Getting started is simple. Start by communicating with current employees. A good place to begin is with the eNPS. In fact, Factorial’s eNPS feature allows you to send out an anonymous eNPS survey to your employees at whichever frequency you prefer. See how it improves, gain insight and feedback from employees, and make decisions based on the scores you have.
After that, you’ll want to discover any hiring or skills gap within your organization. Putting together an org chart can help you visualize the skills, backgrounds, and abilities of your current workforce to help you make better hiring decisions moving forward. Factorial’s org chart updates automatically no matter how often you add new employees.
And, of course, give support to new talent entering your company. Many people think about or are willing to quit a job within the first month of employment. This can be due to lack of support, a bad first impression during onboarding or training, or lack of leadership. It may be time to assess your onboarding and hiring process if you’re seeing drops in retention.
Use reports and analytics
Data analytics may be one of the most important things in business. With data analytics, you can follow trends and forecast future results. Not only that, but it can really help in reducing costs.
Factorial allows HR professionals and leaders to create and analyze reports with a few clicks, driving better business decisions related to your workforce and your business based on real-time data. Factorial’s reporting and analytics software allows you to:
- Generate predefined or personalized reports and share them with your colleagues
- Automate your org charts
- Create reports using time-off data and group this by team or office
- Centralize survey results and performance evaluations
- Create performance management reports with data from surveys and 360 reviews
Want to learn more about Factorial? A free demo may be what you need if you want to start assessing your financial data in the most efficient way possible.