For many of my clients, 2018 brings good news for employees, but most employers are facing tougher times filling positions as the job market continues to tighten its grip. For the month of May, the economy added 180,000 jobs and pushed the unemployment rate to an 18 year low of 3.8%.
For 2018, 44% of all employers will be looking to hire permanent full-time workers and many job vacancies are taking well over three months to fill per CareerBuilder’s forecast. On top of that I am seeing some of my client’s employee turnover rates exceed 30%. If your loosing valuable employees, it’s imperative that you understand the reasoning. Its’ not always about wage increases, it could be related to other issues such as your culture or promotion process. However, I am seeing many clients realign their pay scales to hold down their turnover rates.
Managing, developing and tracking labor Key Performance Indicators (KPI)’s is vital during these times of employee shortages so you can quickly react to your hiring needs. These are a few on the top of my list:
- Direct Labor as % of Sales
- Direct Labor Productivity
- Overtime as % of Regular Hours by department
- Value Added per Payroll Dollar
- Employee Turnover
Having a pulse on your labor metrics is vital, but you need a holistic approach to truly understand your business needs. It is imperative that you have in place a performance measurement system that monitors all your business metrics and they need to be reviewed each month with the management team.
CDH’s Executive Focus is an excellent solution for helping your business manage and monitor your operating expenses. Executive Focus is a visualization tool that provides transparency within the organization and empowers people with knowledge by helping them have a better understanding of all departments within the business. How do we do this?
- We develop a custom set of business metrics that represent your organization’s function as a whole.
- We focus on Key Performance Indicators (KPI’s) that clearly reflect efficiencies and value add capabilities.
- We facilitate monthly management team meetings to highlight and discuss the trends and relationships in your results to drive a culture of continuous improvement.
Matt Wirth is a Senior Consulting Manager for CDH, a national accounting and consulting firm. He has been consulting with privately held companies for over twenty years. CDH provides a service called Executive Focus. This service offers a process, tools and support to help management teams improve their performance. They design custom graphics packages which identify trends, relationships and performance drivers. The net effect is a system that fosters continuous improvement and enhances the bottom line. Matt has a BBA in accounting from the University of Milwaukee and is a CPA.
If you would like to learn more about the CDH Executive Focus process please contact Matt Wirth, Senior Manager ([email protected] or 262-784-4040).