Labor Cost Must Be Precontrolled

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The best time to control labor cost is in advance. The key to advance control lies in efficient scheduling, and efficient scheduling requires an understanding of the quantitative and qualitative aspects of each job category and the forecasted level of business activity. One cannot forecast without knowledge of what transpired in the past and the conditions which impacted sales activity.

Once labor cost has been incurred, it cannot be lowered or recovered. If you were overstaffed yesterday, you cannot recover the cost by under staffing tomorrow. Therefore, you must schedule only the amount of labor hours needed for the forecasted volume of business activity.

“Precontrolled” implies advance planning compared with “after the fact” corrective action.

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