Payroll costs at most clubs are impacted by many different factors such as:
- Hours of operation
- Member service requirements/standards and related staffing guidelines
- Nature of club facilities and services offered
- Competitive wage environment
- Union labor agreements
Too often it seems, we take a reactive approach to high labor costs after review of the monthly financial reports and of course at that point it’s too late. It is possible, however to take a more proactive approach that manages to control such costs in advance. It all starts with a realistic budgeting process that accurately reflects the club’s member service philosophy, hours of operation, etc. It is important to use the budgeting process to address these issues, and ask questions such as “can we afford to be open for lunch on Tuesday?”
Once the budget has been adopted, your regular employee work schedules should reflect these budgetary constraints. An effective method for ensuring that they do is to actually cost out the work schedules in advance as you prepare them by applying employees’ hourly rates to their scheduled time using a simple excel-type spread sheet. Management employees on non-hours based salary should also be included in the calculation along with an appropriate provision for employment taxes and benefits. By performing this exercise in advance, adjustments could be made to the schedule to help keep your labor costs on track. Anticipated business and income levels should also be reviewed in this light.
