Labour Management Benchmarks
Labour expense can seriously negatively impact a store’s profit margin if the expense is out of proportion. It is therefore very important to correctly measure and manage labour expenses. Managing labour to have enough employees on hand to do the work required, and having extras as needed, requires precise scheduling. Proper scheduling is critical to maintaining economic labour costs.
Sales Per Labour Hour (SPLH)
Since labour is the largest single factor in a store’s operating expenses, effort is needed to intelligently control this cost.
Sales per labour hour (SPLH) is a statistical measure of productivity. SPLH shows the dollar sales per each hour worked. To calculate SPLH, the sales (per store or per department) are totaled and divided by the number of hours worked.
| SPLH = |
Total Sales
Total Hours Worked |
|
| SPLH = |
$100,000
220 |
|
| SPLH = |
$445 |
This equation can be converted to calculate the work force required to meet estimated sales.
Example:
| Total hours to be worked = |
Total Estimated Sales
Desired SPLH |
|
| Total hours to be worked = |
$100,000
$445 |
|
| Total hours to be worked = |
220 hours |
SPLH benchmarks are developed by considering performance standards and work practices, and careful assessment to ensure that labour costs are offset by clear benefits.
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