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Reasons Why Unapplied Labor Can Be So High and What to do About It

Being unapplied at work can derail a business and tank small companies.

Unapplied labor is one of the key things to watch for when operating a small business. Having off task employees not only means work is not getting done, but it could also mean paying them more for less labor.

We’ve already talked applied vs unapplied labor, so let’s focus on what causes the onset of unapplied labor.

Causes of Unapplied Labor

  • Employees taking longer than industry standard to complete a task
    • Could be because they are unapplied or just bad–either way this is a problem
  • Improper hour application
    • Are you assigning the right allotted time to complete a task?
    • If multiple employees are working a job, the normal time said job takes to complete should be adjusted
  • Poor scheduling
    • Make sure the supply you provide is meeting demand
    • Ensure that work is evenly divided amongst employees (who operate in same field) and not unequally split
    • Do you need to schedule more appointments to fill in the gaps between peak operating hours?
    • Inspect employee schedules with accounting software to cut down on indirect labor and ensure effective time management
  • Compensation strategy

Now that we know why unapplied labor occurs, and why it can be so high, let’s try to mitigate unapplied labor and improve efficiency.

How to Beat Unapplied Labor

Using Punchey’s services that calculate labor cost, billable hours, and unapplied labor, you can figure out just how much unapplied labor is hurting your business. The next step is cutting it down and maximizing efficiency.

If your unapplied labor is no more than 10% then you’re probably ok to stay put and continue thriving. If it’s greater than 10%, consider taking these steps:

Unapplied labor can be a massive burden for businesses, but with your business savvy, Punchey’s software, and a little bit of work, you–and small business owners everywhere–can get the best out of your employees.

Updated on October 10, 2019

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