According to the Businesses Dictionary, labor costs are the wages, taxes and extra benefits, such as health insurance that a business must pay to or for employees during each accounting period.

Generally speaking, these labor costs are one of an organizations largest expense. So what can you do to keep them in check?

Here are 5 tips to manage labor costs:

1. Hire right.

How many times have you hired someone and weeks later said to yourself, where did the person I hired go? No matter how perfect the candidate presents themselves in an interview, you truly can’t know what type of employee they will be until they begin working. However, there are actions you can take to hire the best candidate the first time. Consider administering testing that assesses whether people are a "right fit for the job". Need help? Check out Predictive Results at http://www.predictiveresults.com.

2. Hire temporary help.

It is common for organizations to have peak periods or seasonal spikes. A golf course may have more golfers in certain season than others. A restaurant may have more patrons during lunch time and dinner time than in the middle of the afternoon. Regardless of your need, consider checking into a temporary agency to help reduce labor expenses and meet the peak requirements. Temporary agencies are an excellent way to cut labor expenses and remain consistent with production, customer service, and sales.

3. Use technology.

Replace labor intensive jobs with technology. Computers and the right computer software can automate many manual tasks and eliminate errors. In addition, software ensures and easy, impartial, and orderly approach in addressing specific needs without any confusion. In fact, software has been shown to have a better accuracy rate than manual systems.

4. Streamline processes.

Think efficiency. Create policies and procedures that employees can follow to make their jobs easier and faster. Most issues that occur on a daily basis have been addressed before. For example, if you’re in the country club business you have had to address an unsatisfied member. Create protocol for handling this type of issue. Be sure to include specific information. Include verbiage and body language to be used, as well as, resolution options.

5. Avoid overtime.

Paying 1.5 to 2 times the regular hourly rate for overtime, adds up quickly, and can be a big chunk of labor expense. Cut overtime labor costs by hiring right, making use of temporary help, using efficient technology, and streamlining processes.