Controlling Labor Costs and Outsourcing
Controlling Labor Costs and Outsourcing
Pharis Jackson III, Becky Miller, Justine Santos, Cassandra Sullivan
HRM/324
February 9, 2015
Callie Burnley
Controlling Labor Costs and Outsourcing "Managing the number of employees and/or the hours worked is the most obvious and perhaps most common approach to managing labor expenses in the United States" (Milkovich, Newman, & Milkovich, 2008, p. 583). There are many ways that employers can control labor costs. This team paper will detail the different ways of controlling labor costs, how organizations use inherent controls, and what activities in managing the pay system are candidates for outsourcing.
Controlling Labor Costs Controlling labor cost can be tricky. “There are three main factors to control in order to manage labor cost, the number of employees and the hours that they work, average wages and bonuses, and average benefit costs" (Milkovich, Newman, & Milkovich, 2008). When companies have multiple employees doing the same exact job, compensation can become a problem. When this problem arises, scheduling is important. An example of this is when a military hospital employs civilian nurses along with military nurses. To control the amount of compensation each civilian nurse makes, they are only scheduled to work eighty hours a pay period. They are only allowed to work overtime if it is the last resort. Since military nurses are on fixed salaries, they can work overtime without the government paying the extra time and a half for overtime to the civilian nurses. This way of cutting cost may not be well liked by the fixed salary nurses, but it saves the government millions of dollars each year.
Examples of Inherent Controls
There are 3 Risks that will be discussed in this topic: Inherent Risk, Control Risk, and Detection Risk. These risks have to have adequate internal controls to prevent and detect fraud or errors within the organization. Inherent Control is a higher degree of judgment and estimations as
Pharis Jackson III, Becky Miller, Justine Santos, Cassandra Sullivan
HRM/324
February 9, 2015
Callie Burnley
Controlling Labor Costs and Outsourcing "Managing the number of employees and/or the hours worked is the most obvious and perhaps most common approach to managing labor expenses in the United States" (Milkovich, Newman, & Milkovich, 2008, p. 583). There are many ways that employers can control labor costs. This team paper will detail the different ways of controlling labor costs, how organizations use inherent controls, and what activities in managing the pay system are candidates for outsourcing.
Controlling Labor Costs Controlling labor cost can be tricky. “There are three main factors to control in order to manage labor cost, the number of employees and the hours that they work, average wages and bonuses, and average benefit costs" (Milkovich, Newman, & Milkovich, 2008). When companies have multiple employees doing the same exact job, compensation can become a problem. When this problem arises, scheduling is important. An example of this is when a military hospital employs civilian nurses along with military nurses. To control the amount of compensation each civilian nurse makes, they are only scheduled to work eighty hours a pay period. They are only allowed to work overtime if it is the last resort. Since military nurses are on fixed salaries, they can work overtime without the government paying the extra time and a half for overtime to the civilian nurses. This way of cutting cost may not be well liked by the fixed salary nurses, but it saves the government millions of dollars each year.
Examples of Inherent Controls
There are 3 Risks that will be discussed in this topic: Inherent Risk, Control Risk, and Detection Risk. These risks have to have adequate internal controls to prevent and detect fraud or errors within the organization. Inherent Control is a higher degree of judgment and estimations as
References: Detection Risk. (2015). Retrieved from http://www.investopedia.com/terms/d/detection-risk.asp Inherent Risk. (2015). Retrieved from http://www.investopedia.com/terms/i/inherent-risk.asp Job Outsourcing Statistics. (2014). Retrieved from http://www.statisticbrain.com/outsourcing- statistics-by-country/. Milkovich, G.T., Newman, J.M., & Milkovich, C. (2008). Compensation (9th ed.). Retrieved from the University of Phoenix eBook Collection database.