How to Reduce Your Indirect Labor Costs

Last week we discussed the importance of tracking your indirect labor costs, or the amount of money you’re spending on hourly team members when they’re clocked in but not producing billable work. If you want to succeed in the green industry, you can’t afford to ignore this metric.

Some of the biggest buckets of indirect labor for landscaping companies are:

  • Training

  • Loading and unloading

  • Drive time

  • Call-backs or warranty work

This week let’s focus on how you can start to reduce the hours and dollars you’re spending on these.

Training

This is the LAST place you want to cut indirect time. As Marty always says, training is an investment, not an expense. Done well, it can actually reduce your indirect labor costs by enabling your team to operate more efficiently. But you still have to be mindful of the time you spend on it. At Grunder Landscaping Co., when their weekly team-training session is up, a timer goes off and everyone heads immediately to their trucks and heads out. No going over the time limit, no lingering around to chat after, no dragging of feet. Without strict start and stop times, you can easily waste five or ten or 15 minutes here every week. Your crews then arrive at their jobs later, and before you know it you’ve lost thousands of dollars over the year on this.

Loading and Unloading

Many companies refer to their daily roll-out as the “morning circus.” You can greatly reduce your indirect labor costs by turning this circus into a well-ordered, efficient process. The easiest way to do this is to set your crews up for success the night before. When they return at the end of the day, task them with refueling their trucks and loading them for the next day’s jobs. This enables them to focus their mornings solely on getting to the job site. You will likely find too that your team will get these tasks done more quickly at the end of the day, when they are eager to get home.

At Grunder Landscaping, they have streamlined this process even more by creating and maintaining standard truck set-ups for construction, LandKeeping™, and mowing. Sometimes they need to add specialty machines or tools, but for the most part their trucks are set up and ready to go.

Drive Time

Drive time is unavoidable but you can reduce it by knowing your local traffic patterns and getting your trucks out early, or with a staggered start. You can also reduce it by using GPS to optimize your routes for efficiency and by increasing the density of your routes—if a crew takes care of four houses on a street, make sure that same crew takes on the fifth house when you get it. You are looking to save minutes on drive time every day, which will add up to many hours and dollars over the course of the year.

Call-Backs or Warranty Work

The old adage “Get it right the first time” holds true. Accurately and thoroughly detail your work orders so nothing is left off and you don’t find yourself having to return to the job again another day to fix what you forgot to do. At Grunder Landscaping Co., they also use a site checklist to ensure they’ve accounted for everything on the front end of their jobs and can inspect each item for quality and cross it off on the back end. The extra minutes these steps take pale in comparison to what it costs to send crews back out to properties.

These are just some of the ways you can reduce the time and money you’re spending on indirect labor. Take a good look around your company this week and see what others you can find.

Have a great week!

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Vince Torchia
Vice President, The Grow Group


JOIN US FOR OUR GRUNDER LANDSCAPING CO. FALL FIELD TRIPS

Our Fall Field Trips bring owners and their teams onsite to Grunder Landscaping Co. headquarters in Dayton, Ohio, one of the most successful companies of its kind in the Midwest. You’ll spend a jam-packed day going behind the scenes with president and CEO Marty Grunder, touring the facility and grounds, and meeting with the GLC leadership team to see how they execute and optimize each area of the business. Learn first-hand what they’re doing to trim their indirect labor costs to 10%.

We purposely limit this event to just 14 attendees so we can guarantee you get the one-on-one attention you need. These events sell out every year so if you plan on joining us, please reserve your spot soon.