Make the Most of a Minimum Wage

Some states do not require a minimum wage while others are poised to mandate a minimum wage of $15 over the next few years. This makes the question of how to optimize the minimum wage a high priority for business owners. Labor costs make up a significant portion of an organization’s expenses. With labor taking up so much of an organization’s overhead budget, how can small entities make the most of a higher minimum wage?

Establish a Baseline

Whether a higher minimum wage is being proposed, scheduled to begin next year or increase on an annual basis, the first thing an entity should do is examine its current state of operations. Study cash flow figures, budgets and hiring projections for the next year. Once you’ve established an accurate and current financial picture, consider some adjustments moving forward to accommodate a higher minimum wage.

Look for Efficiencies

While an increase in minimum wages often can’t be controlled, look for efficiencies among existing staff to offset additional hiring or increased hours for current workers. In an office setting, an organization could set higher expectations for workers. Those who use the Internet at work can have limits placed on access to social media and news websites to minimize time spent on non-work related activities.

Automate or Personalize?

Consider how you can use technology to complement the workforce to help build a more efficient organization. An example of how limited resources can be allocated to deal with a higher minimum wage would be to help callers route their calls without a receptionist by implementing an Interactive Voice Response (IVR) system.

While human resources can’t be replaced in all tasks, there are many benefits to using automation beyond the increase in direct wages, such as additional savings from training and recruiting costs, payroll taxes, health insurance premiums, retirement packages, workers’ compensation insurance costs or litigation from a disgruntled employee.

Balance Prices and Labor Costs

You also may want to consider how much to increase efficiencies through automation compared to the public’s experience and expectation of personalized service. One way to accomplish this is to survey your customers to see what they might like automated. For example, would customers like to speak with a receptionist or use an IVR system? Using surveys is an effective tool because it helps understand your specific customers, not an entire population. Younger generations, such as millennials, may be more likely to use mobile devices for banking and communication. However, using an automated system to book an appointment or make a payment might not be the first preference of the entire millennial generation. Conducting a survey can help determine the ideal human and automation ratio.

The minimum wage is a contentious topic that cities, states and Congress will likely debate for the foreseeable future. While the matter will be argued in city councils and state and federal legislatures, organizations may wish to explore what human resources and technological options presently exist that offer viable options in the wake of higher mandated minimum wages.