WHAT IS “LABOR COSTING?”
In simple terms, “Labor Costing” is a process that calculates the cost or savings associated with changes in the terms and conditions of employment. It also encompasses various analyses of employment structure, whether they are compensation, benefits, scheduling or operational in nature, that determine the underlying economic basis of labor utilization within an organization.
“Labor Costing” is normally wanted and required during the negotiating of collective bargaining agreements. However, it can also be equally useful for non-union employee groups and for individual employee contracts, as terms and conditions of employment must be effectively established within these work contexts as well.
For those who are responsible for setting the economic conditions of work, whether these are labor negotiators, compensation and benefits analysts, or contractual agents, knowing the financial consequences of their decisions are essential. Without such knowledge, they are suffering from “value blindness,” i.e., not comprehending the economic consequences of their decision-making.
LCA provides the costing and analytical resources to remove the blinders of negotiators and other employment specialists, so that they can properly develop effective financial solutions for their employee staffing needs.
LCA understands that “Labor Costing” may mean different things to, and thus may require different costings and analyses for, different clients. For this reason, LCA will work with each individual client to develop the appropriate tools and reports to meet its needs.