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Ensure Small Business Productivity with Labor Cost Distribution Reports

As the term human resources suggests, HR is about the people. It involves everything from getting them on board, assessing their performance, to computing their compensation and putting together their benefits packages.

Among other things, businesses rely heavily on employee productivity, which is not always easy to determine accurately, or comprehensively.

Productivity metrics such as met deadlines, client satisfaction, supervisor reports, and employee activities will give you a good idea of how well your business is doing, but labor distribution reports give you fine-tuned clarity with the numbers you want to see.

What is a labor cost distribution report?

A labor cost distribution report is an accounting statement that provides business owners and HR managers with data critical to their decision making: work hours, wages, benefits, deductions, etc.

In typical labor cost distribution reports, this pertinent data is broken up by department. It includes information such as goals and fund allocation, as well as which particular organizational funds were used to pay for each specific labor.

Labor cost distribution reports may also include company-specific information, to reflect whether the company met a goal it set for itself, like staying below a projected labor cost.

Labor cost distribution reports vary in levels of complexity, mainly depending on their intended use. Overall, the goals are as follows:

  1. To have a better understanding of how efficiently and productive employees and departments are operating.
  2. To pinpoint areas of optimization to ensure the business runs more efficiently.
  3. To determine where costs can be cut.


Labor cost distribution reports typically include the following information:

  • Staff members
  • Salary or hourly rates
  • Total hours worked, direct hours, direct dollars
  • Education/research hours
  • Vacation hours, vacation dollars

Why do you need a labor cost distribution report?

In addition to the benefits previously mentioned, these reports can also assist both small and large companies with the following:

  • Ensure accuracy of labor charges against work done from or for different departments
  • Catch and correct any payroll errors
  • Improve budgeting process and visibility
  • Make informed decisions concerning hiring and termination of employees
  • Gain a more comprehensive understanding of profit margin drivers

What is the typical labor cost distribution report format?

Many organizations, or their payroll service providers, generate multiple labor cost distribution reports electronically. This allows for the reports to be searched or viewed using different criteria—such as reports generated per department or source of funding.

Ready to take your business to the next level through improved decision making? Get comprehensive labor cost distribution reports through your payroll service provider.

Payroll Systems offers easy-to-scale human-supported payroll solutions to help your business optimize all its resources. Let’s work together.

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This article provides general information and shouldn’t be construed as legal or HR advice. Since employment laws may change over time and can vary by location and industry, please consult a lawyer or HR expert for advice specific to your business. You can also contact Payroll Systems to inquire about our HR support services.