In the third article in our business planning series, Food For Mzansi zooms in on labour planning. Certified business advisor Willem van Jaarsveld provides some professional advice on what to consider.
“Labour planning, in a certain sense, is the most important of all your planning, because it’s about people,” says Van Jaarsveld. He unpacks the aspects of labour planning in this article, and provides a list of topics for new farmers to consider.
The labour for your new farming venture is something that is largely informed by your production plan. Depending on how you farm, your labour needs might fluctuate, and good management of your workers is critical.
When plotting out the workforce you require, Van Jaarsveld outlines the following factors as critical to your planning.
Required skills and training
Create some type of timeline of your process – this will help you measure the labour and specific skills you will need. As one of the most critical considerations of your labour plan, “Know what skills you will need, and when in the production cycle you will need [it. Also], be sure about the smallest number of labourers needed at any time.”
Budget for the right number of people for the specific time of year. Your labour plan will influence your financial plan, especially your cash-flow budget.
To get a clear idea of labour costs, group employees according to the same remuneration level first, then multiply the number of employees at that level with the amount they will be paid per month. Repeat this for each remuneration level, to arrive at your total labour cost for each group and each month.
Add together the monthly amount for each of your labour groups, to arrive at the amount you will enter into your cashflow budget. These monthly amounts will also help you determine what your labour costs will be for the entire year.
Note: The cost of training should also be included in your labour plan, as sourcing the correct number of people with the relevant skills could prove to be a challenge. This means that the people who receive training will end up costing you more. “Always remember that investment in employees is the best investment any business can make,” says Van Jaarsveld.
Human resource management
HR management can be time consuming, but it is essential as your labour force needs to be set up and managed according to legislation. Depending on the size of your business, you may want to appoint an HR manager. If your business is small to medium-sized, it may be more cost effective to outsource the service to a professional HR company. Make sure to negotiate clearly what you will be doing and what the HR contractor will be doing.
Plan for the risks
As with each aspect of your business, labour also includes some risks, one of which could be the relationship you have with your employees. Van Jaarsveld recommends that you treat your employees like they are relatives. “People want to know they are important and appreciated. Poor relations usually become evident at the time of the harvest.”
Another potential risk is seasonal planning. Ensure that the community from which you source your labour is informed well in advance of when you will require their services. “Treat them in a way they will want to be available. Discuss remuneration for the next season well before you need employees. Establish trust and reliable lines of communication with seasonal workers, just as with permanent staff.”
Van Jaarsveld lists the following topics as points of consideration when creating a labour plan:
- Workforce size – The more people you employ, the better your management skills need to be and the better your management structure needs to be. The structure of your management is extremely important. “There can’t be only one manager and a lot of labourers. There must be a proper personnel management structure in place”.
- Locality – You need to consider how far the source of your labour is from your farming operation. Distance, the availability and condition of the roads between the community and your farm, and whether there is public transport available are all factors you need to consider. You may need to transport your employees from where they live to where your operation is, which is an additional cost you would need to budget for.
- Labour laws – Even if you outsource your HR services, you would need to be deeply familiar with labour legislation. Make sure to handle and store your labour records and procedures meticulously, including attendance registers, personnel records, and disciplinary action documents.
- Housing – You may need to review whether it is possible for you to host your employees on the farm or if you would rather opt for daily transport of your personnel. This decision depends on your labour requirements and the condition of the available housing.
- Transport – Are you able to provide transport for your labour force that meets legal requirements? Is there public transport around your farm? Will it be economical to transport your workers when you consider the cost of the vehicle, the driver, the fuel and maintenance costs? These are all questions you need to consider when you decide on whether to provide transport.
- Ablution and food facilities – When doing your labour costing, do not forget to add the cost of toilets, showers and a canteen. The setting up of these facilities is also mandated by governing bodies specific to the market and product you plan to work with. You need to have a hard look at the cost of these facilities to make sure it does not prevent the failure of your financial planning.
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