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Pay close attention to how managers view the commodity called “labor.” In most organizations, the perspective is that labor is an expense. It is handled on the financial statements as an expense.

In most cases, labor is the highest monthly expense for an operation. It is the payment made in order to secure the resources needed to create the products or services sold by the organization.

As the largest expense for many operations, labor is watched and managed very closely. The profitability of the operation is directly impacted by how many workers there are, so all kinds of techniques are used to keep this variable under tight control.

Managers want to have exactly the right number of people on the roster, so perhaps they utilize temporary workers during peak times to mitigate overtime. They need to be careful because the temporary workers need to be sufficiently trained so there are…

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