Top 5 Things Execs Should Know About Workforce Management
While Workforce Management can be a strategic asset of an organization, it may not be discussed much by senior management, because it is often part of a process managed at an administrative level from the finance or HR department, depending on who owns the payroll process.
Workforce management systems help ensure compliance, achieve corporate goals, drive labor performance, bridge operational and administrative functions, and cut significant waste from payroll processes.
Executives should be aware of the Top 5 uses of workforce management applications in an organization. Through familiarity with this type of automation, executives can gain tighter control over a large expense area for the organization.
#5 – Workforce Management Reduces FMLA, FLSA and SOX Non-Compliance Risks
Just in the last six months we’ve seen headlines announcing, “Dell Call Center Slapped With Overtime Lawsuit,” “ Orange County Deputies' Lawsuit Granted Class-Action Status,” and “ Jury orders Wal-Mart to pay at least $78 million for breaking labor laws.” These legal actions result from employers not complying with FLSA regulations….and all of these were avoidable.
State and federal regulations are complex and require non-stop monitoring. However, workforce management systems can automatically police the rules and restrictions required by these regulations and prevent employers from making a costly mistake that puts them at risk.
It’s not just a good idea for employers to protect themselves with these systems; in many cases the regulation requires it. This information serves as an audit trail if the employer is challenged in court. A workforce management system will automatically provide the audit trail and serve as a repository for information and changes made to that information.
#4 – Better Scheduling Helps Meet Production and Service Goals
Many organizations that could benefit from scheduling automation systems do not use them. In most cases, they are simply not aware of the solution, or feel that the problem is not costly enough to warrant automation.
However, consider the overtime cost savings that could be realized by a medium-sized firm with 1000 employees. If we assume their annual payroll costs are about $40 million, and scheduling optimization could reduce their overtime costs from 3% to 2% of payroll, their savings would be $400,000 per year.
How is this accomplished? By simply putting the right person in the right job at the right time. For example, if the need arises for extra manpower to be applied to a job, workforce management systems will determine how to staff the position in a way that eliminates or reduces the need to pay overtime to accomplish it.
Workforce management scheduling can also help an organization meet its production and service goals by improving the manual scheduling process with accurate demand and production information that helps optimize the schedule to achieve results. Rather than using the “first schedule that works,” organizations move toward using the schedule that “works best.”
Workforce Management Scheduling lets employers… |
- Fill “unpopular shifts” fairly
- Staff positions during popular vacation times
- Fill last-minute illness vacancies
- Provide schedule & shift swapping
- Share schedule information
- Schedule to match demand
- Reduce overtime costs
- Minimize time spent scheduling
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#3 – Managing Workforce Performance Decreases Tardiness and Absenteeism
According to the most recent CCH survey, “unscheduled absenteeism climbed to its highest level since 1999, costing some large employers an estimated $850,000 per year in direct payroll costs.” In addition, tardiness costs American businesses an estimated $3 billion annually. This is a problem worth solving.
Workforce management systems attempt to do just that. By accurately tracking absenteeism and tardiness, employers can respond with methods that discourage this behavior.
For example, a point system can assign points based on the number of tardy minutes, and then notify managers when corrective action is needed. Other employers have had good results by rewarding desired behavior by granting special privileges for on-time arrivals and departures.
By actively measuring employee begin and end times, these organizations shift from passively reacting to a problem, to pro-actively attacking it. Given the cost of the problem, the results are worth the effort.
#2 – Workforce Management Bridges the Gap between Operations and Administration
Over the last decade, businesses spent billions of dollars on operationally-focused systems that control costs through better management of materials, processes, and services. While these organizations spent money to optimize their purchasing power, they did little to optimize the cost of labor.
Workforce management systems bridge the gap between operational systems like ERP, and administratively focused systems like those that automate payroll. For example, by incorporating project information into employee time collecting systems, employers are able to get a true cost of labor spent on projects, and better information yields better results.
A workforce management system collects detailed employee time information and enforces business rules and state & federal regulations that determine how an employee is paid, but when integrated with operational systems, it also provides a true labor cost for manufactured components, services, and projects. The value of this integration is greater than the sum of its parts.
#1 – Improved Workforce Management Cuts 1-3% of Your Biggest Line Item, Payroll
An organization’s payroll cost is usually one of the largest line items on its income statement, sometimes representing 30-50% of total costs. Workforce management systems are able to reduce payroll costs from 1% to 3%. This means that even a medium sized company with 2000 employees and a $100 million annual payroll may save from $1 million to $3 million dollars.
A workforce management system can be deployed in an organization and net a return on investment (ROI) in a matter of months. A workforce management system is ubiquitous and can gather time and employee information through web browsers, time clocks, phones, or other input devices.
Workforce Management systems let employers… |
- Collect time, leave requests, and other labor data through a web-browser, badge readers, touch tone phone, or other devices
- Apply HR and payroll business rules at time entry, so pay is calculated accurately and consistently each period
- Verify that employees accumulated enough paid time-off hours in a bank, before authorizing time-off requests
- Ensure all time collection and leave requests are approved by supervisors before allowing them to proceed to payroll
- Provide self-service inquiry functions to employees and managers
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Because information is typically collected self-service time entry using a browser or badge reader, data-entry errors and re-keying of information are eliminated. Payroll calculations are processed automatically, so error costs are significantly reduced. Additional savings may be gained when automated badge readers or other input devices are used to collect data, because buddy-punching, early arrivals and unapproved overtime can be controlled.
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