Your business costs are directly related to the way you manage your workforce. Yet, managing a workforce for optimal business efficiency is no easy task. The brutal truth is that workforce management issues are routinely cited as one of the top challenges faced by business leaders. Poorly managing your workforce drives employee disengagement, which according to Gallup costs the U.S. $450 billion to $550 billion in lost productivity per year.
Table of Contents
- Current Workforce Management Issues
- Technology is Key to Better Workforce Management
- 8 Ways Workforce Management Technology Can Reduce Business Costs
- Off You Go
There are multiple ways poor employee management increases overall operational and labor costs. One of the main reasons for this situation is the high level of data inaccuracy that generally results from manual staff management practices. Manual workforce management can leave your business prone to errors, especially when you are handling data from hundreds of employees at the same time. According to a report from Approach Human Resources, over 50 percent of small and medium businesses face significant problems when handling administrative data.
To effectively manage your workforce, you need access to your business operational data, which normally include attendance, labor costs, staff schedules, employee feedback, seasonal trends, and customer behavior. In short, business operational data is a quantifiable record from your organization’s day to day operational activities.
Collecting and analyzing these key performance indicators can be very challenging when you are dealing with hundreds of workers, contractors, and customers simultaneously. Without a solid data handling and analysis system, organizations may miss out on beneficial insights. Still, taking decisions based on this data can potentially improve your business performance and cut down your operational costs.
Fact: A report from Gartner suggests that the costs involved in setting up a workforce management platform cost significantly less than investing in other HR areas, such as human capital management.
To reduce business costs, organizations should strongly consider investing in automation technology solutions. Dropping manual staff management practices in favor of workforce management platforms can give you the edge when it comes to business efficiency. In this article, we take a closer look at 8 ways workforce technology can help you reduce your business costs.
1. Accurate Staff Payroll
Workforce management technology can simplify the way you handle your staff payroll calculations. Most platforms are able to perform complex pay calculations based on data collected, such as the number of hours worked, time-offs, and even commissions earned. Manually merging all this data increases the risks of payroll errors and hence, employee complaints. Using a workforce management platform automates the process and drastically reduces these risks. This ensures you never underpay or overpay your workers and are in line with your internal employee award program.
2. Automate Administrative Tasks
Your organization’s human resource department is often flooded with micro-tasks that gradually eat up hours in a workday. Workforce management technology can help you automate repetitive administrative processes and allows employees to ‘help themselves’, such as applying for paid time-off directly via the platform, instead of the traditional request letter or email. More importantly, this reduces the number of queries received by your human resource and payroll teams. In turn, this frees up more time for their core duties, hence increasing their daily work output and productivity. A report by McKinsey suggests that 45% of current paid activities can be automated with the technology currently available, which represents around $2 trillion in total annual wages.
3. Reliable time clocking
If your business relies on manual timekeeping, chances are you may have dealt with inflated payroll figures in the past. This is normally caused by employees estimating their hours worked by themselves, or even by staff who clock in for late or absent colleagues. Inaccurate and fraudulent time recording can prove to be very costly for your business, especially if you handle hundreds of employees. Relying on an automated workforce platform ensures employees' hours are computed accurately and can even reduce fraudulent clocking practices by enforcing staff verification methods, such as PIN entry or badge swipes.
4. Using Overtime Effectively
When demand spikes, businesses generally turn to overtime hours to fill in supply gaps. Yet, if not properly monitored, it can all get very expensive, and overtime hours may be holding your business back, especially if used unnecessarily. For instance, overtime should not be used to cover up for work not completed by absent or unproductive workers. When relying on workforce management technology, you have access to data sets that can give you an insight into the reasons to use (or not to use) over time, which can reduce your operational costs. Additionally, workforce management technology can gauge employee productivity and advise who performs best during their overtime periods. Overall, using workforce technology
5. Control Over Absenteeism
Unplanned staff absences can be costly for businesses. Indeed, a study by CDC points out that productivity losses linked to absenteeism cost employers $225.8 billion annually in the United States, or $1,685 per employee. Other than the absence of an employee, HR departments relying on manual workforce management spend time on finding replacement staff and processing a no-show. Using workforce management technology helps employers track down absence patterns and can help eradicate any abuse of time-off rules. Moreover, this can help you find available replacements faster and minimize productivity disruptions.
6. Streamlined Roster Management
Mastering roster management is a crucial component to any business looking to cut down on unnecessary costs. Overstaffing considerably increases your labor costs and can negatively impact your productivity. Conversely, understaffing can lead to employee burnout and dampen customer satisfaction. Workforce management technology can enhance the way you handle employee schedules and make shift-swapping easier. Generally, most workforce management technology provides graphical views of employee schedules and allows you to promptly make changes to your roster. Ensuring you have the right people in, at the right time, and at the right price gives you more control over your operational costs.
7. Performance and task tracking
Tracking down your staff workload and employee performance is essential to be able to gauge your productivity. Using task-tracking technology tools such as Trello or Salesforce helps you assign tasks and stay on top of your organization’s workflow. In the long run, this allows you to identify trends and bottlenecks; for example, if you find that an employee is struggling more than his peers to complete his tasks or meet his project deadlines, this may be a sign that not all of your workforce is in a role matching their individual skill sets or that your operational procedures are not at their maximum efficiency. Workforce optimization does not happen overnight, but having the necessary data at hand can help you tweak your business for maximum productivity and possibly lower operating costs.
8. Lowers the Impact of Staff Turnover
When staff leaves, the transition time before onboarding a new worker is often costly due to non-standardized procedures. A study by SHRM reports that losing an employee can cost 1.5 - 2 times the employee's salary. For hourly workers, the average cost reaches up to $1,500 per employee. Workforce management technology can provide businesses with data on trends and help standardize onboarding processes. Some workforce management platforms are even able to track the work history of individual employees and their experience levels. With all the operational data at hand, organizations are in a better position to compare candidates, standardize procedures and make an informed decision when taking on a new recruit. Overall, this leads to an easier transition period and gives you more control over your operational costs.
Ultimately, the goal for any business is to generate a sustainable profit by providing a desirable product or service. While increasing revenue is a legit way to reach better profits, lowering operational costs can improve margins as well. For instance, research by Oracle suggests that an organization running a $300 million payroll could potentially save around $6 million a year by improving its workforce management capabilities. When implemented and used efficiently, workforce management technology can significantly help organizations cut costs by maximizing individual contribution from their workforce.