Labor costs are increasing.
Of course, the wage-price spiral is considered to be the “official” economic driving factor. But what other factors could be at work here? Could poor or suboptimal people management processes be one of the largest, yet most overlooked, facilitators of spiraling labor costs?
The truth is that people management issues are consistently cited as a top business leader’s challenge, particularly in this time of disruptive change and growing adoption of new technologies. With priority often given to comprehensive management of new system or process implementation, the people side of change can often be overlooked and subsequently poorly managed. And so an important question arises: in becoming more efficient and effective at people management, could labor costs be reduced?
Exploring the Current Issue
There are a number of ways that poor people management can increase workforce management costs, and potentially drive increasing labor costs. One such way is through the possible data inaccuracies that can result from manual management processes. Reports suggest that processes relating to administration, policies, and processes form a significant problem for nearly 50% of all small and medium-sized enterprises, implying there is definite room for improvement.
A number of pioneering organizations have started to introduce workforce management software as a solution. However, this is still considered to be somewhat of an emerging area, and Gartner suggests that there is significantly less investment in workforce management software (WFM) than there currently is within other areas such as human capital management (HCM). In order to reduce workforce management costs, businesses should be diversifying and expanding, and should be beginning to look at investing in alternative solutions such as WFM and utilizing available technologies for maximum value.
How to Reduce Workforce Management Costs
Let’s take a closer look at six distinct ways that technology can impact workforce management costs:
1. Assess, Track, and Monitor
The first step should always be to assess, track, and monitor existing ways of working to identify inaccuracies or inefficiencies within current processes, and highlight room for improvement. Relevant key performance indicators (KPIs) that could be tracked here include time and labor by employee, leave and absences, people-per-project costs, people-per-task costs, and human resource scheduling Technology should always form the basis of assessing, tracking, and monitoring, with workforce management software creating a low-cost way to automatically monitor relevant and selected KPIs.
2. Standardize Processes
Consistency and transparency are key in creating good management processes, yet many organizations struggle to integrate human resource aspects into day-to-day workplace operations. However, by using single interface technologies to incorporate typical HR aspects such as time tracking, pay calculation, vacation, and leave into workplace policies, it creates a strong, consistent, standardized, and transparent system that facilitates and supports new policy implementation and configuration when required.
3. Utilize Big Data
Automation, machine learning, and artificial intelligence (AI) are some of the hottest topics infiltrating practically every sector and industry, and they’re technologies that can easily be applied to workforce management. Through the automatic collection of employee data, such as hours worked and time spent on tasks, these technologies can make sense of the big data companies now have the ability to collect and hold about their workforce. Big data analysis enables businesses to generate predictions and estimations about the habits, behaviors, and productivity of their workforce based on previous patterns.
4. Prioritize Scheduling
As well as hours worked and time spent on tasks, scheduling is another form of employee data that can be analyzed through machine learning technologies. An understanding of this particular data set can open up doors to automated scheduling based on predicted trends in buying behaviors and customer demand. For example, more resources can be scheduled based on a business’ busiest times of the year.
5. Integrate Systems
While some organizations are beginning to implement new systems, this can sometimes do more harm than good. Many in-house systems, for example, still require a decent amount of manual input, which can be both time consuming and costly. To reduce management costs through WFM software, the solution’s capabilities must span all areas of business, including time and attendance, scheduling, and payroll, for seamless integration across the company.
6. Optimize Employee Performance
Optimizing employee performance helps to save valuable managerial resources by reducing the workload that needs to be managed. To optimize employee performance, workers must be provided with the tools and knowledge they need to effectively self-manage, with timesheet tools being one of the most accessible, available, and affordable options. Through these tools and training opportunities, employees can accurately manage their own individual needs that contribute towards organizational productivity, enabling them to spend more time with their customers, which in turn works to boost reputation and client satisfaction.
For organizations that have been affected by rising labor costs, now is the time to fully consider whether some of this effect can be negated through the adoption of new technologies. Reports have found that, on average, a 5,000-headcount business with a $300 million payroll could potentially save $6 million per year and reduce labor costs by 2% with better workforce management.
Rob Press is a content marketing manager at Deputy.