The Nowsta Blog

Management tips and labor market insights to help you run your business

What is Workforce Management?

By Henry Updegrave on September 28, 2018

One of the most difficult parts of running a business is managing your employees, and I don’t mean in the traditional sense of motivating or coaching them (though these are difficult, crucial undertakings in their own right). I’m talking about basic logistics like getting them in the right place at the right time and making sure they get paid.

In many ways, these are bare minimums to operate as a business. But to consistently grow and thrive, you need to do more than the bare minimum -- you need to solve these problems more efficiently than the competition. That’s where workforce management comes into play. Workforce management is the set of tools and processes businesses use to deploy their employees efficiently, keep labor costs in check, and track staff performance.

Every business already does this to some degree. If your managers are calling around to see who can work, signing people in on paper time sheets, and transcribing their reported hours into a payroll system by hand, then you already have a rudimentary workforce management system in place. But these offline, pen-and-paper processes create huge costs in administrative work and data loss -- not to mention, human error. Savvy business owners and managers are using software to automate these processes and passively collect the data they need to improve.

But what does an effective workforce management solution actually look like? There are three key operations it has to address:

  • Staff scheduling
  • Time and attendance
  • Payroll reporting

As your software solves these problems, it also needs to collect data around each function, as each part of the system feeds off the others to do its job. For instance, the time and attendance module needs to check reported hours against your schedule to check for discrepancies and help you create an accurate payroll report. This need for interconnectivity also shows why standalone solutions for individual functions -- as in, say, products that only build schedules -- are inadequate. The data also comes in handy for reporting, as it reveals insights on your top performers and overall business health.

In this post, we’re going to look closely at how effective workforce management tools address each of these areas, while also generating the insights you need to constantly improve your business.

Staff scheduling

The first thing a workforce management solution needs to do is help you schedule your employees’ shifts. Too many managers accomplish this today through a mish mash of texting, emailing, and spreadsheets. Others use free software products that don’t amount to much more than calendar templates employees (or, just as often, managers) fill in themselves. Both methods require active upkeep and are too time-consuming for companies with lots of employees.

A full-fledged workforce management solution will streamline scheduling with three key functionalities:

  • A clear view of what shifts need to be filled over the time period of your choosing -- the next day, week, month, etc.
  • An easy way to see which employees are free for each shift, which are already booked, and which are approaching the overtime threshold. 
  • A communication system that lets managers notify qualified workers of what shifts they’ve been scheduled for, and in turn lets workers confirm or decline the shift immediately -- in real time, wherever they are. The master schedule should update automatically to reflect employee responses, without input from a manager.

The nuts and bolts of these functions will vary depending on the type of business you run. For instance, consider a restaurant versus a caterer. While these sound like similar businesses, their scheduling needs are quite different. As an event-based business, a caterer would need to see all their upcoming events for a given time period, along with details like venue location, uniform requirements, and different jobs (e.g. five cooks, two bartenders, three waiters, etc.) for each. A restaurant, on the other hand, has a more consistent schedule. Restaurant managers would want to see a simple breakdown of upcoming shift needs depending on seasonal, weekly, or daily trends in customer volume.

Don’t discount the importance of mobile, either. Your employees spend more time on smartphones than computers, so your workforce management solution needs to push work requests to them not just by email, but also by text message or mobile app. That way, they can let you know if they’re working immediately, rather than leave you in the dark until they get to a computer.

Time and attendance

Labor makes up the single biggest overhead cost for most companies, so it logically follows that any money you can save there will have a big impact on your bottom line. That’s what makes time and attendance tracking so important -- hours worked make up half of the labor cost equation, the other half being your pay rates. You need an accurate view of how much everyone’s working to keep labor costs reasonable.

And yet, lots of companies continue to track time and attendance with old-fashioned time clocks, static spreadsheets, or worst of all, pen and paper. These outdated methods cost you money in a few different ways:

  • Employees can fudge their reported hours or clock each other in on the sly. The American Payroll Association (APA) estimates that various forms of time theft can cost employers up to 7% of their annual payroll.
  • The APA also estimates a human error rate of 1-8% when managers transcribe hours from paper time cards into their payroll software. That shouldn’t come as a surprise -- manual data entry is tedious, convoluted work.
  • You lose the opportunity to collect data and track historical trends if your time and attendance data lives on paper. And even if you use a slightly more advanced system like Excel, you still need someone to manually pull and format the data to glean any insights -- very few teams have the time for that. There’s no telling the size of the savings opportunities your missing out on if you’re not learning anything from your time and attendance data.

So, how does workforce management software solve these problems? It starts with a smarter time clock. Some companies give their trusted managers the ability to clock each employee in on a mobile app as they arrive at work. Others opt to install their software on a tablet device placed in a central location where employees can clock themselves in -- unlike a traditional time clock, the tablet can take a picture upon clock-in to stop anyone from “buddy punching.” And some solutions can even use GPS technology to let employees clock themselves in from their own smartphones when they arrive at work.

Each time clock solution has its pros and cons depending on your business, but the key point is that they all drastically reduce the odds of you misreporting anyone’s hours compared to pen-and-paper time sheets or legacy punch clocks. Plus, by comparing the data from all those clock-ins to the inputs from the scheduling side of the software, your workforce management solution can automatically surface any discrepancies.

And of course, getting all that data in one place makes it easy to track trends in employee behavior. Who’s showing up late? Who’s leaving early? Who’s trying to clock in from their car? Employees are more likely to give their best effort and refrain from bad behavior when they know the answer to these questions are at your fingertips.

Payroll reporting

The other big benefit of your workforce management solution collecting all that time and attendance data is that it makes running payroll exponentially faster. No, it doesn’t do that by replacing payroll providers like ADP and Paychex. It does it by integrating with them and augmenting them.

As we mentioned before, too many pre-workforce management companies are tracking time and attendance on pen and paper. Others are using stand-alone products that don’t integrate with their scheduling or HR software. In either case, the result is that whoever runs payroll has a lot of manual data entry ahead of them, including inputs like:

  • Hours worked
  • Pay rate
  • Overtime calculations
  • Employee classification
  • Any absences or vacation time

That makes for a long, error-prone payroll process. But those problems go away if your workforce management software and payroll software talk to each other. By integrating these two systems, you can automatically export all your time and attendance data and load it directly into your payroll software. The process goes from hours to minutes and the opportunity for human error is all but eliminated.

Why now?

It’s never too early to get started with workforce management. Even if you have two or three employees, adopting these tools now -- while pen and paper is still manageable -- will pay dividends down the road as your business grows. And your employees will thank you for the simplified processes and reduced busy work.

If that doesn’t convince you, think about the changes we’re seeing all around us in the labor market. If you employ a lot of part time workers, you already know how difficult it is to manage a large pool of people with varying skills and availability. But as the gig economy continues to grow, this will become the norm for more and more businesses. A huge, on demand labor force will give employers access to more talent, but it will also multiply the complexities they face in managing that talent. Workforce management will be the key to managing those complexities in the coming years.

Henry heads up marketing at Nowsta: the easiest way to schedule, manage, and pay hourly staff.

Helping you become a better manager.