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What is workforce management and why is it so important?

What is workforce management?
Blaz Kos
19 minute read

Workforce management (WFM) is a set of HRM processes in a company which are implemented with the goal of maximizing the productivity and proficiency of its employees. 

That’s achieved by ensuring that human resources are in the right place at the right time, and doing the right kind of work. In other words, WFM processes include all those activities that are necessary to maintain a productive workforce. 

Workforce management in a modern organization is supported by a dedicated software solution. The main processes and features supported by a WFM solution are:

Everything listed above also helps organizations stay compliant with labor regulations. There are many benefits to approaching workforce management in the right way, especially in terms of improving business productivity. 

In this blog post you will learn everything you need to know about workforce management and how choosing the best approach (especially when it comes to choosing the right software solution) can help your business thrive.

1. What are the core workforce management processes?

As mentioned, workforce management is a set of HRM processes that help run the daily operations of an organization and keep productivity high. These processes ensure that each employee is at the right place at the right time, and that the workforce is optimally allocated.

Workforce management starts with staff planning and ends with timecard reports used for payroll processing and optimizing labor productivity.

A good workforce management software solution supports the entire process from beginning to end, and everything that comes up in between. 

With a good workforce management solution, a business can ensure that:

  • Shifts are scheduled optimally, without overscheduling unnecessarily.
  • Employees get paid for their actual workhours, based on accurate timesheets.
  • Employees or freelancers don’t abuse working from remote locations.
  • Absences are minimized and deviations on individual or team levels are avoided.
  • Overtime costs stay under control.
  • Workforce management processes are digitalized and optimized, ensuring valuable working hours aren’t wasted on inefficient administration.

Now let’s look at the main processes that fall under workforce management in greater detail.

1.1 Workforce (staff) scheduling

All effective workforce management starts with good staff scheduling and shift management. With the workforce scheduling feature, managers can easily plan and schedule the work of their teams. 

The main priority of workforce scheduling is to have the appropriate number of employees with the proper qualifications in the right place and at the right time. In other words, it’s a matter of deploying the right number of suitably qualified workers exactly where and when they are needed.  

Workforce scheduling helps with the appropriate deployment of individual and rotating shifts, creating overviews, taking into account daily attendance checks and annual vacation planning, supports the analysis of deployment and vacation times, along with creating duty rosters for each individual employee.

A workforce management solution that comes with staff scheduling usually supports the following:

  • Scheduling templates for the organization of work hours
  • The sharing of schedules with the entire team
  • Extrapolation of time accounts based on the created schedules
  • An overview of the covered requirements based on the scheduled work plan
  • Management of shift changes and automatic reminders for employees of upcoming shifts
  • Labor cost forecasting
  • Convenient access to schedules in real time via a mobile app

A modern staff scheduling approach is, of course, digital. A digital solution allows you to react flexibly and quickly through fast, direct, and uncomplicated communication channels. In practice, that usually means staff scheduling is done on an interactive calendar. 

Managers can easily manage their workforce on the calendar while employees can see their assigned schedules on the web or mobile app. It’s a breeze compared to cumbersome manual scheduling and communication.

1.2 Tracking time & attendance

After scheduling your workforce optimally, tracking time and attendance comes next. That’s why we often separate time & attendance as a more specific concept under workforce management. 

The idea of monitoring time & attendance centers on the following:

  • Attendance – Having information on whether an employee is present in the company or not, and why. We can also add location data to attendance (office, home office, field site, etc.).
  • Time – How many hours an employee has been working - to fulfill their weekly legal obligation, to manage their overtime, to process payroll correctly, etc.

Time and attendance management enables managers to track all of the different types of work their employees engage in, such as regular work hours, overtime, weekend hours and so on. 

Different categories of work can also be connected to distinct payment types. Having accurate timesheets is one of the most important conditions in workforce management.

Time and attendance (and consequently timesheets) are always made based on recorded clocking events. Clocking events can be done through the use of:

  • mobile phones,
  • web apps,
  • time clock terminals or
  • Bluetooth beacons.

That means a good workforce management solution should support different types of clocking events so the data can be consistently and easily tracked.

1.3 Absence tracking

The other side of attendance management is absence tracking. Managing vacations and sick leave can mean a lot of additional work for managers and employees, so an important part of workforce management is tracking all of the different types of absences.

By accounting for different types of work and absences, timesheets are generated for accurate payroll processing.

An absence feature enables employees to simply enter an absence request, and managers are automatically notified so they can approve or deny it as easily as possible. 

Absences appear on the timeline and timesheet reports automatically. Employees can also see their remaining vacation days using the vacation counter so they don’t need to check with an administrator.

With this feature, the coordination of vacations in teams becomes much easier (Christmas, summer breaks, etc.). You can also avoid short staffing as digitalized absence tracking allows you to check who will be absent, and when, on an interactive calendar. 

Identifying possible scheduling problems without a good software solution is almost impossible.

1.4 Overtime tracking

Another important part of workforce management is tracking overtime for the sake of keeping overtime under control, whether it be for regulation, or to address safety and cost issues. 

With digitalized workforce management (specifically, by implementing a good workforce management IT solution,) managers can automatically and accurately track the overtime of their employees.

Employees can always see how much overtime they have available, so they know when it’s time to clock out. The system can automatically deduct overtime hours over certain periods, and show these cuts in payroll exports to ensure they are tracked and compensated properly. 

The implementation of the solution can also go a further by controlling overtime manually, allowing managers to grant or deny particular overtime. 

In this case, overtime is not counted automatically and instead needs specific approval from the responsible manager.

1.5 Payroll processing

With the use of a professional workforce management solution, payroll processing becomes both simpler and more accurate. 

A professional workforce management solution should allow managers or administrators to export a customized report that fits the company’s HR or accounting needs. Furthermore, by using these software solutions, managers can avoid time-consuming procedures and confusing timesheets.

1.6 Time & Attendance analytics

Professional workforce management should also come with many different kinds of reports, all of which are included under the heading of HR analytics. HR analytics help managers make better decisions regarding their workforce

Success lies in knowing how employees’ hours are being utilized, and HR analytics can provide management with core data about the productivity of their employees.

HR analytics is becoming more and more prolific in data-driven companies. HR analytics can provide answers to questions regarding the: 

  • number of hours worked per employee, 
  • accumulated overtime hours, 
  • outstanding vacation balances, 
  • the number of absences categorized by reason, 
  • illness by department, 
  • team and other departmental variables (early birds, late arrivals, and much more.)

HR reports based on clocking events help management keep productivity high and absences low. Balances, deviations, and other statistics are always on hand to help with the process.

1.7 Compliance with labor legislation

Most countries around the world have legislation which regulates labor and working time for employees. These standards regulate minimum daily and weekly periods of rest, adequate breaks, night work, annual leave, and the maximum limit on weekly working hours. 

To meet all these standards properly, employers must somehow track the time and attendance of their employees, and the best way to do that is to use a professional workforce management solution.

Let’s look at the EU as an example. The European working time directive (EWTD, passed in November 2003) regulates labor and working time for employees. Essentially, these standards regulate minimum daily and weekly periods of rest, adequate breaks, night work, annual leave, and the maximum limit on weekly workhours. 

Each European Union (EU) member state is obliged to draft its own federal laws and define the particulars, using the EWTD as a general guide. Some EU member states have stricter legislation regarding some aspects of the directive while being more liberal with regard to others.

That means every employer in the EU must track the workhours and attendance of their employees, meet the minimum standards defined in the EU directive, and, of course, be compliant with the federal legislation that’s been implemented based on the directive. 

The situation in the EU is similar to that in the US, where all businesses are required to track time in order to be FLSA compliant.

When talking about regulation and personal data, we can’t forget about GDPR. A professional workforce management solution must be implemented according to restrictions for data processing according to GDPR. These requirements apply to all companies which have employees working in the EU. 

2. Workforce management vs. Human capital management

An idea which complements WFM is HCM, which stands for Human capital management. 

Many WFM software platforms also offer HCM features. In addition to the previously mentioned features, HCM solutions can also include:

  • talent management (talent recruiting, onboarding, development and compensation plans),
  • employee experience surveys,
  • management training systems,
  • performance management,
  • benefits administration,
  • HR administration management, and so on.

Whether you should go for two separate systems – WFM / HCM – or an all-in-one solution, largely depends on your needs. 

The decision is usually based on whether you want a specialized solution that focuses on one particular aspect in detail, or a general solution that addresses a range of problems more superficially.

In our experience, specialized solutions that do one thing really well tend to provide better results. The best thing you can do is try different software solutions, and then choose the one that best fits your needs. Most contemporary workforce management providers offer a free trial.

3. Workforce management of flexible and remote workers

Because of advances in technology and digitalization, it is no longer necessary to worry about the physical location (and working time, in some cases) of employees. 

They’re able to work together with the rest of the company seamlessly from almost any part of the world by using digital tools and devices. 

You might see this referred to as a flexible work trend. Following changes brought on by COVID-19, this trend has become increasingly mainstream. There are five categories for this flexible form of work:

  • Remote work: The most popular type of flexible work is remote work, meaning employees work from home or other location.
  • Job sharing: Job sharing means one or more employees share the same job.
  • Part-time work: Part-time work means an employee doesn’t work a full-time schedule.
  • Compressed schedule: A compressed schedule means working more hours in fewer days, and having more days off.
  • Flexitime: Flexitime means that the employee has no fixed schedule when they’re obligated to work.

A modern workforce management solution should support all of the different types of flexible work. 

They should enable you to track the workhours and attendance of employees regardless of the location, usually through the use of a mobile phone for clocking in and out.

4. The main benefits of workforce management

The fact is that technology has the potential to be leveraged as one of the greatest productivity boosters for any organization. If employed correctly, technology can also be one of the biggest drivers of innovation, productivity, and progress. 

By utilizing software for different business functions, such as sales (CRM), finance (ERP), operations (PM) etc., management efficiency can be greatly improved in delegating, collaborating, information flow, data integration, and so on.

Workforce management is no exception. With the use of time & attendance and project time management tools, advanced HR analytics, and by digitalizing processes like absence management, staff scheduling, and payroll processing, businesses can achieve a completely new level of productivity and stay competitive on the market.  

Here are many of the benefits businesses enjoy by using a modern workforce management solution, such as the one we’re offering at Spica:

  • Improved company efficiency.
  • Automated payroll resulting in fewer errors.
  • Meeting compliance standards.
  • Reduced administrative work for managers and employees.
  • Improved transparency and accountability.
  • Greater motivation in employees thanks to a more transparent workplace.
  • Better workforce management through taking advantage of the provided HR analytics.
  • Easy clocking in with reminders and notifications.
  • More efficient staff scheduling and absence management.
  • Keeping overtime in check.
  • Cost efficient (subscription based) business model with no upfront investment necessary.
  • Tracking for all of the different types of flexible work.
  • A solution which is GDPR compliant.

The most valuable asset any business has is their employees’ time. With global competition, heavy pressure on prices, and costs of labor rising, businesses need to keep employee (long-term) productivity as high as possible. 

In today's complex world where everyone is constantly busy and there are always too many things to do, outstanding workforce and time management can be what makes the difference between winners and losers in the market.

5. Outdated vs. modern workforce management solutions

Now that we know what workforce management is and what a workforce management software solution does, let’s look at the difference between a modern approach to workforce management and an outdated one. 

A modern approach to workforce management consists of the three key elements:

  • Digitalized workforce management processes
  • Cloud or hybrid workforce management solution types
  • Support for the low touch economy

5.1 Digitalized workforce management processes

Digitalization and digital transformation are vast global trends, affecting organizations in all industries, no matter the size. Digitalization means the use of digital technologies to raise productivity, optimize processes, transform business models, providing new revenue and value-producing opportunities on the market. 

Digital transformation, as the next step after digitalization, means the novel use of digital technology to accelerate business strategies.

Among all the HR processes that a workforce management solution supports, digitalization of time and attendance is the most important, so let’s take a closer look at this trend. There are four levels of digitalization for time and attendance:

1. Some companies don’t track time and attendance at all. 

In this case they are not compliant with legislation and can be a subject to a fine in accordance with federal laws. Aside from that, it’s also a disaster for maintaining a high degree of productivity in an organization. This is the first level of time and attendance tracking, highly detrimental for the employer as well as the employees.

2. The most rudimentary outdated system for time and attendance is tracking them on paper. 

Businesses employing this kind of system usually have timesheet templates printed on paper, and employees manually enter how many hours they’ve worked on any given day and how much time they take off. As you can imagine, doing this on paper, especially if the number of employees increases quickly, can be a nightmare.

3. Some companies have transitioned from paper-based time and attendance systems to electronic spreadsheets. 

This might seem like an effective way to handle timesheets at first glance, however, there are also many drawbacks to using spreadsheets (Excel, Google Spreadsheets, etc.). In some cases, this system might have even more significant drawbacks than analog record-keeping.

4. A modern workforce management solution through which everything can be digitalized. 

There’s no need to put in so many hours of manual work just to manage timesheets. A modern workforce management solution provides a clocking system via a mobile app, and most processes can be automated. 

This can save a business countless hour of administrative work as well as providing many opportunities for automation. It’s a more efficient, transparent, and straightforward system, along with being a huge timesaver for everyone involved.

5.2 Cloud or hybrid workforce management solution types

Cloud computing has become mainstream in the past decade in terms of organizations buying software on the market, and this includes workforce management solutions. 

Cloud computing means that different IT resources, such as computing power, data storage, and even different software solutions are available on-demand, without requiring the active management of these resources by the user. 

On a practical level, by using the cloud you can access data and programs over the internet, instead of keeping everything locally on your hard drive or computer.

Not long ago, moving to the cloud was only possible for the most technologically advanced businesses, but nowadays the majority of businesses have migrated to the cloud to some extent. 

Moving functionality to the cloud provides many practical advantages for IT departments (no hardware maintenance required, software is always up to date, etc.) and users (accessibility, UX, etc.), all while providing a competitive advantage for businesses (cost efficiency, flexibility and scalability).

With an on-premises setup, an organization has its own IT infrastructure in their offices (on the premises), which needs to be maintained, updated, secured, etc., by IT experts. It also necessitates a significant initial investment to purchase all of the requisite equipment. 

The software is installed on servers which also need to be regularly upgraded and maintained. Applications are much harder to access from different locations, and with dozens of different applications in use, maintaining everything can become extremely complex; this is even more true when a business is growing quickly.

Nowadays companies generally decide either for a pure cloud solution or for a hybrid option. The latter is especially appropriate for enterprise businesses, where part of the infrastructure and data needs to be kept strictly in-house. 

Exclusively on-premises solutions, on the other hand, are becoming increasingly less popular and are not an effective way of organizing a company.

5.3 Support for the low touch economy

The last important trend to be familiar with when talking about workforce management is the so-called ‘low touch economy’ trend. This is a trend that resulted from the COVID-19 epidemic. 

The low-touch economy, also known as the contactless economy, refers to interpersonal interactions and others(with surfaces, handles, etc., for example) that consist of minimum physical contact, or none whatsoever. 

The idea behind the low-touch economy is to prevent the spread of germs through contact with different surfaces, or through being in close and direct proximity to other people.

There are many measures that fit under the low-touch economy umbrella, such as social distancing, video conferencing, glass protection walls, visors, and so on. To these we can add solutions such as automatic doors, limitations on the number of people simultaneously in one room, and travel restrictions as well. 

A modern workforce management solution that supports the low-touch economy can provide several features in this regard:

  • Clocking in and out with a mobile phone to avoid additional contact with hardware other than one’s personal device.
  • Touchless facial-recognition integration to clock time and grant access to different areas.
  • People-in-Room Counter to automatically limit the number of people entering a given area.
  • Integration with thermal cameras and mask detection to prevent the spread of COVID-19.
  • Dynamic Scheduling to manage workforce on demand.

We hope you learned everything you wanted to know about workforce management, why it’s important, what the main benefits are, and how to choose the right software solution for your needs. 

If you need additional information, you can read our time & attendance guide or you can read more about our solution.

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