In business, profit is the name of the game and in order to win, you as a business owner have to keep costs as low as possible.
Workforce expenses amount to over half of all business costs.
Not only is it a huge area of spending for most businesses, it is the one that too often gets bloated due to its fluctuating nature - employees come and go, wages change under the influence of labor regulations and employee status, seasonal variety affects the total number of employees needed for a particular task. Payroll leakage is a serious problem that can eat at your budget, and you might not even know about it.
That’s where strategic workforce planning comes into play. In the modern world there is no denying that strategic workforce planning is a key to success; whatever your business is, however many people you employ or whatever your goals are: if you don’t plan your workforce right, you are going to lose a lot of money and will inevitably stumble on the way to your business objectives. The most important and cherished resource of any business is its employee. To ensure that the workforce remains efficient, you need to analyze its current state and then bring your business goals to the table. Are there too many employees and you are overstaffed? Or, to the contrary, you lack expertise in a crucial area of knowledge and are in a dire need of a high-skill specialist? Maybe you have just the right number of people but their overall productivity leaves a lot to be desired?
These problems, like many others, can be solved by strategic workforce planning. This is a continuous process: from analysis to taking measures and then back to analysis, but it helps build a reliable work process and reduce labour budget while at the same time ramping up productivity. It also helps you get rid of exploits in your system that people might have been using for years, causing you to lose money for no reason whatsoever. Want to know where you are losing money and how to mitigate these problems?
Here’s our guide to effective workforce planning.
Work hours registered before or after a set shift are considered to be overtime and can significantly bloat the workforce budget. Often overtime hours payments are calculated based on the number of hours reported in a particular day instead of total monthly hours. Employees often take advantage over their employers by exploiting these overtime tracking nuances which ultimately lead to payroll leakage.
Solution: overtime expenses can be significantly reduced by correcting the payroll calculation either manually via the Excel table or by using an appropriate custom software that can automate this process to involve as little human supervision as possible. Employees will still get fair labour compensation while you save a lot of money by getting rid of unnecessary expenses.
Shift tracking is a staple when it comes to managing a lot of staff working different shifts. Are you sure that all your employees are working full hours? Are they at their highest when it comes to productivity? If you do not track shifts, it will inevitably result in employees skipping working hours since their late check-ins and early check-outs are left unsupervised. As a result, it not only slows you down on the way to your business objectives, but also makes workforce analytics and forecasting inaccurate.
Solution: shift tracking is one of the easiest systems to implement into your business process and there are a lot of options on the market today. You could use time trackers that will show you exactly how many hours your employees work on a specific task or project, when they started and when they finished their work and whether it checks out with the estimations and plans agreed upon previously. You could use biometric shift-tracking systems that require biometric authentication to start the shift and to finish it – this particular system leaves almost no room for abuse. Another modification is location-based shift-tracking if your business involves your employees moving around the city a lot. With these systems implemented into your routine you can forget about people skipping hours.
Labor regulations are quite complex and can be very confusing: they change regularly adding new adjustments to the process of payroll calculations, and keeping up with these changes can be tedious and time consuming. Tracking both office and mobile workers, preparing data for compliance audits and keeping up with geographic variations on labour regulation can prove to be a difficult task. However, when a business fails to comply with said regulations, it often results in fines, inspections and a headache for the business owner overall. Many complications and immediate punishment for failing to abide by the labour law is what makes compliance an important part of every company’s workforce planning and labour budget.
Solution: an automated labour law compliance system is the answer to this problem. Editable libraries of rules automate all calculations and integrate directly into your payroll system. Configurable flexible reporting makes audits and inspection a breeze, saving you thousands of dollars on fines.
Budget planning relies heavily on the previously mentioned systems: shift tracking, payroll calculation, and other workforce planning tools. Since the process of budget planning entails finding a balance between sources of income and all current and future expenses, the more accurate data you have from your implemented systems, the more accurate your budget planning will be. However, compiling and analyzing the gathered data without an appropriate strategic tool on hand might result in an inconsistent planning or even erroneous decisions.
Solution: budget planning is no small feat and takes a lot of time and effort to be done right. Its benefits to any business are hard to overestimate: correct budget planning helps predict future labour expenses and get ready for them, as well as prevent your business from losing money. Despite the fact that business analysis approaches and methods vary greatly from company to company, a budget planning system that consolidates all the necessary data from other tools and systems implemented into your business process is what unites all best practices. Budget planning system can keep track of all metrics, such as a number of shifts, working hours spent in a particular time period, wages and many more to make an accurate prediction and prepare you for the future.
Strategic workforce planning is a complex and continuous process but it is paramount to building a successful business and reaching the heights you set out to conquer. There are many steps you need to take in pushing your company to a level of management that will allow you to save money, give your employees a fair compensation for their hard work and make sure that they are at the peak of their productivity.
However, it is nearly impossible to implement accurate workforce planning without some degree of automation. Speaking from experience of developing a complex workforce planning system, there are far too many aspects of labor planning for an old-fashioned, “manual” approach. The amount of data needed to be processes and analysed, as well as the cost of a potential mistake is far too high to leave workforce planning to a single manager. A labor planning software is almost certainly the way to go for most businesses, especially those with a large amount of employees. And with a variety of business processes out there, it’s important to add as much customization to your labor planning process as possible. When choosing a workforce planning system, make sure it suits your business processes for an accurate and convenient planning workflow.
Embed our infographic on your site (copy code below):
<div style="clear:both"> </div> <p style="text-align: center;"><img alt="4 steps to strategic workforce planning" border="0" src="http://www.businesswaretech.com//Files/Admin/BlogImg/Strategic-workforce-planning12-%281%29.png" style="border: 0px;" title="4 steps to strategic workforce planning" width="800" /></p> <p>Courtesy of:<a href="https://www.businesswaretech.com/">Businessware Technologies</a></p>