Workforce Management: Everything You Need to Know

Workforce management is a business function that employers perform through their HR department. To know why it is essential, you only need to look at the workforce’s pivotal role in an employer’s success. In short, employers need a productive workforce in order to thrive.

This article will help you understand workforce management, including how to leverage it to drive positive business outcomes.

What “workforce management” means

Workforce management (WFM) is the process of managing the organization’s human capital needs in the most effective and efficient manner.

Interestingly, workforce management started as a way for call centers to improve efficiency, productivity, and consistency. This was primarily done through scheduling. Over the years, WFM has ballooned into a complex framework that organizations use across all industries.

If you have employees and contractors, your workforce management responsibilities extend to both groups.

Nowadays, employers use WFM processes to strategically boost organizational performance through an array of HR activities, including:

• Analytics
• Forecasting
• Hiring
• Performance management
• Recruiting
• Scheduling
• Training

Keep in mind “workforce” refers to individuals who are available for work or have the ability to perform a job. This includes not only employees but also other types of workers, such as independent contractors, freelancers, seasonal workers, and temporary workers. So, if you have employees and contractors, your workforce management responsibilities extend to both groups.

Benefits of workforce management

Your business can gain several advantages by engaging in workforce management. For example, WFM can help you:

• Outperform your competitors
• Achieve regulatory compliance
• Control your labor costs
• Make data-driven decisions

Below is a closer look at these (and other) advantages of workforce management.

Competitive Edge

Employers want to outperform their competitors, and workforce management is instrumental in gaining this competitive advantage. Through workforce management, you can ensure the right people are in the right jobs at the right time. Having a productive workforce can position you as a top-performing organization in your industry.

Regulatory Compliance

Employers must adhere to applicable federal, state, and local employment laws. They risk the administering government agency penalizing them for noncompliance if they don’t. Workforce management enables you to implement practices that help you meet your legal obligations as an employer.

Labor Cost Control

Qualified workers are vital to organizational success, but they can become a liability if you fail to control your labor costs. This can happen, for example, if you’re not keeping a watchful eye on your overtime expenses. It can also be a problem if turnover gets out of hand. Studies show that the average cost to replace an employee is 6-9 months of that employee’s salary.

Effective workforce management can help you maintain control over your labor costs.

Effective workforce management can help you maintain control over your labor costs. For instance, it allows you to reduce overstaffing by forecasting the number of workers you need throughout the year.

Data-Driven Decisions

One ill-informed decision can cripple an organization or cause headaches that impede business growth — depending on the scope of the impact. So, it’s essential to aim for informed decisions on workforce matters. You can achieve this through workforce management processes like data collection and analysis.

For example, data analysis can reveal trends in employee performance and turnover. You can use this information to make stronger decisions in these areas.

Other WFM Benefits

According to CIO Magazine, “Implemented correctly, WFM can help companies reduce costs and improve customer service through consistent and automated monitoring of the workforce.”

WFM also makes it easier to predict future staffing demands and determine whether staffing cuts are needed.

Elements of workforce management

Workforce management has many levers, and when combined, they result in a highly comprehensive process. The most common components of WFM include:

• Scheduling
• Timekeeping
• Performance Management
• Human Resource Management

Next is an overview of each of these 4 elements.

Scheduling

Scheduling involves predicting the organization’s short-term and long-term staffing needs and formulating strategies to fulfill them. While scheduling is typically used for employee labor, it can also be applied to a contingent workforce.

A myriad of internal and external factors affect scheduling, including the economic climate and talent landscape. The organization’s current and future staffing needs, along with its capacity to meet them, also play a role.

Notably, the COVID-19 pandemic has accelerated remote work, which has changed how many employers schedule their workforce. Moreover, flexible work options have made scheduling more multifaceted than before.

Still, the primary goal of scheduling remains the same: to deploy the organization’s workforce most effectively and efficiently.

Timekeeping

Under federal and state wage and hour laws, employers must document their nonexempt employees’ work times, among other things. This makes timekeeping a core workforce management task for employers with nonexempt employees.

Whether you have exempt or nonexempt employees, you must monitor their attendance to see if they’re arriving and leaving work as expected. You also need to track allotted breaks and meal periods.

Performance Management

After recruiting, hiring, and onboarding an employee, you’ll need to manage their performance on a continuous basis. This critical aspect of workforce management includes:

• Setting work goals for the employee.
• Communicating established work goals to the employee.
• Implementing a feedback system for managers and employees.
• Determining whether employees are performing according to company standards.
• Deciding which employees should get a raise, bonus, or promotion.
• Developing and initiating performance improvement plans.
• Creating and maintaining a healthy workplace culture for employees to flourish.
• Ensuring employees have the resources they need to succeed in their roles.

Human Resource Management

Workforce management encompasses all people-related aspects of human resource management. Therefore, scheduling, timekeeping, and performance management are only part of the WFM equation. The remaining portion includes:

• Benefits administration
• Career advancement opportunities
• Compensation planning
• Employee discipline
• Employee relations
• Health and safety
• Hiring
• Mentorship
• Onboarding
• Payroll administration
• Recruiting
• Termination
• Training and development

Workforce management has numerous moving parts, and you need the appropriate tools to administer them. This is where workforce management tools come in.

Workforce management encompasses all people-related aspects of human resource management.

What are workforce management tools?

These software solutions automate and streamline WFM activities, making the process easier to implement, navigate, and maintain. Typically, WFM tools are offered as part of an extensive HR software suite.

WFM tools simplify most areas of workforce management, including recruiting, hiring, timekeeping, performance management, health and safety, payroll, and benefits. A well-designed solution considers all areas of WFM and automates the necessary ones. By automating these activities, the solution frees up the HR team, so they have more time to focus on strategic endeavors.

For example, WFM recruiting tools may include an applicant tracking system (ATS) to assist with candidate management. The ATS can also provide insight into your company’s hiring trends to better inform future hiring decisions.

To reduce administrative errors, the WFM solution should include integration capabilities. For example, HR, payroll, and benefits are closely related, so integrating them into one unified system is a good way to save time and reduce errors across all 3 functions.

Additionally, WFM tools enable HR to create policies more easily and communicate them to employees at all organizational levels.

WFM tools can help with the following (and more):

• Benefits
• Budgeting
• Compensation
• Compliance management
• Forecasting
• Payroll
• Reporting and analytics
• Scheduling
• Talent acquisition, development, and management
• Time and labor

For insight into many of these tools, see “5 Essential Automation Tools Every HR Manager Must Have.”

Employee self-service tools

Most employers offer an employee self-service portal to minimize HR’s workforce management burden and increase the department’s efficiency.

Employees can access the portal to obtain specific HR, payroll, and benefits information, instead of relying on HR. For example, employees can:

• Retrieve their work schedules and pay stubs
• Make tax withholding and direct deposit changes
• Manage their benefits
• Submit PTO requests

Without the self-service portal, the HR or payroll team would have to handle such WFM tasks or employee inquiries.

Are you interested in workforce management solutions? See how Zenefits’ workforce management tools can help.