Learn About Workforce Management and Why It's Important

By Indeed Editorial Team

Published November 7, 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

A company's workforce plays a critical role in its ability to compete effectively and achieve long-term success. Workforce management (WFM) assists businesses in forecasting staffing needs, scheduling and budgeting, tracking employee performance, planning leave, and managing payroll. A basic understanding of WFM is essential if you're interested in a career in human resources or other high-volume customer service environments. In this article, we define WFM, highlight its categories, explain its importance, describe how it works, and introduce its benefits.

What is workforce management?

Workforce management is a system that helps businesses better employ their human resources to achieve optimum efficiency and productivity. It involves forecasting, scheduling, and managing employee labour throughout the day. WFM aims to ensure that businesses have the right number of employees working at the right time, in the right place, and doing the right tasks to meet customer demand. In achieving this, businesses first understand their historical staffing patterns and then use that data to predict future trends. WFM systems have three categories, with various features designed to make the process easier.

Categories of WFM

The categories of WFM include:

Calculating need

This involves analyzing historical data to calculate the number of employees the company requires to complete specific tasks. To better calculate the needs of a business, consider various factors, such as the type of business, expected customer demand, and average transaction time. To forecast, you can consider:

  • patterns of transactions

  • sales volume and marketing objectives

  • customer service level agreements (CSLS)

  • number of support channels

  • productivity goals

  • current business growth rate vs. the staff reduction rate

  • hiring cost and training time for new employees

Acquiring a workforce

This category involves selecting and recruiting people to work for a business. It includes sourcing candidates, interviewing them, and making job offers. Always consider turnover rates when hiring. High turnover rates can be costly and time-consuming, but it's common in seasonal business models, such as restaurants and construction businesses. These organizations might benefit from hiring a temporary workforce. Provide detailed training materials and processes to ensure new employees learn skills quickly. A WFM strategy can aid a business in several ways, including improving profitability.

Productivity, performance, development, and satisfaction

Besides proper hiring and adapted training, WFM covers another crucial element: employees' performance and satisfaction. It includes time and attendance tracking, managing shift patterns, and developing employee incentives. The goal is to satisfy employees with their roles, which can significantly affect productivity. Satisfied employees are less likely to leave an organization, leading to low turnover rates. Here are some elements to consider for a happy workforce:

  • adapted training

  • competitive pay

  • clear job descriptions

  • team-building events

  • flexible work terms such as vacations, temporary work, and remote working

  • advancement opportunities

The importance of WFM

A well-managed workforce is important for the success of any business. An efficient workforce results in successful business metrics, such as increased sales, improved customer satisfaction, and reduced costs. This information can also determine whether a business can scale up or down as needed. For example, if a business is growing rapidly, WFM can help the business add new employees quickly and efficiently, or if a business is slowing down, it can help to reduce the number of employees without compromising quality or service.

WFM is important to ensuring a variety of factors, including:

  • The right number of employees: WFM ensures that businesses have the optimal number of employees doing productive tasks when the business requires them to. It can help businesses avoid overstaffing, which can lead to wasted resources, by ensuring enough employees to meet customer demand.

  • The right skill set: Employees require the correct skill set to complete their tasks efficiently and effectively. WFM assists businesses in identifying the skills that are necessary for each job and then matches those skills with the right employees.

  • The right attitude: A positive attitude is contagious and results in a better work environment for everyone. WFM promotes employee satisfaction by engaging them and recognizing employees for their work.

Related: What Is Workforce Planning? (Importance and Steps)

How WFM works

The following are some standard processes of WFM:

Forecasting and demand planning

WFM helps businesses to forecast future demand and plan staffing levels. Forecasting means using historical data, such as sales figures and customer trends, to predict future demand. This information can also help businesses identify potential problems and manage them according to their needs.

Budgeting is also a part of WFM, as it helps businesses to plan and allocate resources for their employees. This includes things like salaries, benefits, and training. It improves businesses' financial stability and allows them to make better decisions about their employees. Some WFM tools also allow you to run “what-if” scenarios to improve the business risk level.

Related: Top 9 Workflow Management Software (With Benefits)

Scheduling

This is the creation of a work schedule for employees, which includes shift patterns, working time preferences, availability, legal requirements, and vacation days. It's critical for WFM because it ensures enough staff are available to fulfil customer demand. A proper schedule leads to fewer errors, reduced customer complaints, and fewer missed sales opportunities.

Time and attendance

Time and attendance tracking involves monitoring employee hours worked and attendance patterns. WFM helps businesses ensure employees perform their scheduled shifts and take proper time off. It also allows companies to calculate payroll accurately and promptly while managing employees' absences and lateness.

Employee engagement

This is the level of commitment that employees have towards their work. WFM allows businesses to better understand employee engagement and how employees contribute to success. You can reward outstanding performers and increase morale and productivity by using WFM.

Related: How to Increase Employee Engagement (Short Term and Long Term)

Performance management

WFM also assists businesses in tracking employee performance by setting goals and objectives. This includes quality, quantity, speed, and customer satisfaction metrics. By analyzing this data, a business can identify areas where employees need improvement, provide training to help them, and give them a clear understanding of what it expects of them. WFM can also help businesses to create incentive programs that increase employee performance.

Related: What Are Workforce Analytics? (With Types of Analytics)

Payroll and benefits

WFM can help businesses to automate payroll and benefits administration. This includes time tracking, absence management, and vacation accrual. Companies can save time and money by automating these processes while ensuring accurate and on-time payments. It also has options like instant payment and syncing of timesheets to payroll.

Vacation and leave planning

This includes setting up a vacation request system, managing employee absences, and tracking accrual rates. WFM can help businesses to ensure that employees are taking paid time off and that there are no schedule conflicts with documented absences. This typically leads to better efficiency and a better use of a company's human resources.

Related: What Is Paid Vacation and How Does It Work?

Compliance

This is a major concern for businesses of all sizes. WFM encourages businesses to comply with labour laws, health and safety regulations, and anti-discrimination laws. By using WFM, businesses can create policies and procedures that improve compliance and reduce the risk of penalties or legal action.

What are the benefits of WFM?

There are several positive outcomes of WFM, which include:

Reducing labour costs

With WFM, you can ensure that you're not overstaffed or paying employees for time they haven't worked. This leads to significant cost savings for the business. WFM also provides better labour planning through which businesses can make more informed decisions about hiring, training, and other HR processes.

Increasing productivity

WFM can help to identify areas where employees are struggling and need additional training. It can also help businesses to create incentive programs that motivate employees to reach their full potential. Overall, these improvements lead to increased profitability for businesses.

Related: 14 Best Productivity Tools to Boost Workplace Productivity

Enhancing customer satisfaction

When businesses have a better understanding of their workforce, they can ensure that employees have the skills to deliver quality products and services. This avoids missed sales opportunities and reduces customer complaints. WFM aligns employee skills with customer needs, leading to improved customer satisfaction.

Related: What Is Customer Satisfaction and Why Is It Important?

Reporting in detail

WFM provides businesses with detailed reports about employee performance, labour costs, and compliance. This allows them to make informed decisions about where to allocate their resources. It also helps managers understand and manage absenteeism and overtime.

Planning for different scenarios

The what-if analysis is a powerful feature of WFM. Businesses can use it to plan for different scenarios, such as an uptick in sales or an increase in labour costs. It allows businesses to prepare for anything that might come their way.

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