Workforce management systems can now do much more than simply record employee attendance. Lindsay Nicolle reports
A new breed of Internet-based software solutions has arrived - solutions which recognise that a company's workforce is one of the business' most valuable assets and staff are also, arguably, the last remaining differentiator between companies operating in competitive global markets.
The software is ideally suited to businesses employing large numbers of staff in shift patterns, such as in the manufacturing and retail sectors, or companies where staff charge by the hour, such as consultants, solicitors and accountants.
Web-based software known as a human capital management (HCM) system is the next generation of what used to be known as a standalone workforce management system. These typically took the form of time and attendance-style recording systems.
At its simplest, HCM systems are about maximising the value of staff while keeping down costs. In practice, the software can achieve many additional business benefits.
HCM software can help you to manage your business expectations and forecasts; budgets and costs; staff skills and preferences; equity and fairness in allocating unattractive jobs; customer service levels and expectations; administration and policy; workplace legislation; and union agreements. It can thus ensure that managers never break a corporate rule and always adhere to company policy, culture and specific constraints.
The software can also maximise the use of a company's workforce in response to ever-changing customer demands, ease planning and budgeting for seasonal fluctuations in demand for labour, and deliver detailed management information on all employees' expertise and working hours.
All of these workplace efficiencies translate into an improved quality of service to customers, helping to attract and retain more customers, decrease lost sales and improve market share. It sounds great - so why did the first generation of such systems which heralded such promise, bomb so badly? The theory was certainly sound enough. Chorleywood Consulting estimates that operational managers can spend up to six hours a week manually planning how to schedule their people over the following week.
However, line managers found the first generation of systems too complicated and time-consuming to learn, and too scientific and inflexible in their approach to accurately interpret real-life and individual business needs. They also took no account of the line managers' unique knowledge of his or her workforce. Add to this the fact that the systems were also imposed on managers by people in head office who knew nothing of the vagaries of local staff management, and the suspicion arose that local management jobs were under threat from the introduction of computers.
Such inappropriate software and approach to its deployment was bound to cause conflict. Sure enough, line managers simply refused to use the systems and continued with their time-consuming manual business processes.
Today's Web-based systems largely correct the mistakes of the past. The new breed of HCM system is, by and large, more user-friendly, requiring only basic staff training since access is via customisable Web browsers. They are also more flexible in their approach, taking account of line managers' unique knowledge of local business and staffing needs.
The systems offer more powerful, intuitive features, such as "what if" scenarios, enabling the effect of new staff schedules to be tested before going live, and self-service facilities so that workers can personally manage their own shift preferences.
Many systems also integrate with others, for example customer relationship management and point-of-sale systems. This means that key managers in the business, from the chief executive downwards, can tap into real-time workforce information and plan future business resourcing based on all sorts of employee data. For example, individual staff skills and preferences for working hours can be considered, not just the cold clinical approach of "customer demand equals Y number of staff working Z number of shifts".
Most crucially, today's systems can cut the time currently spent manually organising staff at the sharp end of business by up to 80%, according to Chorleywood Consulting. The decision support information generated also has the potential to reduce over-staffing by 80%, and under-staffing by 50%.
The potential impact of HCM software on a company's bottom line has been recognised by industry analysts. According to research firm Aberdeen, the HCM IT market is worth at least £120m at present but is expected to reach nearly £7bn by 2003. Aberdeen says that a huge growth in popularity of the software can be expected because companies are increasingly recognising that effectively managing "people assets" has the potential to increase shareholder value among larger companies by as much as 30%. Since nearly three-quarters of corporate spending is allotted to human capital assets, best practices in attracting, developing and retaining talent can make organisations both more effective and more profitable.
With so much money up for grabs you can expect to see all manner of suppliers launching so-called HCM solutions in the coming months. Some really will help line managers do their jobs better, while others are more likely to be systems for human resources departments dressed up to look like HCM systems.
Accordingly, the so-called HCM market is being fought over by the likes of SAP, PeopleSoft, Oracle, Blue Pumpkin, Kronos Systems, Open Text, Rostima, and TempoSoft.
Some suppliers, for example Rostima, focus on one particular aspect of HCM technology. Rostima's automated rostering software matches staffing levels to workloads for companies including Securicor and Quantas Airways, typically saving them between 10% and 15% in staffing costs. Others, for example, TempoSoft, offer multifaceted software capable of fully integrating the forecasting of labour needs, budgeting, scheduling of shift workers, and time and attendance processes, as well as ensuring compliance with employment laws.
"However, the aim of HCM software should not be to automate every aspect of workforce management but to provide powerful tools to enable operational managers to use their local knowledge of their staff and management expertise more efficiently and effectively," says John Blackwood, UK general manager of TempoSoft. "If you recognise that staff are probably a business' largest cost but also its greatest asset, and if you want to enhance customer service, then you must provide operational managers with the tools to do what is becoming an increasingly complex job. By doing so you'll also provide executive management with the performance reports and decision support they need to take strategic business decisions."
Certainly the lot of the operational manager is becoming increasingly complex even as senior managers are demanding more sophisticated management information from the shop floor. Research by the Industrial Society shows increasing demand for flexible working among workers, while the national skills shortage; European workforce legislation; increased competition from the global economy; and the impact of mobile technology, are combining to turn-up the pressure on operational managers to apply staff in imaginative ways to meet ever more stringent productivity targets. Why slave over this manually when a computer system can juggle a melting pot of hundreds of variables in seconds?
"To succeed, businesses must manage all assets within their control - capital, technology and people," concludes Keith Statham, regional managing director of labour management systems specialist, Kronos Systems. "Traditionally, companies focus on capital and technology, neglecting their people and the impact they have on the success of their business, and yet people costs contribute significantly to the bottom line of most companies."
Indeed, Chorleywood Consulting estimates that if companies can reduce their staff turnover by 1% - and that's feasible if a workforce is managed better using HCM systems so as to create a happier working atmosphere - then they can generate a 6% increase in productivity, because retained staff are more motivated and familiar with their role.
In today's cut-throat markets, managing people assets more effectively has never been so important. HCM software may turn out to be the saving grace for many a firm facing economic quicksand today.
Manual versus automated HCM
Front-line labour management systems enable companies to automate many labour-intensive manual processes. For example:
- Planning complex work schedules and shift patterns for hundreds of staff
- Recording hours worked - replacing traditional clocking in and clocking out
- Ensuring compliance with European Union directives such as the Working Time Directive - many companies still maintain time-consuming manual records to ensure that staff do not work more than the maximum 48 hours average per week and that they take the requisite number of breaks between shifts
- Recording activity-based pay - for example, where hotels pay staff at different rates depending on the nature of the job
- Keeping track of annualised hours. Instead of working, say, 30 hours per week, an employee works 1,400 hours per year, enabling staff with families to have time off over school holidays, and the business to allow for seasonal fluctuations in labour requirements. This is almost impossible to manage efficiently without the help of an automated time and attendance system.
Case study: Silicon Graphics
High-performance computing and advanced graphics specialist Silicon Graphics (SGI) decided to overhaul its contact centre strategy to improve customer service and reduce costs. Accordingly, it installed a new switch to connect its four US locations together to create a virtual contact centre.
SGI had previously developed its staff schedules manually, relying on local critical needs assessment to develop a plan. However, the company needed a more efficient and accurate method for accommodating the complexities of a workforce physically located in four time zones.
The challenges didn't end there. SGI also decided to bring all customer contact in-house, increasing call volumes by 50% to 2,500-3,000 calls per week. Budget constraints discouraged increasing the percentage of staff to accommodate the added influx of new calls.
The solution was to deploy Blue Pumpkin's workforce management optimisation software. The computerised staff plan has resulted in a 37% increase in agent productivity and a 40% improvement in staff adherence to it, resulting in a 47% increase in customer satisfaction. In addition, senior staff spend 10% less time on workforce management functions today, and SGI has avoided spending millions of dollars in additional employee-related expenses. Moreover, the first year return on investment was a staggering 3,000%.