Workforce Management: Controlling Costs, Delivering Results

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1 Workforce Management: Controlling Costs, Delivering Results Organizations today must balance the need to run an efficient and costeffective operation while remaining agile and flexible to meet both customer and employee needs. How the organization manages its workforce can play a critical part in achieving both. Based on data collected from over 250 organizations between May and September 2011, this Analyst Insight looks at the key challenges organizations face today and how workforce management solutions manage customer demand efficiently, empower managers and employees, and engage and retain key talent. Balancing Cost and Agility Every operational leader is faced with the key challenge of better managing labor costs, while still being flexible enough to respond to changing marketplace and customer requirements (Figure 1). And the most significant challenge they face in achieving this balance is the inability of business leaders to leverage HR / workforce data to make better operational decisions, as cited by 65% of Best-in-Class organizations (see sidebar) in Aberdeen's 2011 workforce management survey. How the workforce is managed is critical to responding to these pressures. Figure 1: Workforce Management Pressures June 2012 Analyst Insight Aberdeen s Insights provide the analyst's perspective on the research as drawn from an aggregated view of research surveys, interviews, and data analysis Best-in-Class Definition In Aberdeen's recent Workforce Management study (September 2011), the following key performance indicators were used to distinguish the Best-in-Class (top 20% of aggregate performers) from the Industry Average (middle 50%) and Laggard (bottom 30%) organizations, with mean performance among the Bestin-Class as follows: 89% of employees indicating they are satisfied or very satisfied with HR service delivery 0.49% error rate on payroll, (defined as average % of pay checks / stubs that require redo as a result of errors per pay period) 13% year-over-year reduction in the number of manual HR transactions Source: Aberdeen Group, September 2011 This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies provide for objective fact-based research and represent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc.

2 Page 2 Even small organizations today can be highly complex, and require more sophisticated data and process management in order to operate at the highest levels of efficiency, and all leaders need up to date workforce data, such as schedule, time and attendance, pay rules and skill profiles to help them make decisions that will improve overall productivity. For example, if an extra shift must be added to respond to customer demand or someone calls out sick, leaders need to be able to quickly make a decision on staffing that will help them avoid overtime costs while still putting the right person in the right place at the right time to respond to customer needs. Without standard processes and workflows, collecting this data and disseminating it to the right decision-makers becomes nearly impossible. And as organizations grow and expand, the issue only becomes more complex. In response to these critical challenges, organizations are turning to tools that allow them to empower both employees and their managers to make better decisions, and find and keep the staff they need. As Figure 2 shows, standardization through automation is one key strategy, but non-best-in- Class companies are still struggling to efficiently align employees with business demand. What is interesting to note however, is that Best-in-Class companies are not just standardizing and optimizing schedules with their workforce management solutions. They are using them as tools to attract and engage employees by demonstrating employee focus. Figure 2: Best-in-Class Strategies Source: Aberdeen Group, September 2011 These strategies are all about collecting data, integrating it and delivering it back to employees and managers to help them make better business decisions. And, they demonstrate that an optimized and efficient workforce management plan does not have to be at the cost of employee engagement and retention. It's about creating efficiency for the company while also building a sense of engagement between employees and employers. Both of

3 Page 3 these are critical, because while optimization and efficiency are important for the bottom line, if individual employees are not retained the costs of replacing them or retraining other staff members can eat away at operational efficiency gains. Finding new ways to use data to drive better scheduling and staff optimization decisions, empowering individuals through self-service, and the use of analytics tools to turn workforce management data into information that can drive action are driving huge benefits for organizations, as we will see throughout this report. Data-Driven Decisions All organizations are striving to make better talent decisions, and to bring together key data points in meaningful ways is critical to driving improved decision-making. Automation is frequently at the core of driving this type of integration. Once data is collected in an automated system, it can be used in multiple ways. As Aberdeen's March 2011 study on Time and Attendance showed, organizations that utilize analytics and dashboards and integrate time and attendance data into its scheduling system are achieving huge gains in business metrics, including customer satisfaction and reduction in labor costs. Furthermore, when managers are able to access reports and perform analysis related to their business, the burden of manual transactions on HR is reduced (Figure 3). Reducing the number of manual HR transactions is the most frequently indicated barrier preventing HR from being more strategic, as found in Aberdeen's December 2011 study, Human Capital Management Trends Figure 3: Timekeeping Analytics and Integration with Scheduling Auto w /analytics tools Average report in KPI, n = 261 9% 6% 3% 0% 6% 3% 8% Percent of overtime costs that w ere unplanned/unbudgeted Auto w /analytics tools and integration w ith scheduling No automation or analytics 5% 5% 5% 4% 3% Average improvement in customer satisfaction 0% Change in number of manual transactions related to time and labor per month Source: Aberdeen Group, March 2011 This same Time and Attendance study also showed that automating and integrating timekeeping, payroll, and leave management does pay off in terms of improving accuracy and minimizing errors. As illustrated in Figure

4 Page 4 4, error rates were 2 to 3 times lower when timekeeping, payroll and leave management are automated and integrated. Figure 4: Automation and Integration Impacts Accuracy Average reported error rate, n = % 3.0% 2.0% 1.0% Automation w /payroll int AND leave mgmt system Automation w /payroll int AND no leave 3.3% No automation 2.4% 1.2% 1.1% 1.1% 0.9% 1.3% 1.3% 3.5% 0.0% Payroll processing (standard) Paid time off accrual calculation Tracking actual time w orked Source: Aberdeen Group, March 2011 The even better news is, not only are organizations that are automating and integrating various aspects of their Core HR solutions achieving greater operational efficiency, but they are also enabling greater employee engagement. The same tools that allow for more accurate calculations and reduced manual transactions also allow organizations to implement one of the key workforce management strategies organizations are using to drive results employee self-service. The Self-Service Revolution Employee self-service is a critical driver of employee engagement, and engagement has been found time and again to be a leading indicator of overall organizational performance. In Aberdeen's July 2011 study The Engagement/Performance Equation, the number one technology solution in place among Best-in-Class organizations was an employee self-service portal. This is quite telling, as the entire focus of this study was understanding the drivers of employee engagement and performance, and yet a tool that is often considered to be a driver of efficiency showed up so frequently among top-performing organizations those with the highest levels of engagement, individual, and organizational performance. Best-in-Class organizations in Aberdeen's recent study on Core HR set the pace when it comes to implementing self-service tools (Figure 5). Whether for front line managers, operations managers or employees themselves, individual access to relevant information is helping to drive both Core HR performance and user satisfaction.

5 Page 5 Figure 5: Self-Service Enablers Source: Aberdeen Group, September 2011 Workforce management including scheduling, time and attendance, and absence management is a big part of the core HR portfolio. It is also an area where self-service tools can help individuals be more engaged with their work experience, and help managers make better business decisions. Mobile tools are also extending the reach of self-service. Figure 6: Self-Service Impacts Stakeholder Satisfaction Employee self-service to view timesheets real time Mobile self-service to view timesheets real time Average report in KPI, n = % 40% 20% 0% -20% 51% 54% 42% Percent of employees that rated themselves as engaged or highly engaged based on last engagement survey No automation or self-service 35% 44% 31% Percent of respondents that improved customer satisfaction -3% -8% 1% Change in number of manual transactions related to time and labor per month Source: Aberdeen Group, March 2011

6 Page 6 As Figure 6 shows (from the March 2011Time and Attendance report), organizations that allow self-service are 31% more likely to report increased customer satisfaction, and those that compliment self-service with mobile access (see sidebar for definition of mobile devices) are 42% more likely to report such increases. Providing self-service information to the point of decision, to both employees and managers, is critical to enabling the kind of decision-making that is driving performance for companies today. Technology Supported by Process Automated tools and integrating data are critical to support Core HR functionality. But of course, tools are only as good as the environment in which they operate. Critical capabilities must also exist around collaboration, consistency and accountability (Figure 7). Mobile Device Definition In the workforce management survey, Aberdeen s definition of mobile devices includes smartphones (cell phones with advanced computing capabilities), Web and SMS enabled phones, netbooks, tablets, handheld devices, and ruggedized laptops for field use (traditional laptops are not included in this definition). Figure 7: Key Capabilities Source: Aberdeen Group, September 2011 Without buy-in and support from managers and senior leaders, as well as consistency around where and how data is stored and collected, tools can only provide limited benefit. To truly take advantage of the power of automation and other Core HR technologies, they must be implemented in an environment where there is a mindset around using data in new ways to drive better decisions. There is real work to be done when it comes to aligning processes and helping managers see the value that data and analytics

7 Page 7 can provide for them. Without this change management supporting technology implementation, the impact will never be as great. Case in Point For nearly 160 years, the Y has played a significant role in the Greater Twin Cities community. It is a non-profit organization serving men, women and children joined together by a shared commitment to nurturing the potential of kids, promoting healthy living, and fostering a sense of social responsibility. With a staff of over 4000 year-round employees, 1500 seasonal employees for summer programs, and 1500 volunteers, the Y offers a variety of classes, camps, programs, and activities for people of all ages, abilities, and incomes. In 2005, the Twin Cities YMCA began looking for a fully-integrated HRMS solution in order to become more compliant, more efficient, and more cost effective. At that time, their payroll system was no longer going to be supported and staff efforts were consumed by paper-driven processes, from applications to time sheets. They needed a solution that would allow them to reduce the number of manual processes, provide better reporting and better service to employees, and streamline payroll processing. The HRMS solution they selected included a Timekeeping module that could support employees working multiple jobs at multiple sites with different pay rates and could automatically import time data into payroll. The improved productivity and efficiency was enough to result in the reduction of staff required to process payroll, which has continued despite the organization s staffing levels having increased by 20 percent since the initial implementation. The addition of the Hiring module in 2008 eliminated several compliance risks by incorporating integrated background checks and employee onboarding. As employees are hired, data is transferred into the HR system. I-9s are stored electronically as part of the employee s record, which addressed a prior struggle for the Y. They have since gone back and created electronic records for all existing employees, bringing all of their HR data into one repository that can easily be used to run reports and analytics. In 2007, the Y rolled out Manager and Employee Self-Service. This allowed managers access to information regarding their employees more quickly and easily and provided employees with visibility into their time off balances, benefit information, and tax and payroll guidance; reducing the amount of time previously spent by HR and payroll staff to answer questions. To help drive adoption, Self-Service was introduced in conjunction with the annual benefits renewal, ensuring employees had exposure. Pushing employees to use the tool for open enrollment assisted in the education process. Employee Self-Service has allowed us to go paperless. We no longer have the expense of printing and mailing pay advices. And at tax time, we no longer have a backlog of people requesting duplicate W-2, said Sharon Berglund, Chief Human Resources Officer. The Y has seen great benefits from integrating its HR, timekeeping, payroll, benefits, and hiring systems, but this has been as much due to the work they

8 Page 8 did on process and stakeholder management as it was to the technology. We had a great internal project manager that helped us stay committed to investing the time and resources it would take to not just implement technology, but configure it in the right ways to support processes and achieve our goals, said Berglund. Consider your organizational needs first. Take the time to identify and implement best practices as opposed to continuing with current practices. While the technology is powerful, what you re able to get out of it will only be as good as what you ve put into it, said Angie Burke, Director of HRIS and Payroll. Recommendations For organizations looking to improve organizational efficiency and employee engagement through better delivery of Core HR and workforce management solutions, the following recommendations should be kept in mind: Automate, integrate, and power analytics. None of the kinds of performance gains illustrated in this report can be expected without starting with a solid automation foundation. Getting out of the manual morass is the first step to operational efficiency and improved experience for managers and employees. But once automation occurs, there are many more benefits to be gained. Integrating multiple pieces of core HR and applying analytics tools to the data generated will not only continue to ramp up the efficiency of the organization, but allow for improved engagement and continued empowerment of employees and managers through options like self-service and mobile access to data. Focus on manager and employee self-service. Self-service is a true win-win for organizations. It dramatically reduces the manual, tactical burden on the HR organization, making it more efficient as well as effective. When individuals have access to their own information they also help improve accuracy by correcting mistakes that may exist in their own employee information. Also, when managers and employees have visibility into how their actions impact the rest of the organization whether that be financial or otherwise they can make better decisions. And when individuals feel like they have a voice in decisions, they are more engaged and more likely to stay with your company. Sharing data through selfservice tools, and looking at how self-service can be delivered in more places through tools like mobile devices is an important step in improving Core HR delivery. Don't forget about process. The journey towards automation and integration has the greatest benefits when the process work happens side-by-side with systems implementation. If your organization is just beginning the automation journey, use it as an opportunity to standardize and improve your Core HR and workforce management processes. Don't just rush to automate a

9 Page 9 bad process. Take the time to involve the right stakeholders, and make sure you have a standard and effective process before automating. Stakeholders from the business, HR, IT and legal all have a role to play in ensuring that you're optimizing the right processes that can underpin your organization's ongoing success. For more information on this or other research topics, please visit Core HR: Becoming a True Business Partner; March 2012 Analytics into Action: Workforce Planning for Talent Success; March 2012 Workforce Management Goes Mobile; February 2012 Human Capital Management Trends 2012: Managing Talent to Lead Organizational Growth; December 2011 Related Research The Engagement / Performance Equation; July 2011 Time and Attendance Strategies: Beyond Compliance and Payroll Accuracy; May 2011 Workforce Scheduling 2011: Automation Drives Accuracy, Efficiency and Business Outcomes; March 2011 Author: Mollie Lombardi, Research Director, Human Capital Management, For more than two decades, Aberdeen's research has been helping corporations worldwide become Best-in-Class. Having benchmarked the performance of more than 644,000 companies, Aberdeen is uniquely positioned to provide organizations with the facts that matter the facts that enable companies to get ahead and drive results. That's why our research is relied on by more than 2.5 million readers in over 40 countries, 90% of the Fortune 1,000, and 93% of the Technology 500. As a Harte-Hanks Company, Aberdeen s research provides insight and analysis to the Harte-Hanks community of local, regional, national and international marketing executives. Combined, we help our customers leverage the power of insight to deliver innovative multichannel marketing programs that drive business-changing results. For additional information, visit Aberdeen or call (617) , or to learn more about Harte-Hanks, call (800) or go to This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies provide for objective fact-based research and represent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be

10 Page 10 reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc. (2012a)

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