Workforce costs are spiraling out of control, particularly for organizations that employ hourly and frontline workers. At the same time, many of these businesses are also grappling with increased operating expenses, supply chain disruptions, and labor shortages.
With business leaders expected to drive stronger results with fewer resources, reducing labor costs is critical. But how can companies cut expenditure without weakening performance and hurting the employee experience? The answer lies in a strategic approach to workforce management.
It's impossible to address rising labor costs without trustworthy, real-time data and insights. That's where the best workforce management software gives companies a competitive edge. As the modern workplace continues to evolve, that competitive edge will make the difference between success and failure. Read on to discover why a structured, intelligent approach to workforce management makes such a difference to the bottom line.
How Workforce Management Solutions Can Reduce Costs
Legacy human resources (HR) management systems are unnecessarily complicated. Carrying out simple HR tasks often requires managers and employees to deal with outdated software solutions with cumbersome user interfaces. Worse, different tasks often require different tools, wasting employee time rather than saving it. Even simple processes, like leave management, can feel like mammoth undertakings.
With a modern workforce management system, you can address employees and managers’ needs in real time. In the next section, we'll highlight three key areas where a connected, holistic approach to workforce management helps reduce costs.
1. Addressing Spiraling Labor Costs
One of the highest fixed costs for any company is labor—and that's not changing any time soon. This 2023 study from S&P Global of 40 global economies found that the main driver of inflation was rising wage costs. The study highlights the service and manufacturing sectors, citing wage costs at three times the long run average. With minimum wage rates increasing and employees expecting more from employers, such as flexible working options and greater workplace transparency, businesses can't afford to react slowly.
Previously, legacy workforce management practices relied on manager intuition to reduce costs and increase productivity. Now, workforce management tools can automate operational processes, enabling the following benefits:
Meet your managers where they work. By automatically delivering workforce insights to managers in their natural workflow, you reduce their administrative burden. That way managers can focus on what they do best—strategizing the next step forward and leading their team.
Automate employee scheduling with artificial intelligence (AI). Workday Scheduling uses AI to automatically track employee schedules and adjust them to prevent coverage and skills gaps. In doing so you avoid either over- or under-staffing, massively reducing labor costs in the process. Not only that, but you also remove the possibility of unconscious bias and human errors in shift scheduling.
- Turn passive employees into active contributors. By providing your workers with self-service options on their mobile devices, you give them more control over their working life. That organic increase in employee engagement not only boosts productivity, but reduces the risk of attrition (and the associated costs).