Understanding Workforce Management: A Comprehensive Guide

Engage your team and boost productivity with a dynamic WFM solution

Anticipating what your workforce needs next week, next month, or years from now requires more than business acumen and gut instinct. Workforce management (WFM) is a delicate balance between adequate staffing and customer demand. Whether you're understaffed and need more employees to handle your workload or you have a generous headcount you can't justify, it's important to strike the right balance to maintain efficiency while keeping your customers and workers satisfied.

Our guide explores how workforce management software is integral to your organizational planning. We also suggest specific questions to ask when evaluating the best platform for your business.

What is workforce management?

Workforce management is the practice of optimizing an organization's employees to improve productivity, efficiency, and overall business performance. WFM activities include scheduling shifts, tracking attendance, forecasting labor needs, and managing compliance.

What is a workforce management solution?

Traditional workforce management has relied on paper-based processes, or spreadsheets, to manually track employee activities such as leave, attendance, and shift patterns. But these repetitive tasks place a burden on management and Human Resource departments to keep records accurate and updated.

A work management solution is a software platform that helps businesses automate and streamline their workforce management processes. It’s a more productive approach that eliminates the risk of human error.

Why is workforce management important?

The concept of WFM dates back to the late 1980s when call center managers explored new ways to drive efficiency among their staff. Since then, it has been widely adopted across many other industries due to the many benefits of workforce management:

1. Driving engagement

Gallup reports that worker stress has reached record levels since the pandemic, with 52% of US and Canadian employees surveyed experiencing stress the previous day. Employee engagement is now a top priority for employers who have faced everything from the Great Resignation to quiet quitting as their workers strive to reduce stress and regain control over their work-life balance.

In response, employers are tasked with creating a work environment where every employee can thrive. Workforce management is at the heart of this supportive culture, empowering employees to:

Take control of their schedules
Make time-off requests
Collaborate effectively with team members.

2. Ensuring compliance

Any organization must plan its workforce activities according to labor laws and regulations in your state or region. These may relate to:

Working hours
Minimum wage
Leave entitlements
Health and safety standards.

WFM tools allow managers to monitor and track compliance, ensuring the organization operates within legal boundaries.

3. Supporting hybrid work

The hybrid working model has been gaining pace since the pandemic, as employers and workers recognize the value in working from home for at least part of the week. Gallup research finds that 60% of remote-capable workers were based entirely on site in 2019, but this dropped to just 20% in 2023.

As hybrid working becomes more common, WFM solutions are essential for managing remote teams and keeping them aligned with the rest of the organization.

4. Reducing operational costs

Workforce management tools provide detailed, real-time insights about how, when, and where your employees are deployed across your organization.

By managing overtime, reducing idle time, and optimizing shift schedules, organizations can enjoy decreased labor costs in line with the company's financial goals and budgets.

5. Increasing workforce productivity

With a WFM solution, businesses have real-time visibility into their workforce. With AI-powered scheduling recommendations and the ability to make data-driven decisions, employees are better utilized, which improves the organization's productivity and efficiency.

This employee productivity boost is essential for companies looking to transition to a four-day working week, using a framework of 100% salary, 80% hours, and 100% productivity. Microsoft Japan improved productivity by 39.9% in 2019 to make this a feasible solution, and many other countries are now piloting their own approach to the four-day week.

6. Enabling automation

Effective workforce management encompasses every aspect of the employee lifecycle, from recruitment and onboarding to retirement. The best WFM solutions will integrate with other essential HR technologies, such as human capital management (HCM) and/or payroll systems. This approach creates a unified solution that:

Streamlines key processes
Reduces manual data entry
Improves accuracy

By automating these tasks, managers can focus on more critical aspects of workforce management, such as employee satisfaction and engagement.

What are the main goals of workforce management?

Companies interested in deploying a workforce management solution have specific objectives to drive the implementation forward. The most common of these strategic goals include:

Making accurate workforce predictions

From seasonal demand to the impact of generative AI, companies experience fluctuations in their headcount requirements and must find a way to forecast their future labor needs accurately.

WFM solutions can help meet this goal by analyzing:

Historical data
Upcoming events
Skills gaps
Other factors affecting staffing levels.

By accurately predicting labor needs, organizations can optimize staff schedules to minimize costs while maximizing productivity.

Achieving compliance

As labor requirements constantly evolve, businesses must stay on top of any regulatory changes to meet compliance obligations. Speaking on a webinar, WFM Application Consultant Matthew Grabowski explains,

"At UKG, we're all about making sure we're compliant with state and federal regulations. A company I'm working with has had in excess of $38 million in fines in the last six years, so compliance is the biggest issue right now when we're looking at workforce management."

Inspiring a culture of action

With the fast pace of modern business, organizations don’t have the luxury of waiting around to see what happens next. To stay competitive in the market, they must take a proactive approach by anticipating and addressing the challenges and opportunities before them.

With the right tools and data at their fingertips, managers can make swift, informed, and ethical decisions to achieve their business goals and inspire innovation within their teams. Doing so drives business growth and cultivates a work culture that values initiative, strategic foresight, and continuous improvement.

Overcoming barriers to global expansion

Whether expanding your business into different countries or new markets, your organization will likely encounter some obstacles. There are many factors to consider, from language and cultural differences to compliance risks and industry-related regulatory requirements.

WFM solutions overcome these barriers, providing tools to:

Facilitate cross-country communication
Simplify scheduling across time zones
Ensure compliance with local labor laws

With a robust employee management system, you can expand your business operations without worrying about losing control over your global workforce.

Improving efficiency

Efficiency directly impacts your organization’s bottom line. Reduced waste, faster output, and less idle time will save you money, freeing up resources to invest in other areas of your business. While streamlined processes are undeniably linked to productivity, your employees’ energy levels and preferred working patterns are also critical.

Employers can unleash efficiency by giving employees access to workforce management systems, enabling them to swap shifts, request time off, and enhance their work-life balance in just a few clicks. The ability to manage employee schedules independently fosters a sense of autonomy in your workforce—a key factor in driving productivity and engagement, with an excellent return on investment.

Case study: Nucleus Research conducted an ROI analysis of 11 WFM deployments, which revealed that every dollar spent on WFM delivered $12.24 in terms of benefits, time savings, retention, engagement, and payroll. Companies can expect to receive payback in as little as five months.

What are the main functions and features of a workforce management solution?

The software market offers numerous workforce management solutions, each with different bells and whistles to choose between. Although the options can seem endless, you can expect a quality WFM solution like UKG Pro® Workforce Management to have the following key features in common:

Time and attendance

Time tracking is a staple of workforce management that links with payroll. It allows businesses to accurately record the hours employees work. With timekeeping automation for both hourly and salaried workers, employers can:

Reduce manual tracking and data-entry errors
Eliminate time theft
Comply with labor laws

Attendance tracking also provides insights into planned, incidental, and extended absence patterns. Managers can identify areas for improvement, such as addressing chronic lateness or reducing unplanned employee absenteeism.

Scheduling

Staff scheduling is a complex task influenced by:

Employee availability
Shift preferences
Labor regulations

AI-powered scheduling recommendations allow employers to create optimized schedules for their employees in minutes rather than hours. With better visibility into staffing requirements, managers can avoid overstaffing or understaffing situations, resulting in cost savings and improved productivity.

Additionally, employee scheduling features like self-service and shift swapping allow staff to work flexible schedules, leading to increased job satisfaction and engagement.

Analytics

Labor management analytics offers organizations valuable insights into their workforce data. With real-time, customizable dashboards and reports, employers can track key performance indicators like labor costs, productivity levels, and overtime trends. These data-driven insights empower managers to make strategic decisions that align with the organization's goals and objectives.

Employee communication

Give your people a voice by enabling open dialogue between managers and employees. WFM solutions offer built-in communication tools, such as group chats, direct messaging, and company-wide announcements, to inform employees about their schedules, time-off requests, shift swaps, and other important company news or policy changes. This feature also allows managers to gather crucial employee feedback.

Strategic workforce planning

As skills gaps widen and headcounts change, employers must commit to workforce planning to anticipate their future needs. WFM software helps HR leaders and managers with capacity planning and workload budgeting based on:

Historical data
Budget constraints
Business goals

This strategic approach to demand forecasting allows organizations to adapt quickly to changing business environments and stay ahead of the competition.

How does WFM vary according to industry or company size?

Workforce optimization is a best practice for any type of organization in any industry. For example:

Retail companies might be concerned about creating a labor model that adapts according to fluctuating customer demand and economic disruption.
Healthcare organizations may want a solution that leans on data to solve short-staffing problems.
Manufacturing businesses may want to improve their workforce scheduling processes to retain skilled workers longer.

Looking beyond industry differences, your WFM approach may also vary according to the size of your organization:

Small businesses

Small businesses have the following considerations:

Budget constraints: Small businesses often have limited resources and could benefit from low-cost WFM tools that are easy to implement.
Simplicity and usability: Tools and processes should be user-friendly, as small businesses often lack specialized staff to manage complex WFM systems or the time to dedicate to training.
Basic compliance needs: Ensuring compliance with federal labor laws and regulations can be more straightforward for smaller teams.

Medium-sized businesses

As your business grows, your WFM system should easily scale up to accommodate more employees and complex schedules. Some essential considerations include:

Integration capabilities: Syncing your WFM solution with other systems, like payroll and HRIS platforms, streamlines your processes and eliminates data redundancies. As your business grows, you may also require robust integrations with customer relationship management (CRM) or enterprise resource planning (ERP) systems.
Enhanced compliance management: As the workforce grows, managing compliance becomes more complex and crucial.
Departmental coordination: Different departments or branches might have varied WFM needs, and your system should cater to this diversity.

Large enterprises

Enterprise organizations typically have more complex scheduling needs, with multiple shifts, locations, and job roles. Ensure your WFM software solution accommodates the following:

Advanced reporting: Sophisticated analytics can track productivity, labor costs, and other key performance indicators.
Customization: Each organization is unique, and your WFM should be able to accommodate specific organizational processes and policies.
Comprehensive compliance management: Large organizations often operate in multiple jurisdictions, making compliance management more complex.
Employee self-service portals: Empower employees by giving them access to schedules, leave requests, and other core HR functions.

How to choose a workforce management solution

With a sea of available options, selecting the right workforce management solution for your organization can be challenging. It's worth conducting extensive research into a shortlist of WFM tools and pitting them against each other before you invest. Here is a checklist to work through during your WFM evaluation process:

Core features

What specific workforce management needs does our organization have, and how well does the solution address them?
Does the solution offer flexibility and customization to adapt to our specific industry and operational requirements?
What features does the solution offer to streamline and improve processes like scheduling, time tracking, and leave management?

Pricing

What is the solution's total cost, including setup, subscription, and any additional fees?
How does the pricing structure align with our organization’s size and budget constraints?
Are there flexible pricing options that scale with the growth of our organization?

Compliance

How does the solution ensure compliance with relevant labor laws and industry regulations?
How does the system update when these legal requirements change?
Are there features to help manage union rules, overtime, and other compliance-related aspects?

Integrations

Does the solution integrate easily with existing HR, payroll, and enterprise systems?
How does it handle data sharing and synchronization across different platforms?
Are there APIs or other technical supports for custom integrations, if needed?

Employee experience

Is the platform intuitive for new users?
What feedback have our employees provided about their experience?
Are there features that specifically cater to improving employee engagement and satisfaction?

Scalability

How well can the solution adapt to our organization's growth and changing needs?
Do any limits exist for the number of users, locations, or data volume?
Can the system handle complex organizational structures as the company expands?

Data security and privacy

What measures does the solution use to protect sensitive employee data?
Does the platform comply with data privacy regulations like GDPR or CCPA?
How does the system handle data backups, recovery, and breach responses?

Customer support and training

What type of customer support is offered? For example, 24/7 phone support, live chat, or community knowledge base.
Are there comprehensive training resources and programs available for administrators and end-users?
What do other customers say about their experience with support and training effectiveness?

Optimize workforce management with UKG

UKG Pro Workforce Management makes it easy to put your people front. Our platform offers a customizable approach to workforce management, meaning you can tailor rules and features to meet your industry's and your organization's specific needs. Whether you need to track attendance, improve resource allocation, or boost productivity, our WFM platform will provide an elevated experience for all.

Ready to optimize workforce management in your organization? Take a product tour today or contact our sales team for more information.