Maximizing Productivity and Efficiency with Core Analytics Key Performance Metrics
While most organizations continue to strategically reposition themselves to face challenges brought about by the COVID-19 pandemic, labor costs continue to be one of the most expensive drivers of variable costs in organizations across each sector. However, even with this ongoing dilemma, leaders realize that there is an opportunity to control costs without sacrificing quality and efficiency. The secret is using Workforce Analytics tools to remove organizational obstacles that hinder workforce productivity.
Some would say this is easier said than done; however, this is not an impossible feat to achieve and sustain through one shared goal related to Workforce Analytics — and that is the need to facilitate opportunities for proactive rather than reactive management.
So, how can you consistently champion and encourage proactive management? The simple answer to that question will always be based on these factors:
- Governance and leadership
- Target setting
- Buy-in
- Structure
- Ongoing training
- Linkage to performance
By building these into your organization’s success plan, you can drive a culture of accountability — one that embraces control of labor costs and the ability to enhance service delivery. The approach is not one that is meant to be cookie-cutter, as every organization across every industry is different. Through the use of productivity measurement and analytical data within Workforce Analytics (specifically, core ad hoc reports), you can provide immeasurable insight into opportunities in specific areas that help paint a unique picture of what labor productivity success looks like to your organization.
For most organizations across all business sectors, the primary productivity objectives revolve around five key areas:
- Staffing efficiency — Reducing labor costs through effective staffing. Improving staffing while ensuring that you are “hired in” appropriately as well as eliminating inefficiency in labor usage across all departments. Are we over/understaffing in comparison to workload (i.e., volume, census, sales)?
- Premium labor — Balancing the usage and costs associated with premium labor, such as overtime, supplemental, contract, and/or agency labor costs, and allocating employees where they are needed. What is driving higher overtime levels in some departments? Does our excessive usage of premium labor indicate the need to hire an additional full-time equivalent (FTE) or part-time employee?
- Increase transparency — Make meaningful productivity data more accessible across all departments at varying levels of leadership, from managers to senior executives, that can be used to improve operations through strategic planning and decision making. How do these departments’ FTE counts compare to budgeted targets? Where do our variances lie, and why?
- Mitigate the risk of being out of compliance — Eliminate potential or ongoing compliance issues and risks related to inappropriate timecard adjustments, canceled meal breaks, or excessive overtime, particularly in healthcare settings.
- Enhance the bottom line — Measurable and enhanced productivity equals increased profitability. Tracking key performance indicators (KPIs) on an organization wide basis is essential and establishes your overall benchmarks. Maximize value from a high-performing workforce and the use of industry benchmarks.
Four Key Performance Metrics to Improve Productivity
Although there are numerous ways to measure productivity across all industries, there are several metrics that are both essential and universal — and can be extracted from your Workforce Analytics solution. Let’s look at four key performance metrics that you can use to improve productivity and increase efficiency with Core Analytics:
1. Overtime hours
The metric explained: Capacity and staffing misalignment can drive a significant uptick in the use of premium labor while also impacting hiring decisions — for example, sudden scale-ups to bring on new hires to fill the gaps. This is a typical concern for most organizations and something that can be addressed through the strategic use of various reports and data provided in Workforce Analytics. It is also important to note that overtime isn’t always bad. In fact, this was a significant talking point during my recent conversation with Dr. Christina Carter, a UKG senior management consultant for Workforce Analytics – Healthcare. Carter stated, “Overtime is not only important but also useful, as most organizations tend to focus on overtime reduction too much, when in fact, overtime may be the better option,” she said.
Reporting to the rescue: This is an important point to consider when determining the best strategic approach for the appropriate use of overtime based on operations, workload, and finances. Evaluating overtime using Workforce Analytics core ad hoc reports (like Approaching Overtime) can facilitate quicker insight into overtime, and the opportunity for proactive management may lead to any adjustments needed. This type of core report also allows you to dive deeper into the root cause of the overtime events through drill-downs over a particular period of time. Some overtime occurrences that may not be warranted include incidental overtime or even scheduling issues. The most important aspect is ensuring that the excessive use of overtime is not signaling an overworked team, which has been linked to a decrease in efficiency as well as an increase in absenteeism.
2. Absenteeism
The metric explained: From healthcare to retail to public sectors, absenteeism has a significant impact on productivity and carries hidden costs for every organization — be it through the decrease in employee morale or poor performance. This metric should be monitored consistently to determine the root cause and to develop a plan of action. The plan should prevent the inevitable increase in stress levels that will arise among employees and should provide coverage to fill the gaps created through excessive absenteeism. This is particularly true when the use of overtime is often selected as the quickest resolution to absenteeism by some frontline managers.
Reporting to the rescue: The Overtime vs. Unplanned Absenteeism core ad hoc report is another great tool to assist in monitoring these events and quantifying the impact. Identifying and addressing patterns of absenteeism can ensure that managers are enforcing their attendance policies, particularly when the use of reports can also highlight trends in absenteeism — for example, on Mondays and/or Fridays or after major events, such as Super Bowl Sunday! By consistently monitoring this metric, organizations can reduce the direct negative effect that absenteeism can have not only on the workforce but also on service delivery and patient or customer satisfaction.
3. Scheduling effectiveness
The metric explained: The evaluation of deviations from planned work schedules is another KPI that should be analyzed to determine areas of improvement and cost savings. The management of hourly employees coupled with an effective schedule is critical to any organization. This is particularly true in regard to key differences in scheduling by demand or scheduling based on need, which in some instances can lead to unfavorable outcomes in terms of productivity. The best approach is to analyze and compare both actual and scheduled hours over a period of time.
Reporting to the rescue: The core ad hoc report Actual vs. Worked Scheduled Hours offers this analysis and the ability to drill into detail regarding the work hours scheduled versus the hours that were actually worked by the employee and/or department. Using reports like this will allow the manager to identify root causes, such as inconsistent usage of schedules across the organization, and trends that may signal consistencies in actual hours exceeding scheduled hours for a department or employee as well as drive the need for efficient scheduling.
4. Exceptions
The metric explained: Punch exceptions is one of the long-running topics that are often at the forefront of most customer conversations when they are seeking ways to reduce incidental labor costs and increase efficiency. This is evident when it comes to missed punches, early ins, late outs, and missed meal breaks. As we concluded our recent conversation, Carter reflected on her customers’ shared experiences regarding punch exceptions, particularly the negative impact these occurrences can have.
Reporting to the rescue: The use of core analytics to monitor exceptions is one of the most effective approaches for our Workforce Analytics customers. In fact, when asked which of the core ad hoc reports has been the most beneficial in her experience, Carter emphasized the value of the Punch Exceptions report as the best way to effectively monitor exceptions across departments and by the employee: “This report not only identifies the employees and departments that have the highest number of punch exceptions but also the type of exceptions, such as early ins and outs or even meal deduction cancellations. This is particularly helpful when coupled with managerial comments regarding the reason for the exception, [which] can be appended by the timecard editor for the event. This type of reporting offers yet another effective method of tracking or auditing for leaders in any organization to determine the appropriate course of action.” The use of these reports, coupled with relative policy changes for punching and ongoing monitoring, has proven to be effective in reducing the negative impact on both labor costs and productivity. Timeliness is essential to reducing the likelihood of continued inaccuracies and potential organizational exposure to compliance violations.
Core Analytics for the Win!
For all industries, labor costs will continue to be the largest cost driver, and they warrant ongoing analysis from both operational and financial perspectives. The ability to address critical organizational decisions in close to real time can make all the difference in driving labor costs down while increasing productivity. While we know that productivity is all about doing more with the same resources, efficiency must not be lost in the process. The best way to improve labor productivity is to find ways to identify and reduce barriers to productivity and strategically allocate staff in a way that meets demand while enhancing the quality of service delivery. Using root cause analysis, coupled with timely decision making and action, you can paint an accurate picture of what success looks like to your organization as you continue to gain immeasurable value from analytics insight and further drive favorable outcomes.