This article was updated on June 13, 2018.
Developing a more accurate staffing plan can help businesses boost their bottom line by eliminating inefficiencies and reducing costs, while improving the top line through improved customer service. The backbone of this plan should be robust analytics and employee scheduling tools, along with constant collaboration between the CFO, HR and operations.
While an accurate staffing plan can benefit any organization — whether it's retail, manufacturing, healthcare or otherwise — it's especially useful to businesses with a mix of full-time, part-time and temporary staff, as well as those with fluctuations in the levels of staffing required.
Analytics and HCM
Ernst & Young reports that, unlike physical assets CFOs have long valued and measured, human capital management (HCM) can be difficult due to limited control and predictability of your employees. Effective HCM requires consistent data and analytics to fuel planning between the CFO and CHRO. Robust analytics can enable leaders to make decisions from a more informed standpoint and to identify risks, opportunities and drivers in the business.
Acquiring reliable data about staffing and scheduling trends should be a long-term goal to boost more accurate forecasting. "This forecasting process — often undertaken over several years — forms a greater alignment and synergy between finance and HR," per Ernst & Young. Likewise, marrying this data with insights into demand drivers — that can help predict business volume — can create a culture where managers are continually learning from the past to improve in the future.
One of the best ways to help acquire the data to support an accurate staffing plan is to rely on a comprehensive time and labor management system that provides automated staffing applications. These automated applications should help you better understand productivity and labor efficiency. And, when combined with data about work volume from other business systems, it can help you ensure you have the right people in the right place at the right times. That is ultimately the secret to an optimal operating plan that can lower costs and lift revenue.
These applications also offer a history of accurate data from which to seek continuous improvements. This data is more accurate and easier to obtain when humans are removed from the process of calculating it. CFOs and CHROs can analyze things like hours scheduled, hours worked, overtime hours and revenue per employee.
For example, McKinsey & Company said that "through activity-based labor scheduling and budgeting, retailers can cut store labor costs by up to 12 percent while improving both customer service and employee satisfaction." Because of the complexity in creating accurate schedules and budgets for so many stores, even large, highly sophisticated retailers can find room for improvements within the data. Technology allows large organization to track their human capital, and can track hours worked by the minute. For a retailer with 1,000 stores, eliminating even just a few hours of inefficiency per week at each store could add up to quite a tidy sum of savings for the organization. The more closely labor can be aligned to actual demand, the more wasteful overstaffing, or lost sales due to understaffing, are eliminated.
According to the ADP Research Institute®, sound data and a plan that increases HR efficiency can help reduce labor costs in the face of rising wages and turnover. As organizations expand HR and administrative roles in their organizations, these automated systems offer HR executives more time to focus on strategic goals like improving service and boosting sales, rather than time-consuming workforce management tasks.
Data Drives Successful HCM
For businesses with successful HCM plans, data is often the tie that binds, serving as the common ground between HR and the CFO. The Ernst & Young report cited above notes that these businesses have greater CFO and CHRO involvement in strategic workforce planning with wider adoption and greater use of analytics to better understand the workforce. They also have more rigorous measurements of key HR metrics to track the overall health of the organization, beyond finances.
By relying on the most accurate data possible and keeping the lines of communication open with HR, financial leadership can design workforce plans that help reduce risk and account for contingencies such as spikes or lulls in business that require fine tuning your manpower to optimize service. This will give your organization the capability to quickly respond to unexpected changes, while still adhering to short- and long-term business goals.