With all due respect to our geology friends out there, for some reason knowing that erosion is the act in which the earth is worn away by water, wind or ice, doesn’t make it sound exactly like a walk in a rose garden. But then, when we hear those two frightful words, margin erosion…now that really hits close to home. In the wonderful world of workforce management, margin erosion just leaves a bad taste or bad smell in our mouths and noses.
If you’re a union organization, or a company with a lot of labor scheduling rules, it’s time to clear your palettes. Historically, companies would enter into agreements with labor without understanding how to manage those agreements. It’s almost always after the fact that the company is saddled with trying to figure out how to administer the rules, often times without the workforce management software to handle the administration. The standard default in situations like this is almost always, overtime, and that might be entertaining in sports, but it’s far from entertaining in business.
Overtime, or being in an overstaffed situation can be the largest single contributor to margin erosion. Over the years, many manufacturing clients of Workloud have told us that being overstaffed rarely increases production, all it does is drive up costs. This is what our research has told us about the impact overtime can have when the appropriate workforce management solution is not being utilized:
- Initiating overtime in reverse seniority can heighten a disgruntled workforce
- Not knowing the most cost effective, qualified employee to fill a gap
- Not finding employees who might be willing to volunteer at no overtime cost
- Granting vacation time without knowing how many employees will be off resulting in certain overtime costs
- Working from a certification and skills spreadsheet and having disparate sources of information like employee work availability will lead to margin erosion
- No reporting mechanisms or processes in place to notify staff of impending overtime situations
- Not having a systematic process to recruit employees for volunteering
- Inability to push notifications to employees for additional work opportunities
Today, workforce management solutions are cloud-based and combine all the right functionality that’s necessary to drive down overtime while complying with work rules. Customers often tell us how delighted they are to see the positive impact on labor costs, as well as a reduction in employee complaints, when they use Workloud’s human capital management software. So, if margin erosion is a concern, and payroll is your single largest expense, consider a workforce management solution that best fits your needs.