Beyond Tools Optimizing Workforce Management Process and Technology

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3 June 2012 Beyond Tools Optimizing Workforce Management Process Workforce Management processes including time and attendance, absence management, task management, and scheduling have undergone a radical transformation in recent years as new, more automated and streamlined tools have come to market. Aberdeen's survey of 250 organizations gathered between May and September 2011 showed the extent of the impact of automation and technology on workforce management. The data also shows that tools are not enough. Technology solutions must be implemented properly, processes need be evaluated, data integrated and of course users must adopt the technology for the full value to be realized. This report will look at the benefits of optimizing technology, processes, and user experience to achieve the greatest business results. This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies provide for objective fact-based research and represent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc.

4 Page 4 Elements of Optimization Optimization is all about striking the right balance between multiple variables to get the greatest outcome. When optimizing workforce management, consider the following areas: System automation and integration. This is the technology foundation upon which workforce management initiatives hinge. Without the right tools to automate elements like scheduling, time and attendance, absence management, and payroll, and the ability to integrate data across these elements, organizations may miss huge opportunities to make solutions more efficient and easier to use. Process improvement. Efficiency is only one half of optimization. The other half is effectiveness. Without effective processes supported by automated and integrated systems, organizations will not be able to achieve optimal labor cost reduction. Effective processes must have the buy-in of all stakeholders, from executives to front-line workers, across all functions.

5 Page 5 User engagement. Results occur at the intersection of people, process, and technology. Great processes and tools only work if managers and employees put them to use. Focusing on change management and user adoption will help organizations accelerate their return on workforce optimization investments. Ensuring that workforce management solutions are streamlined and easy to use will also boost adoption. Analytics and business intelligence. Optimization is not a one-time event. Organizations are continually looking at the near-term and long-term workforce needs of their business. Analytics and business intelligence allow organizations to combine multiple data sources and create actionable insights, fine-tuning nearterm decision-making and guiding future optimization efforts. A focused optimization effort can invigorate the organization's workforce management initiatives. When first implementing a workforce management system, an organization spends much time and energy ensuring that system delivers full value but only so much change can be absorbed at once. An optimization effort can recapture focus and ensure the full value is realized.

6 Page 6 System Automation and Integration The journey towards optimizing workforce management begins with using technology to manage the workflow, automate and streamline applications, and share data between systems. Without accurate time and attendance, absence, and other workforce data, or tools to automate and integrate all of these inputs into a reliable schedule, it can be difficult to gain traction for optimization. Not only must workforce management systems be in place, they must talk to each other to gain the full benefits of the implementation. In Figure 1 we see that organizations that do not automate their time and attendance and scheduling solutions fall behind their automated counterparts in several key areas, including unplanned overtime, error rates, and time spent on manual transactions.

7 Page 7 Figure 1: Benefits of Automation and Integration 20% No automation percentage of respondents, n= % 10% 5% 0% -5% 14.2% 13.5% 10.6% Percent of overtime unplanned/unbudgeted 4.4% 2.9% 3.3% 2.1% 1.8% 1.6% Time tracking error rates WFM automated WFM automated and integrated Payroll processing error rates Reduction in manual transactions -3.6% -10% -7.5% -8.2% Year-over-year change Source: Aberdeen Group, June 2012 When automated systems for time and attendance and scheduling are integrated with payroll and core HR systems, the benefits are even greater. Automation and integration combined lead to fewer errors, improved unplanned overtime spending, and more than double the year-over-year reduction in manual transactions. Integration eliminates the need to enter data multiple times, improving accuracy as well as efficiency since no time is wasted reentering data from the schedule to the time and attendance and payroll systems. While automated systems are a good start, ensuring these systems can communicate and share data drives even greater results. Organizations with automated workforce management solutions are more than twice as likely (41% versus 20%) to indicate that they integrate workforce data with business performance data. As you will see in the section on business intelligence and analytics, integrating business and HR data is critical to improving organizational performance and productivity.

8 Page 8 Case in Point Summit Health is a nonprofit local and regional network of healthcare providers serving patients in Franklin County, PA and the surrounding communities. Summit Health s network includes family physicians, surgeons, specialists, diagnostic services, a women s health center, a fitness center, and two hospitals. Summit Health had already implemented an automated timekeeping and scheduling solution. However, several years later they were still struggling to use this technology to its full extent for scheduling and reporting. In addition, they had recently transitioned all nurses scheduling from a separate system, and the transition was not smooth. They had discovered, like so many organizations before them, that technology implementation is not enough to guarantee business outcomes. Technology, process, and user adoption must all come together to be effective. Summit Health underwent an optimization audit with their vendor, Kronos, to understand how they could manage labor costs, increase user adoption, manage their systems integration, and use business intelligence generated by the scheduling and timekeeping solution. The process began with a survey of over 100 front line managers, schedulers, and IT and HR representatives. In addition,

9 Page 9 project sponsors, members of the implementation team, and other key stakeholders were interviewed to better understand the challenges Summit Health faced. The main recommendations from this investigative work were to: Resolve specific pay, workflow and business rules that had never been configured properly during the initial implementation Establish better workflows for scheduling processes Focus on educating users from front-line workers to systems administrators and managers to ensure that they knew how to properly use the system, as well as understand the benefits they could gain from the information contained within it. The audit also estimated that Summit Health could save as much as $3 million by implementing all the recommendations uncovered in the process. Upon receiving these recommendations, Summit Health established a process redesign team with a trained facilitator, nursing director, and leaders from several other parts of the organization. This process redesign team has executive support from finance, nursing IT, and HR, and has used the output of the optimization audit as a roadmap for developing projects to address each issue. By tackling a combination of systems integration issues, process workflows, and user adoption, Summit Health is walking the road to recovery when it comes to the effectiveness of their scheduling and timekeeping solutions. Process Improvement to Reduce Cost The number one pressure cited by respondents in Aberdeen's 2011 workforce management survey was "economic pressures forcing the organization to better manage labor and control costs", cited by 73% of respondents. Clearly, cost control is a main goal for workforce management efforts. Steps must be taken to ensure efficiency and effectiveness throughout the workforce management workflow, from scheduling to time tracking to managing absences and running payroll. As shown in Figure 1, automation and integration help improve efficiency,

10 Page 10 and reduce costs associated with unplanned overtime and manual transactions. But simply automating a subpar process will only lead to limited results. To get the most out of a technology solution, the process itself must improve. To be effective, processes must be consistent and applied universally. This not only improves compliance and reduces the possibility of misuse or abuse of the system, it also aids in transparency. Individuals understand the rules and know that they're being applied fairly, which can reduce conflict and keep managers and employees engaged with their work, rather than negotiating schedule, payroll, or absence queries. As Figure 2 shows, organizations with automated solutions for time and attendance tracking and scheduling, and those integrating their

11 Page 11 automated solutions with core HR and payroll systems, have several key processes in place to support their efforts. These include payroll approval processes, defined escalation processes for time tracking and scheduling issues, and notifications that help managers make better decisions around overtime allocation. Figure 2: Processes Supporting Labor Cost Reduction 80% 75% 75% No automation WFM automated percentage of respondents, n= % 40% 20% 0% 45% 60% 60% Process for HR to approve time data before submitting to payroll 38% Defined escalation process for payroll disputes due to timetracking issues 41% 54% 51% Managers are notified of potential overtime before it occurs WFM automated and integrated 32% 49% 43% Defined escalation process for shiftscheduling issues Source: Aberdeen Group, June 2012 Before implementing an automated solution, organizations should evaluate their current processes to make sure they are geared towards achieving the intended results. Simply automating a bad process just gets you to the wrong answer faster. Or, even worse, automating a bad process can disengage employees and managers further, because they will not see the results they need to be more productive. If managers and employees understand HR processes and their role in them, automation becomes a simple tool to help achieve a business result which is the ultimate goal of any initiative, not simply implementing a technology or process. Step back once in a while and review both process and technology use to ensure that they remain focused on business results.

12 Page 12 User Engagement People stand at the core of workforce management excellence. People make up the workforce, and they are responsible for executing workforce management processes and interacting with workforce management technology. Even the most well-thought out process works only when the people executing it know what is expected of them and understand the process's goal. Aberdeen research has shown that the most common capabilities in place at Best-in-Class organizations (see sidebar, next page) support collaboration and accountability for workforce management processes (Figure 3). Figure 3: Most Common Workforce Management Capabilities percentage of respondents, n= % 60% 40% 20% 0% 76% 55% Managers held accountable for forecasting staffing requirements and labor costs Best-in-Class All Others 72% 70% 60% Managers understand impact of staff costs on profitability 52% Senior executive buy-in for the importance of WFM Source: Aberdeen Group, June 2012 To achieve results, the business must take accountability for ensuring workforce productivity and performance. Top performing companies are 38% more likely than other organizations to hold managers accountable for forecasting staffing requirements and labor costs. They also ensure managers understand the impact of labor costs on overall profitability. This knowledge and accountability

13 Page 13 encourages greater use of workforce management solutions, because managers need information to help them create accurate forecasts and understand the impact of their decisions. Unsurprisingly, these high-performing companies have senior executive buy-in for their workforce management efforts. When senior management is on board, others tend to follow. This kind of user adoption requires collaboration between HR and the business, and a focused effort on change management to help individuals understand how policy compliance and technology use can drive business results. Figure 4 highlights capabilities that set Best-in-Class organizations apart the capabilities with the biggest percentage gap in adoption between Best-in-Class and All Other organizations. The Best-in-Class align workforce management with the business, establish common metrics and train managers to use technology.

14 Page 14 Figure 4: Most Differentiated Workforce Management Capabilities percentage of respondents, n= % 40% 20% 0% 54% 29% Line of business and HR define goals of workforce management strategy 57% 36% Regularly review the impact of scheduling on key business metrics Best-in-Class 43% Formal training for managers on WFM systems, reporting capabilities and dashboards All Others 40% 28% 27% Clearly defined metrics against which the impact of scheduling are measured Source: Aberdeen Group, June 2012

15 Page 15 When individuals are held accountable for results, and are given the tools and training to achieve those results, they tend to use those tools more effectively. End-users need to understand the benefit to them and the organization if they are to be expected to take advantage of technology solutions. Case in Point A real estate management company based in the mid-atlantic, with over 2000 employees at more than 190 locations across the US, was looking for a better way to manage timekeeping, and to use automation to make life easier for employees and site managers. In 2006 they adopted a timekeeping solution to replace their highly manual process. Prior to adopting the solution, managers were responsible for calculating time at the end of each week and ensuring that all payroll elements, including overtime and other union rules, were applied correctly. Not only was this a manual and tactical burden, but it meant that many people were responsible for applying a range of compliance regulations. The organization was also looking to control overtime, and understand the causes of overtime in their various locations. The new solution made managers' life much easier, since they no longer had to calculate each week's timesheets by hand and as a result, the system caught on quickly. But the organization was still looking to get more out of its investment. They undertook an effort to find ways to do more with their solution. By surveying and interviewing managers and leaders, they found several key areas for improvement. First, they learned that to do all the things they wanted, they needed an upgrade to the next available release of their software. While work began on that effort, the organization also realized it had several user adoption issues to address. While managers enjoyed no longer having to manually calculate timesheets, they were not using the information the system generated to the greatest effect. Many were not taking advantage of the ability to review time and attendance data on a daily basis, and instead relied on an end-of-the-week review of exceptions. When

16 Page 16 the manager was out, timesheets often stuck in the system, because the manager did not know how to delegate permissions to let someone else take over approvals while they were gone. Managers were shown the benefits of more frequent reviews of time and attendance data, and features within the system were activated to send push notifications to managers whenever exceptions occurred, so they could be addressed immediately. Managers were also trained to use delegation features to keep operations running smoothly even when they were away from the office. The major benefits of this optimization were twofold. First, managers became more productive, since they spent less time reviewing timesheets and calculating payrolls at the end of the week. Also, compliance has been made easier, because time and attendance data is readily available. While their system upgrade promises further rewards, simple actions like training have already had significant impact. Analytics and Business Intelligence The payoff for automation, process improvement and user adoption is improving the ability to surface meaningful data to drive business decisions. Real-time insight drives results by helping managers and executives understand schedule information, time and attendance data, and absence tracking and their impact on business results like profitability, efficiency and customer satisfaction. The right technology, process, and skills can help organizations collect data, integrate it with other key systems, and share it with business leaders. Business leaders can then use that information to tweak technology solutions and processes and encourage user adoption. Business intelligence tools and analytics can automate and guide decision-making by sharing information. As illustrated in Figure 5, organizations with automated scheduling and time and attendance solutions, and those that integrate these solutions with their core HR and payroll solutions are significantly more likely to take advantage of business intelligence. Capabilities like automated alerts, which

17 Page 17 inform managers when employees don't show up for work or when a schedule is pushing an individual into overtime, can let a manager react before a problem occurs. Backup staffing can be secured shortly after the beginning of the shift, and schedule issues that may drive undesired overtime can be avoided. Figure 5: Business Intelligence Capabilities percentage of respondents, n= % 40% 20% 0% 12% No automation WFM automated WFM automated and integrated 47% 42% 42% 42% 40% 37% 34% 29% Reporting tools that combine operational data with attendance 9% 10% Real-time alerts when scheduled employee doesn't clock in on time Automated absence management (i.e. incentive/discipline based on attendancemetrics) 8% 9% Real-time alerts when employees approach overtime 38% 31% Business rule based schedule optimization tools Source: Aberdeen Group, June 2012 Building business intelligence into solutions can avoid many other issues. Automated absence management messages can encourage on-time arrival of employees and warn them of absence issues, taking much of the emotion out of such interactions and allowing managers and employees to keep themselves in check. Schedule optimization tools that apply business rules to skills, certifications or compliance requirements for particular jobs or shifts can create better schedules without manager intervention. Companies with greater capabilities in analytics and business intelligence are better positioned to put the right employee in the right place at the right time to serve business needs. They are also better able to respond to compliance inquiries and audits, because the data required is more easily accessible. Business analytics can have a significant impact on organizational performance; organizations should focus on this area as part of their workforce optimization efforts.

18 Page 18 Key Takeaways Workforce management's impact on organizational productivity makes it a top priority for HR and business leaders. Smart organizations know that simply implementing a technology solution isn't enough. Automation and integration drive efficiency, process evaluation and redesign drive effectiveness, user adoption drives change management, and analytics drives better decision-making and workforce optimization. Organizations hoping to make the most of their workforce management initiatives and investments should consider the following: Focus on people, process and technology. True business value is delivered where these three key fields intersect. Each in isolation will only take you so far. All three must be improved together for the biggest results. Optimization is ongoing. During the implementation of workforce management technology, much energy is focused on user adoption and processes. But as weeks and years go by, this energy may fade. Organizations should revisit their solutions frequently and ensure they are optimized to deliver the greatest value.

19 Page 19 Optimization is about impact. Workforce optimization at its best gives organizations the information they need to make better decisions. As organizations adapt to a changing marketplace and changing customer expectations, they should ensure their workforce management systems and solutions keep pace, and that workforce data is used to help the business. For more information on this or other research topics, please visit

20 Page 20 Core HR: Becoming a True Business Partner; March 2012 Analytics into Action: Workforce Planning for Talent Success; March 2012 Workforce Management Goes Mobile; February 2012 Human Capital Management Trends 2012: Managing Talent to Lead Organizational Growth; December 2011 Related Research The Engagement / Performance Equation; July 2011 Time and Attendance Strategies: Beyond Compliance and Payroll Accuracy; May 2011 Workforce Scheduling 2011: Automation Drives Accuracy, Efficiency and Business Outcomes; March 2011 Author: Mollie Lombardi, Research Director, Human Capital Management, (mollie.lombardi@aberdeen.com) For more than two decades, Aberdeen's research has been helping corporations worldwide become Best-in-Class. Having benchmarked the performance of more than 644,000 companies, Aberdeen is uniquely positioned to provide organizations with the facts that matter the facts that enable companies to get ahead and drive results. That's why our research is relied on by more than 2.5 million readers in over 40 countries, 90% of the Fortune 1,000, and 93% of the Technology 500. As a Harte-Hanks Company, Aberdeen s research provides insight and analysis to the Harte-Hanks community of local, regional, national and international marketing executives. Combined, we help our customers leverage the power of insight to deliver innovative multichannel marketing programs that drive business-changing results. For additional information, visit Aberdeen or call (617) , or to learn more about Harte-Hanks, call (800) or go to This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies provide for objective fact-based research and represent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc.