VCS Blog

01 February 2016

Where Does The ROI Come From In Workforce Management?

Posted by VCS Software
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Workforce management software can provide HR managers a high return on investment (ROI) by delivering real time data that allows them to manage labor costs and increase productivity. But where exactly is the ROI coming from? And how can companies take full advantage of this information to maximize profitability?

What is Workforce Management Technology?

Workforce Management Technology (WMT) are systems that gather, calculate, and organize business data about workers, activity and cost. Over time, the compilation of this information creates an ongoing history of a business and its workers. The historical data can be analyzed and its results used to make informed decisions that will guide a company to more progressive growth.

There are WMT systems that address every operational aspect of a business. Some that contribute to better decision-making include:

  • Scheduling Software – provides the background logic for the workforce
  • Enterprise Resource Planning (ERP) – supplies employee demographics and job information
  • Learning Management Systems (LMS) - delivers training, assessments, and automates employee record-keeping
  • Payroll Systems – calculates and pays according to hours worked
  • Billing Systems – facilitates invoicing and collections of receivables
  • Time Systems – reports employee time and tracks the flow of people onsite

As data is continually entered into these systems, it can be totaled and then shared with all management, which makes the information even more meaningful. From this amassed data comes business intelligence in the form of reports, analytics, queries, and what-if analysis.

Where does the initial ROI come from?

Often, companies see rapid returns on their investment through payroll and time management processes. According to a Nucleus Research study, workforce management software posits significant ROI, “with an average benefit of $7.88 returned for every dollar spent” (Source). In the same study, Nucleus analysts discovered that the $7.88 return was caused by “reduced payroll error, increased productivity, and avoidance of excessive paid time off.” This quick improvement to the company’s bottom line is appropriately lauded and celebrated, as it should be. But there are many additional benefits that can and should be reaped from the implementation of WMT systems.

Where can subsequent ROI come from?

Simply stated, subsequent ROI will result from the utilization of workforce metrics and analytics to guide better decision-making. The business intelligence that comes from the use of WMT won’t inherently generate ROI unless managers change their decisions and behaviors. The time and labor investment in implementing WMT can only have an impact on a business if the relevant information persuades managers to make different and better decisions than they would have without access to the information.

As companies make the investment in various WMT systems, there also needs to be dedicated management procedures put in place. The systematic sharing of reports with company leaders along with structured meetings to discuss the results is essential. Companies who are willing to make changes to existing processes and policies in response to the reported data have the potential to transform their business. The real return on investment for workforce management systems has more to do with the willingness of the company to make changes, than it does with the system itself.

For more information on implementing WMT automation, click here for our free Scheduling System Comparison Chart.

Scheduling System Comparison Chart