Reduce payroll costs with workforce management software
South Africa may have remained out of technical recession by a whisker 0.4% in the first quarter of this year, but the bottom line is local businesses across the economic spectrum are being pummelled by a host of factors that are pushing up their operating costs. These include rising inflation, a wildly fluctuating and generally weakening currency, load-shedding, increasingly strident wage hike demands, crumbling infrastructure… the list goes on.
But South African companies are not alone in battling the effects of post-pandemic economic uncertainty. For many companies around the world, reducing staff headcount is often seen as the quickest – if not always the easiest – solution to a prop up a buckling bottom line.
Sweeping staff cuts at several of the world’s largest companies, including tech giants Amazon, Meta, Intel, Google, Twitter and Microsoft, made headlines last year and this trend has continued into 2023. According to Layoff.fyi, which tracks job losses in the tech industry worldwide, at least of 823 tech companies globally laid off over 212 000 employees in the first six months of this year.
Closer to home, with Statistics South Africa reporting that almost 8 million people were without work in the first quarter of 2023 – up by almost 200 000 from the last three months of 2022 – more retrenchments are the last thing the country needs.
In any event, while staff cuts can reduce costs – and in situations of unnecessarily bloated workforces may be essential – retrenchments often result in a need for fewer employees having to do the same amount of work, leading to resentment and lower staff morale. This, in turn, can result in lower productivity and poor levels of customer service.
Martin Blignaut, Workforce Management Practice Leader at Altron Systems Integration, believes there is a better way to reduce staffing costs than by slashing staff numbers – and that is to manage staff more effectively and productively. This could include, for example, not resorting to paying unnecessary overtime or using temporary staff when under-utilised employees able to do the required work could be available elsewhere in the organisation.
However, monitoring staff time, attendance and activity has never been easy – and it’s become even more complex with the normalisation of remote and hybrid work models.
“Businesses have to make quick decisions about where and when to deploy staff, and relying on manual or semi-automated processes is not only time-consuming but also often error prone. Accurate, real-time information is required. This is where the latest generation of cloud-based, AI-driven workforce management and automation solutions come to the fore,” Blignaut says.
Workforce management software is not new. Traditionally it has provided many useful features, such as monitoring working and overtime hours of employees, shift planning and leave scheduling, but this has generally been handled in silos.
Latest iterations of AI-driven, cloud-based workforce management software can deliver a holistic, real-time view of the workforce across all departments and locations, providing information about the health status, availability as well as current skills and certifications of each employee.
In effect, this software can produce, virtually at the touch of a button, a ream of information that can help to manage not only costs but also performance, while maintaining employee well-being and customer safety and satisfaction.
According to Blignaut, the proven benefits of the latest iterations of workforce management software are significant.
“A 2021 Nucleus Research analysis of 11 case studies covering workforce management deployments over a five-year period found that for every $1 companies spent on workforce management, there was a 12-fold return, with ROI achieved in just under five months,” he says.
Nucleus also found that just by optimising scheduling processes, organisations reduced their total payroll spend by more than 5% on average.
And because the software automates scheduling processes, time spent by managers on this complex task was reduced by an average of 75%. At the same time, it was found to eliminate the 3% to 6% increase in labour costs generally attributed to unintentional schedule padding when scheduling is done manually.
Nucleus Research’s conclusions about the benefits of workforce management software were supported in a 2022 study by Forrester Consulting, which had been commissioned by UKG into the Total Economic Impact of UKG’s cloud workforce management Dimensions solution.
The Forrester study participants – together representing a global organisation with 60 000 employees and revenue of $5 billion per year – reported cumulative annual savings of 208 hours on scheduling and timekeeping tasks for managers, and productivity gains valued at $8.3 million over three years.
They also experienced 3% improvement in workforce optimisation valued at $5 million over three years; and back-office productivity gains for payroll and compliance teams worth $467 000 over three years.
Other unquantified benefits reported to Forrester included greater employee satisfaction and the organisations’ improved ability to meet compliance requirements.
Forrester thus concluded: “Cloud-based workforce management solutions offer management greater insights into internal labour data, while enabling employee efficiencies for scheduling and timekeeping. Moreover, cloud workforce management solutions can support organisational innovation and flexibility by providing superior analytics, AI capabilities and modules that are upgraded over time.”
According to Blignaut, South African and African companies have also started to recognise the value of cloud-based, AI-driven workforce management solutions.
“We have several clients that have saved exponentially on their payrolls not only because of their ability to manage their staff more efficiently, but also because of the more inclusive and consultative way that this software allows,” he says.