As a business owner, you know that workforce management is essential to your success. But do you know which workforce management metrics to track? Without the proper metrics, it can be challenging to measure the performance of your workforce and identify areas for improvement. This blog post will discuss 10 of the most common workforce management metrics and what they mean for your business. By understanding these KPIs, you will be able to make better decisions about how to manage and optimize your workforce!
What is workforce management, and why is it essential for businesses?
Workforce management is the process of optimizing the workforce to achieve business goals. It involves hiring, training, scheduling, and managing employees to maximize productivity and efficiency. Each of these areas has metrics that workforce management tracks, analyzes, and reports out to the business.
There are many reasons why workforce management is vital for businesses. Firstly, it can help to improve employee productivity. Optimizing the workforce can create a more efficient and organized work environment that encourages employees to work productively.
Secondly, workforce management can help businesses save money. Businesses can save money on employee salaries and other expenses by reducing overhead costs and streamlining operations.
Finally, workforce management is essential for compliance purposes. You can avoid costly penalties and legal fees by ensuring that your workforce is compliant with all applicable laws and regulations.
What are the most common workforce management metrics?
Workforce management metrics are essential to track to measure your workforce’s performance. Below are 10 of the most common workforce management KPIs:
1. Employee Productivity
This metric helps workforce management measure the number of output employees can produce in a given period. You can measure it by calculating the number of units produced per hour, the number of sales generated per employee, or the number of calls handled per hour.
Employee productivity is a fundamental workforce management metric to track. By tracking employee productivity, managers can identify areas where employees may be struggling and need help. Additionally, you see which employees are the most productive and may need to be rewarded or recognized. Finally, tracking employee productivity can help WFM see how their workforce is changing and change their strategy as needed.
2. Employee Turnover Rate
This metric measures the percentage of employees leaving your company within a given period. WFM can measure it by calculating the number of employees who leave within a specific time frame (e.g., six months) or by calculating the turnover rate for a particular department or job position.
Attrition is a critical metric for workforce management to track because it can provide insight into how satisfied employees are with their jobs and the company. Secondly, high employee turnover can be costly for companies. So tracking attrition can help you identify and address any problems that may be causing employees to leave. Third, tracking attrition signals to start recruiting so that you are short-staffed. Finally, tracking attrition can help you find ways to improve your WFM practices and keep your employees happy and engaged.
3. Employee Absenteeism Rate
This metric measures the percentage of employees absent from work for a given period. Workforce management can measure it by calculating the number of days absent per employee or the absenteeism rate for a specific department or job position.
Absenteeism is a critical workforce management metric because it can indicate whether employees are unhappy with their jobs, are being overworked, or have problems with the management. If absenteeism is high, the company may need to investigate why and make changes to improve employee satisfaction. Even more, absenteeism negatively impacts many other workforce management metrics such as service level, occupancy, and shrinkage.
4. Labor Costs
This metric measures how much your company spends on employee salaries and benefits. WFM calculates labor costs by dividing total labor costs by the number of hours worked or by tracking individual employee costs.
Labor costs directly indicate how much money the company is spending on employee salaries and benefits. By tracking labor costs metrics, workforce management can identify whether the company is spending too much or too little on employees and make recommendations as needed. Additionally, labor costs KPIs help companies measure their efficiency and productivity. For example, when labor costs are high, it may indicate that the company needs to change how it operates to be more efficient. Alternatively, if labor costs are low, the company may be able to afford to increase employee salaries and benefits.
5. Adherence
Adherence is a workforce management metric used to measure what percentage of time and the rate employees follow their schedule. For example, are employees arriving on time and attending scheduled activities such as meetings, training, and coaching. Tracking adherence helps managers identify and address Issues with employee schedule compliance.
Employee adherence is a critical workforce management metric to track. By monitoring adherence, managers can identify and address issues with employee compliance to their schedules. Poor adherence can lead to lost time and productivity, so managers must ensure that employees follow their schedules as closely as possible. Adherence tracking also allows managers to identify patterns in employee behavior, which can help with workforce planning and forecasting.
6. Forecasting accuracy
Forecasting accuracy is a fundamental workforce management metric. By forecasting the workforce’s needs, managers can ensure that they have the right employees in the right places at the right times. WFM can measure forecasting accuracy in several ways, including the percentage of variance from actual results, number of incorrect forecasts, and average error.
Forecast accuracy is an important metric for workforce management to track for several reasons. First, inaccurate forecasts can lead to workforce shortages or surpluses, harming both the business and employees. In addition, inaccurate forecasts can also lead to inefficient use of resources and missed opportunities.
7. Shrinkage
In workforce management, shrinkage is a metric that describes any time that takes an employee away from their assigned task. Planned shrinkage includes breaks, training, coaching, meetings, projects, administrative tasks, holidays, vacations, and PTO. In contrast, unplanned shrinkage includes unscheduled absences, adherence, “goof-off” time, technical issues, fire drills, and other threats. Both types of shrinkage can significantly impact a company’s bottom line.
8. Service levels
Service levels are a workforce management metric used to measure the quality of service a company provides to its customers. There are many different ways to calculate service level, but most methods include calculating the percentage of inquiries responded to within a certain time frame. This metric measures how well the company performs and identifies areas where workforce management can improve.
9. Average handle time (AHT)
Workforce management tracks the average handle time metric to ensure that customer interactions are handled promptly. If AHT spikes, it can indicate that agents are handling interactions they may not be qualified to work on, which can impact customer satisfaction. Conversely, if AHT is too short, the level of service being provided could be poor.
Additionally, the higher the AHT, the few customer interactions an employee will have, which means staffing levels would need to increase. So by tracking AHT, workforce management can ensure that agents are properly handling customer interactions and meeting service level agreements.
10. Abandonment rate
The abandonment rate measures how many customers hang up before an agent answers their call. It is a critical metric for workforce management because it can indicate issues with your workforce management strategy. For example, if your abandonment rate is high, it may mean that you don’t have enough staff on hand to meet customer demand. Alternatively, if your AHT (average handle time) is rising, customers wait longer for an agent and hang up before someone answers. You can identify and address these and other workforce management issues by tracking your abandonment rate.
Workforce management optimizes operations by using these metrics
Workforce management is essential for any business that wants quality customer service. You can optimize your operations and improve customer and employee satisfaction by tracking and measuring the most common workforce management metrics. These metrics can help you identify areas where your workforce management strategy needs improvement and allow you to make changes to improve your bottom line.
