HR Glossary  /  Workforce Management
Workforce Management6 min read
Table of Contents:

What is Workforce Management?

Workforce management (WFM) is a combination of practices that companies set up to distribute resources, make the best use of employees' time, estimate workloads, and plan work schedules, all while keeping an eye on employee engagement and employee productivity.

Workforce management involves organizing and managing staff schedules, tracking attendance, and maintaining compliance with workplace regulations. It's usually associated with hourly workers who need to be assigned their shifts, like call center workers, but any sector can rely on WFM. This is because the final goal is to achieve peak productivity without burning out the workforce—or causing a turnover spree. One of the ways to carry out WFM is with workforce management solutions, which is software that can, for example, tell how to schedule employees during peak demand periods.

Effective WFM can make a significant difference when it comes to maintaining efficiency and staying compliant with continually changing labor laws. In fact, 85% of organizations recognized for their operational excellence implement workforce management tools to raise productivity and manage labor costs.

In this guide, we’ll take a deeper look at the impact of a workforce management system in business by clarifying what WFM is, its importance, and how it has evolved to meet modern business needs.

Why is Workforce Management Important?

Workforce management is all about making sure that your employees are where they need to be, when they need to be there and doing the right tasks. It consists of a range of processes designed to help businesses manage their workforce optimally. This includes everything from employee scheduling and tracking attendance to dealing with regulatory compliance. WFM helps organizations run smoothly and efficiently by making sure their workers are doing their job well and meeting their business goals. It's also a data-driven way to track employee eligibility for certain tasks.

Its main purposes are:

  • Making the most of employee productivity: One of the main objectives of WFM is to achieve improved workforce productivity. A workforce management solution ensures that employees are giving their best through scheduling optimizations and workload management
  • Keeping compliance with labor laws: Dealing with labor laws can be complex, but it can be way easier with WFM systems that help businesses stay compliant with various regulations—reducing the risk of legal issues and penalties.
  • Cutting down on operational costs: Good WFM helps organizations cut down on operational costs. Automating processes like scheduling and time tracking can lead to significant savings and a better bottom line.

History and Evolution of WFM

Workforce management has been around for quite some time, starting with basic tracking of work hours and schedules. It began gaining traction in the 1980s, particularly in call centers aiming to improve their workflows and reliability. At first, it was very in demand for hourly workers, because it allowed companies to schedule staff for high-demand time slots. Over the years, WFM has expanded beyond call centers to various industries, and it has started being carried out with the help of software. Today, it’s an integral part of human resources and operations management, especially because it can aid with remote workforce management. There are other benefits of workforce management: WFM can also make a difference in keeping tabs on employee engagement.

Which are the functions that enable WFM to help keep a business running smoothly? Here’s a breakdown of the key components:

Forecasting and Planning

Forecasting and planning is all about predicting future workload and staffing needs. By analyzing past workforce management data, companies can forecast how many employees they'll need at different times, helping them avoid being understaffed (or idle).

Scheduling

Scheduling ensures that the right employees are in place at the right times. A good WFM system lets businesses assign shifts based on things like experience and availability. Employees can also swap shifts and share their preferences.

Absence and Leave Management

With WFM tools, businesses can easily track paid time off (PTO) and leaves of absence, including those required by laws like the Family Medical Leave Act (FMLA). This makes sure that employee absences don't affect business operations. Absence management also helps reduce the risk of not having enough staff by keeping track of leave trends, which companies can match against high-demand periods.

Compliance Management

Staying compliant with labor laws can be tricky, but WFM systems help by applying the necessary regulations to things like scheduling, pay, and overtime. This helps companies stay in line with regulations and avoid costly fines.

Performance Management

WFM systems provide tools for monitoring key metrics like attendance, productivity, and even customer satisfaction, which allows managers to assess employee performance, identify areas for improvement, and recognize top performers.What’s more, performance reviews, while time-consuming, offer a peek into how well employees are meeting expectations and contribute to the overall success of the business. Businesses can make smart decisions about training, promotions, and other changes by using WFM tools to check how well their employees are doing.

Workforce management (WFM) software helps businesses handle key tasks like scheduling, time tracking, absence management, and more. Some companies use stand-alone WFM programs, while others—like TalentHR—incorporate them into broader HR systems. With more remote and hybrid work in the mix, these tools have become even more essential.

Benefits of Using Workforce Management Software

There are plenty of upsides to using WFM software, including:

  • Improvement in efficiency: Automating tasks like payroll, staff scheduling and attendance tracking reduces manual errors and saves time. It's also one of the quickest ways to avoid being either understaffed or overstaffed.
  • Real-time data and analytics: WFM software gives businesses real-time information about key metrics like employee attendance, productivity, and engagement.
  • Better compliance and reporting: These tools help maintain compliance with labor laws—especially since companies can visualize how many hours the staff has put in—and provide easy access to reports for when the auditors ask them.

Choosing the Right WFM Software

When picking a WFM solution, don’t forget to check these factors:

  • Cost: Prices vary widely, from a few dollars per user to much higher, depending on the features. Take advantage of some providers’ subscription-based models, like the free plan from TalentHR.
  • Integration: Does the software integrate well with your existing HR systems? Is it a SaaS solution or does it require a time-intensive deployment?
  • Features: Make sure it offers what you need—like time tracking, scheduling, compliance management, and real-time analytics.

Popular WFM Software Solutions

Some of the top WFM software providers include:

Let’s finish this guide with some practical tips for implementing WFM:

Aligning WFM with Business Goals

WFM is most effective when it’s aligned with your broader business goals. This means understanding what your company wants to achieve—whether it’s improving customer service, reducing costs, or boosting productivity—and using your WFM strategies to support those objectives. For example, if customer satisfaction is a priority, make sure that all of your scheduling and staffing decisions speak to that. You can do this by having the right people in place during peak hours.

Engaging and Training Employees

Your workforce is at the heart of your WFM strategy, so it’s very important to keep them engaged. This includes providing training opportunities, involving them in scheduling (like allowing shift swaps) and making sure they feel valued. Engaged employees are more productive and less likely to leave, which helps you avoid turnover headaches.

Regularly Reviewing and Updating WFM Strategies

WFM isn’t a set-it-and-forget-it process. Regularly reviewing your strategies—whether it’s your scheduling methods, compliance practices, or performance management approach—guarantees that you’re staying on track and adapting to any changes in your business or workforce. Adjust as needed to keep everything running smoothly.

What metrics should I track to measure the effectiveness of my WFM strategy?

Track key metrics like employee attendance, overtime, productivity, and labor costs. These will give you a clear picture of how well your WFM strategy is performing and where improvements can be made.

What is the ROI of investing in workforce management software?

The ROI often comes from reduced labor costs, improved productivity, and fewer manual errors. If you automate processes like scheduling and time tracking, you can save time and money in the long run.

How do you balance flexibility with consistency in WFM?

To strike this balance, you must drop the word “micro” which sometimes goes before “management.” WFM is a means to help employees and companies—not to track them for its own sake. If you, for example, offer flexible scheduling options while making sure your business can make a profit as a result of them, then you've found a good balance between being flexible and being consistent.

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