Time and Labour Challenges: HR at a crossroads

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Introduction

Subtitle

HR teams in 2016 face an ever-changing landscape. Disparate and remote workforces, local regulations and complex risk management clamour for attention. At the same time, employees increasingly demand an easy to use, personalised experience throughout their employment journey. With each new demand, time and labour management as part of Human Capital Management (HCM) gets more complicated. Streamlining and integrating existing systems and processes seems impossible. The rapid transformation of global business creates more and more data to deal with, and the time and attendance of workers – some of whom may never come into the office – becomes harder to capture and strategically manage.

The Federation of International Employers1 found that 18% of the EU working population works part-time and 14.8% are on temporary contracts. According to Deloitte, the need for contingent workers will keep growing over the next three to five years: “Once designed primarily as a compliance function, today’s HR organisation must be agile, business integrated, data-driven, and deeply skilled in attracting, retaining, and developing talent… HR needs an extreme makeover driven by the need to deliver greater business impact and drive HR and business innovation.”2

Most organisations are lumbered with ageing legacy systems which cause performance paralysisDisparate and remote

workforces, local regulations and complex risk management clamour for attention

1. European Human Resource Trends, FedEE Global, 20152. Deloitte (2015), HCM Trends Study

Similar trends are observed throughout Europe. An on-demand workforce offers companies the ability to tap into extensive networks of innovators, technical experts, and seasoned professionals. But only companies with the right processes and technology can enjoy such agility. In reality, most organisations are lumbered with ageing legacy systems which cause performance paralysis.

EU workers with part-time contracts1

The Federation of International Employers

EU employees on temporary contracts1

18%

All workers

Employees

14.8%

54

Time savings are vital to business survivalOrganisations are bleeding money due to inaccurate and outdated ERP and time and attendance systems. The Human Capital Management Institute calculated the sum of employee salaries, hourly wages, overtime and indirect compensation to be 70% of an organisation’s total operating costs – a figure that has risen every year since 20053. IMS Research and Gartner also estimate that between 1.5% and 3% of spending on enterprise software solutions is dedicated to workforce management, leading HR Magazine to comment: “most organisations have not yet tapped the potential of comprehensive workforce management. As firms prioritise IT spending for the coming years, workforce management should be near the top of the list.”4

This is especially true for large and multinational organisations. Two-fifths of businesses have a target in place to reduce absence. However, only a quarter of them (25%), regardless of sector, actually achieved their previous year’s target absence level, with larger organisations most likely to fail.5

Josh Bond, Senior Editor of Modern Materials Handling, writes: “Bad habits are sometimes so well established, that systems proven to dramatically improve labor efficiency seem incompatible with the prevailing culture of an operation… Effective scheduling and forecasting is becoming a bigger area of focus.”6 While this refers to manufacturing, where time is the very essence of productivity, these words could be equally applicable to Retail, Distribution and Services, Financial, Legal, IT services or any sector with hourly paid employees, temporary staff, or those with scheduled overtime.

HR at a crossroads

70% of a businesses total operating costscome from employee salaries, hourly wages, overtime and indirect compensation3

3. HR Magazine (2014) ‘The advantages of workforce management’4. Sambartolo, M. (2014) ‘The advantages of workforce management’, HR Magazine5. CIPD, Absence Management Annual survey report 20156. Bond, J. ‘Labor management systems: The (very near) future of LMS’, Modern Materials Management, 01 Dec 2012

70%

££

£

76

Legal compliance: losing track of workers can cripple businessesGiven the rise in popularity of home and remote working, workforce optimisation has become an increasingly specialist task. A piece of research undertaken by the UK government in 2014 to understand the changing nature of the workforce, found that of the 30.2 million people employed between January and March 2014 in the UK, 4.2 million were home workers. This equates to a home worker rate of 13.9% of people in employment - the highest rate since comparable records began.7

According to employment law expert Katie Williams of Withers LLP, home working creates “a number of hurdles that both the employer and employee must overcome in order to make the arrangement work successfully. Challenges can include: an employer’s perceived loss of control over its workforce; potential damage to the office culture and team spirit; difficulties supporting homeworkers to the same level as office workers; overcoming concerns about trust; and fearing that a homeworker will not be pulling their weight.”8

HR at a crossroads

Gaps in compliance can lead to costly errors,

fines, grievances, and legal action that

can hurt your reputation and your bottom line

7. UK Office for National Statistics, Characteristics of Home Workers, 20148. Williams, K. (2015) Home truths: homeworkers and the law, Personnel Today

Decreased costs of time and payroll managementMultinational businesses face a number of serious HCM problems. A 2015 ADP Research Institute study found the average multinational company contends with over 30 HR systems, as well as an average of more than 30 payroll systems. And these figures don’t even consider the number of talent management systems in play.9

A standardised approach to workforce management and planning improves organisational visibility and control. But according to the CIPD (Chartered Institute of Personnel and Development), less than two-fifths of organisations even monitor the cost of employee absence, despite an overall median cost of absence per employee of £554 per year. The recent “Total Financial Impact of Employee Absences in Europe” found that 67% of respondents perceived employee absences had a “moderate” to “large” impact on productivity and revenue.10

In terms of sickness and absence, UK figures show that minor illness (including colds, flu, stomach upsets, headaches and migraines) is the most common cause of short-term absence for both manual and non-manual employees. Musculoskeletal injuries, back pain and stress are also common. Yet 30% of organisations still report that non-genuine absence is one of their top causes of short-term absence, leading the CIPD to suggest that “flexible working arrangements may help reduce non-genuine absence.”11

9. Harnessing Big Data: The Human Capital Management Journey to Achieving Business Growth, 2015 10. The Total Financial Impact of Employee Absences in Europe, 201411. CIPD, Absence Management Annual survey report 2015

Loss of control over workforce

Difficulties supporting homeworkers to the same

level as office workers

Overcoming concerns about trust

Fearing that a homeworker will not be pulling their weight

Potential damage to culture and team spirit

67% of respondents perceived employee absences had a “moderate” to “large” impact on productivity and revenue10

HR at a crossroads

Hurdles to overcome are:£

98

95% of respondents believe they will be able to work from anywhere in the world12

95%

Increase productivity to grow and thrive

The CIPD also finds that the number of organisations reporting an increase in stress-related absence and reported mental health problems is rising. Human resources must not lose sight of the need for a ‘human’ approach to workforce management. Not surprisingly, the organisations that have a target for reducing absence, or have absence levels as a key performance indicator, are considerably more proactive in their approaches.

HR departments today must strive to improve global connectivity. With the rise of remote employees, HR professionals will need to work harder to ensure teams are truly connected. The ADP Evolution of Work12 report finds that 95% of respondents believe they will be able to work from anywhere in the world.

“Technological and cultural shifts have always pushed workplace innovation forward, but today an even faster global transformation is underway, and employers must take notice,” said Manuela Montagnana, VP Human Resources EMEA, ADP. “To advance business goals – and remain competitive – employers must allow for flexibility, underscore that with technology that is supporting, not hindering, career fulfilment and provide ways to cultivate personal interests while still driving the mission of the company.”

According to an influential article in HR Magazine13, “With an automated approach to workforce management, more data and context can be put in managers’ hands, creating better decisions. Being able to assign the right people, with the right skills, at the right time, and at the right cost directly supports an organisation’s ability to respond to fluctuating production goals without compromising quality. Aberdeen Group indicates that organisations using automated staff scheduling solutions have a 4% higher workforce utilisation on average – an edge that creates substantial productivity gains. Automated workforce management improves employee morale and engagement through increased transparency and manager-employee communication.”

“Technological and cultural shifts have always pushed workplace innovation forward, but today an even faster global transformation is underway, and employers must take notice.”

Manuela Montagnana, VP Human Resources EMEA, ADP

The same Aberdeen Group research reported that organisations achieving best-in-class performance in workforce optimisation see an 11% year-over-year improvement in employee satisfaction, compared to just 2% for all others; the use of automated time, attendance, and scheduling solutions results in 8% to 20% lower replacement costs (as a percentage of annual pay) for hourly workers, which can be attributed to the reduced cost of administration needed to manually manage such functions, while average revenue per full time employee increased four times in organisations with automated absence/leave management technology.14

12. ADP Research Institute (2016), Evolution of Work13. Sambartolo, M. (2014) ‘The advantages of workforce management’, HR Magazine14. Aberdeen Group (2013), Total Workforce Management 2013: Absence Management

HR at a crossroads

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Accurate data: the lifeblood of modern businessBusiness decisions are increasingly based on the understanding and interpretation of data. A survey of executives in 2015 found that 72% agreed with the statement “Our HR strategy is significantly influenced by the analysis of business and people data from across our operations”, and 70% expect to begin using or increase their use of “Big Data” and advanced analytics to inform HR decisions over the next three years. Only 67% agreed that its HR leaders are currently able to clearly demonstrate tangible correlations between people management initiatives and business outcomes.15

To take the guesswork out of scheduling, staffing, workload, hours worked and more, data needs to be entered by employees onto a mobile device - often whilst on the move. Time and attendance must be agile, regularly updated, and the software should be simple and easy to use. The days of traditional appraisals and forced ranking are at an end; performance management is now a tool for greater employee engagement. According to the latest global research by ADP surveying thousands of employees across North America, Europe, Latin America, and Asia-Pacific, 91% of respondents believed that ‘employees will primarily rely on self-service to solve problems and get their job done’ either today or in the future.12 In addition, 95% felt that ‘Tech will enable organisations to proactively adjust individual/team performance’, while 82% believed employees will soon ‘define their own work schedule’. Rather than fearing these changes, these were all embraced as positives by the majority of respondents.

70% expect to begin using or increase their use of Big Data and advanced analytics15

15. KMPG (2015), Evidence Based HR: The bridge between your people and delivering business strategy

KPMG argues that “A solid foundation of well-organised data has now been established in many major companies. Small but committed teams of analysts, recently ensconced within HR functions, are helping their colleagues to see the benefits of evidence-based HR, and to handle it in the most effective way. Measurable successes from the use of evidence, some particularly eye-catching, will help to spur the much-needed enthusiasm of senior executives and encourage investment in developing and recruiting the skills that will cement progress… the days of basing people decisions on the whims or personal motives of one person at the helm are about to end. Organisations that acknowledge that inevitability already have a substantial head start.”15

70%

HR at a crossroads

HR leaders need to free their organisations from the complex web of internal systems that attempt to monitor time and attendance. The landscape is just too complex. Inaccurate and outdated HR and time and attendance systems are holding companies back, with potentially fatal consequences in the global marketplace. Stress and mental health conditions are causing absenteeism, while a third of workplaces still report “non-genuine absence” as a significant problem. A unified IT system is needed to capture today’s world of the home-based and remote workforce, offering a unified workforce management solution that cuts labour costs, streamlines compliance and empower workers.

Conclusion

Human resources must adopt a ‘human’ approach to workforce management, empowering workers and managers alike. With the rise of remote employees, HR professionals will need to work harder to ensure teams are truly connected.

With local and global labour laws being so diverse, they require integrated software systems, delivered by expert partners. Such outsourced solutions are also increasingly the preferred choice of leading companies who wish to offer their employees on-the-move, mobile software solutions, delivered by a provider with global expertise and ready-to-go solutions.

Time and attendance technology can introduce new flexibility to both employers and employees. This allows employees a greater sense of freedom, and employers a higher degree of efficiency, with greater

The time to act is now

connectedness for both, in all industries without the traditional limitations of time and place. Today, thanks to mobile devices, many employees exercise more control and autonomy over their workplace conditions, with greater freedom to decide how, when, and where they work. The workforce nowadays is more guided by a search for meaning and flexibility. As organisations look for increased accuracy and effectiveness in their

A unified workforce management solution helps organisations cut labour costs, streamline compliance and empower workersto make better point-in-time decisions to support business goals

HR departments must keep pace with new programmes and services to ensure that teams remain seamlessly connected

management solutions, while offering more flexibility to their employees and contractors working from home or other remote locations, HR departments must keep pace with new programmes and services to ensure that teams remain seamlessly connected.

Improving Accuracy of ReportingThe Pulte Group a homebuilding company with 5,000 employees needed a solution that could seamlessly integrate with other core HR systems to improve the visibility of employee time since the majority of employees are not in the office on a daily basis. The Time and Labour Management solution implemented helped them to increase accountability for Field Managers in managing the time sheets of their employees and improve accuracy. The field workforce’s previous concern of not being in an office to account for their time was no longer an obstacle, as the new system helped to increase morale and empower workers, while improving accuracy of reporting. ADP offers ways to maximize the productivity of your people and business, while keeping your people happy and engaged.

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