How to improve labor planning and workforce management
Why it’s important to get staffing right
Labor forecasting is a notoriously dynamic and tricky issue to solve. You need to anticipate both busy and slow days, and minor forecasting errors result in paying employees unnecessary overtime, creating negative customer experiences, and hurting employee morale. Developing sophisticated labor forecasting techniques to predict staffing needs in advance will reduce operational costs, deliver higher levels of customer satisfaction, and ensure that you don’t miss revenue opportunities.
Say you’re the manager of a pizza restaurant and are responsible for scheduling employees, both cooks and front of house, as well as a fleet of delivery partners. Based on labor forecasts, you know which weekends are typically busiest for you, so you increase the number of employees you schedule during those nights. But there are non-cyclical demand triggers as well: for example, perhaps on a Wednesday night, the regional NBA team is playing an away game against their biggest rival. While your historical data shows that NBA games drive up demand for you, this particular game was rescheduled from earlier in the season for a day of the week. Since customers will be staying in to watch the live TV event, you’re likely to experience a surge of orders for pizza deliveries. If you don’t plan for this and only schedule one driver and a few new employees for training, you’ll have a backlog of orders that need to be fulfilled, without enough drivers or experienced employees to efficiently make and deliver all of the pizzas ordered.
If you need to cancel orders, or if you deliver orders late, you will be missing out on sales and leaving customers dissatisfied. Internally, your employees might become overwhelmed and make more mistakes while on the job. Optimized labor demand planning and workforce management will help you improve customer and employee satisfaction, since your patrons will feel taken care of and your staff won’t feel overworked. Consistently accurate labor forecasting and scheduling should be a priority if you’re looking to increase revenue and reduce operational costs.
Factors that affect workforce planning
Projected sales You’ll experience demand fluctuations, both incremental (increases in demand) and decremental (decreases in demand), that you can plan for by estimating future sales. It’s important to take the time to understand how things such as sales volume and store visitors relate to your staffing needs, so you know the ideal magic number of employees needed for your projected demand. Employee efficiency Employee productivity can be varied across your staff, so you need to consider individual efficiency in addition to workforce efficiency when you build your labor models. If you anticipate a slower day coming up, you can schedule newer employees that might require more training. Conversely, if your demand forecasts predict a busy day for your business, you’d want to make sure you have more experienced staff coming in.
Staffing laws and regulations Local labor laws need to be considered when making staffing decisions and optimizing workforce. Certain states have restrictions on how often employees can be scheduled week by week. Being mindful of these rules will help you avoid legal issues and keep your employees happy. External factors Events that drive people to and around your stores are important elements for planning labor. Making predictions based on historical data is useful, but events like festivals and expos can increase foot traffic around stores, and things like severe weather and shelter-in-place restrictions can deter customers. Events, in addition to expected demand, impact planned labor.
Tips for building more resilient and accurate labor models
Track employee productivity over time to find efficiency patterns
Complex jobs require more nuanced performance assessments to give an accurate estimate of productivity. It’s important to find accurate and consistent metrics to measure employee performance for the sake of improving labor predictions needs. If you have a rush job that you know requires specific expertise to get done, you can plan to schedule particular employees that you know will get the job done right and done quickly.
Build models that utilize historical data
Many businesses begin by relying on historical data to understand what demand for their products and services will look like over time. This is a good starting point to get an understanding of how many employees you may need on hand on a given day. Analyzing historical trends based on events can be strong predictors of future labor needs.
Leverage external intelligence
It’s important to consider external factors that drive demand. Events like weather and seasonality are common ones to start out with, but there could be additional hidden demand causal factors that move the needle for you. PredictHQ, a demand intelligence platform, can help you identify which external factors are most impactful for driving demand for your businesses. Factors like Academic Events drive college students to study at coffee shops. Live TV Events like televised NFL games create a higher demand for pizza deliveries. We’ll work with you directly to understand which external factors drive demand. By adding external factors like severe weather, concerts or sports games into your models, our intelligent models determine which ones reduce your forecasting errors and lead to more accurate forecasting.