Workforce Management Mistakes can be an Expensive Lesson for CFO’s

Organisations are potentially exposing themselves to HR and Payroll compliance gaps due to outdated workforce management systems not keeping up during the COVID crisis, warns Nick Bailey, Senior Vice President Asia Pacific and Japan at WorkForce Software.

Many of the world’s largest HR teams struggled to keep up with Australia’s complicated and shifting employment laws and pay rules well before COVID. Add to it the upheaval and new regulations from the pandemic and the risk and liability of non-compliance have never been greater.  

The issue has also received further attention, with many states in Australia legislating new criminal offences against organisations and their leaders due to underpayment of wages – often referred to by the media as “wage theft”.

Sadly, young people in deskless workforces like hospitality and retail often bear the brunt of most underpayments. The number of underpaid younger workers could be as high as 76 percent, according to The McKell Institute’s 2019 report titled,“Ending Wage Theft”.

That was before 2020. Then COVID hit. Now here we are.

New layers of complexity have been added to payroll and compliance requirements for every size and type of workforce in the last 18 months.

In Australia, pandemic leave, workers needing more flexible hours to juggle homeschooling or caring for elderly parents, government-mandated health and temperature checks for shift workers, and JobKeeper payments, created additional layers of complexity for employers during already extraordinarily stressful times.

The due diligence to ensure all those changes were correctly captured and reflected in every employees’ payroll in 2021 must be on the risk register of every board. The reality is that the root cause of employee underpayments – and overpayments – is often not criminal intent at all but outdated workforce management systems and processes.

The costs of workforce mismanagement are expensive. Too often, we see incorrect pay rules and award interpretation hardcoded into outdated systems, with organisations making unnecessary overtime payments due to inefficient rostering, for example, or automated policies with non-compliance risks and penalty fees.

Maximising growth and minimising these kinds of risks are critical themes for CFOs with their eye on growth in 2021. To this end, there are five trends in workforce management strategy that every CFO should be across:

1. Digital transformation of operating models

The right workforce management solution is the linchpin to making the most of a change in your operating model because it can identify workforce optimization options with numerous business advantages.

Data can be leveraged to develop more accurate labour forecasting projections that can inform staffing needs to ensure the optimal staffing levels and prevent under or over staffing.

The right solution can build and support hybrid rosters that communicate when employees are expected to be working onsite or offsite and differentiate between core and flex hours to ensure your organisation has coverage.

2. Moving fast with operational agility

After the uncertainty of the past year, an increasing percentage of global CEOs will “aggressively pursue” organisational agility as a top priority, according to research from IBM’s Institute for Business Value.

Plenty of unexpected challenges call for operational agility. Weather events can require a rapid ramp-up in the deployment of technicians, equipment operators, and call centre support. A last-minute sales order for manufacturers may mean an extra shift or line. A market event could affect the rate of foot traffic at a store location.

To act quickly and accurately, you need to equip your organisation with tools that maximise productivity, ensure regulatory compliance around pay and leave calculations, minimise unnecessary labour spend and increase the pace of innovation.

A modern and robust workforce management platform is critical in removing administrative burdens and inefficiencies to optimise your organisation’s agility.

It allows you to accurately anticipate and refine your labour needs based on historical data, emerging trends in the data, and business KPIs; automatically generate and fill optimised rosters that place top talent when and where they are needed most to achieve business goals, and offer predictive and proactive alerts when employees are at risk of incurring overtime or violating legislative or contractual policies.

3. Migrating critical business systems to the cloud

According to IDG’s 2020 Cloud Computing Study, 92% of organisations’ IT environments are at least somewhat in the cloud today, with only 8% responding that their total IT environment is entirely on-premise. Cloud-based, configurable solutions enable digital implementation of your workforce management systems to update in real-time and modern APIs allow seamless integration with existing systems.

Without cloud systems in place, remote working and operational agility are nearly impossible to optimise and maintain.

Cloud-based systems now enable employees to easily locate and view rosters directly from a mobile device. Scheduling managers are able to manage flexible work arrangements, ensure coverage, manage any increase in absences, and comply with changing regulations and guidelines.

According to Algorithmia’s 2021 study into enterprise trends in machine learning, 43% of enterprises say their AI and Machine Learning (ML) initiatives matter “more than we thought”, 50% of enterprises planning to spend more on AI and ML this year, and 56% ranking governance, security and audibility issues as their highest-priority concerns.

These innovations can substantially enhance business efficiency and success. Machine-learning labour forecasting can improve the rostering that organisations need in an environment where next week’s roster suddenly hinges on unexpected disruptions or opportunities. It can also help predict customer behaviours to help facilitate an accurate match in staffing levels and skills.

AI can even enable detection of attendance and work patterns that indicate non-compliance risks to avoid paying costly fines.  All this will, in return, optimise your workforce and increase efficiency and productivity.

5. Elevating employee engagement

The challenges of the pandemic have heightened the importance of keeping employees engaged. We now know, strong engagement is inextricably tied to seamless and empathetic employee experiences. To work the way they want to, employees must be supported by systems they find easy to use – on their mobile, desktop, tablet, accessible wherever and whenever they are thinking about work.

A sound workforce management system offers complete transparency of available regulatory, union, and corporate leave benefits; empowers employees to communicate availability to work additional hours or shifts to minimise disruptions during non-working hours; fair, predictive rosters that help ensure employees’ working hours don’t conflict with other obligations; and pulse surveys that trigger when trends are impacting employee engagement and job satisfaction.

Forward-looking CFOs are well-advised to focus on payroll and workforce systems to ensure they’re not exposing their companies to risk and actively working to improve every employee’s experience.

To explore more insights and avoid the expensive implications of workforce mistakes, join the next CFO Live ‘In Conversation’ webcast with KPMG, IWS Australia, XREF (ASX:XF1) and my colleague Atty Sharaf, Business Transformation Advisor – APJ for WorkForce Software on Tuesday 12 October from 12-1pm (AEST). Register here.

About the Author

Nick Bailey is the Senior Vice President for Asia Pacific and Japan at cloud workforce management solutions provider, WorkForce Software. His career spans a range of HR Consulting roles and then HR-Tech most recently with Oracle in ANZ before joining Workforce Software based in Sydney, Australia.