“Payroll leakage” is a problem for employers. Losses related to bad timekeeping and inadequate management oversight can account for up to 2.5 percent of a large company’s total annual payroll and labor expenses, according to consulting company Deloitte.
Lisa Disselkamp, managing director in Deloitte’s HR Transformation practice, has another term for it: “Death by a thousand cuts.” Disselkamp is the architect of LaborWise, a cloud-based workforce analytics system Deloitte has developed that tracks a company’s “deploy and spend” on labor, with special emphasis on “the context behind why,” she says.
Deloitte recently upgraded LaborWise. Deloitte says the enhancement enables employers to find relationships between labor cost and productivity.
LaborWise is intended for companies with large hourly workforces (Deloitte itself doesn’t use the system), and can save those organizations from $200 to $800 per hourly employee per year, Disselkamp claims. For example, an hourly worker who misses a half-hour break three times in a week generates an hour and a half of overtime—“time inflation you pay at a premium,” Disselkamp points out. LaborWise tracks time and scheduling data “all the way down to the individual employee,” she says, looking at time-clock entries and edits and patterns reported, and comparing scheduled work time versus how they actually worked. Using LaborWise, managers and executives have the same real-time view of workflow and scheduling. And LaborWise recommends corrective action—“three or four things [a manager] could do right now to minimize overspend,” Disselkamp says.
A significant portion of Deloitte’s client base for LaborWise is in healthcare. Hospitals, for instance, often employ workers on a call-back basis, which is notoriously non-cost-effective. Disselkamp describes an instance where one individual was on call for multiple departments at the same time—“but the organization didn’t have a way to see that,” she says.
“Today we [still] see high usage of on call,” Disselkamp explains, “but in a mobile world it doesn’t make sense to pay as much.”
The added LaborWise capability Deloitte just announced is intended to increase the tool’s effectiveness in terms of “business context,” such as sales per labor hour, a.k.a. conversion rate. That’s important in the retail industry, including among seasonal part-time employees, where it can be very hard to track conversion rate. Part-timers tend to be deployed randomly and their schedules and work areas are often fluid. Also, part-timers have high turnover and absenteeism rates, and they need a lot of hand-holding, which drives down conversion rates. It’s why a lot of retailers today are embracing a “more mature” workforce with more full-time employees—an equation LaborWise can help quantify, Disselkamp says. Deloitte would not comment on pricing information.
“There’s super-interesting stuff happening in [workforce] scheduling technology,” says Jonathan Kestenbaum, managing director of Talent Tech Labs, a research and consulting firm. Kestenbaum points to a company called Forge, which operates “a marketplace for retailers to find contingency workers.” The online site operates a just-in-time scheduling system where employers post hourly openings and workers sign up for the hours they’re available. Such flexibility should help “make the market more efficient for workers and for employers,” Kestenbaum says.
Not surprisingly, Deloitte is working on future functionality for LaborWise that Disselkamp refers to as “a framework for schedule equilibrium.” A work schedule needs to be three things, she says: predictable, stable and adequate. “Each of these is measurable, and we can score them,” she says. The new framework, for instance, might help identify employees at risk of absenteeism and/or turnover. The new function is due next year, according to Disselkamp.
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