Analyzing data, measuring performance and making continuous improvements is one of the basics of workforce management. But what will you judge your performance on? How will you know if you are doing well or less well than the standard and set budget? KPIs (critical performance indicators) play an important role in making choices and assessing results. In this blog, we take a closer look at some key KPIs for better results: labor costs, cost per hour (KPU), productivity and availability.
Payroll expense is, of course, an obvious KPI to monitor tightly. It includes all costs associated with paying employees: salary, bonuses, vacation pay and any other, additional benefits. Monitoring payroll costs helps you budget and creates awareness around costs among employees.
Cost per hourly wage (KPU) is another important KPI in workforce management. This KPI is calculated by dividing labor costs by the number of hours worked. Therefore, this means that if you use cheaper employees, your cost per hourly wage goes down. While you probably want to aim for a low average cost per hourly wage, sometimes it can also be a good choice to use more expensive employees on certain tasks. For example, for a better customer experience or to add more experience at busy times.
In short, the goal is to keep cost per hourly wage as low as possible, but in balance with desired quality, customer experience and store performance. A lower cost per hourly wage can indicate improvements in productivity and efficiency, which in turn can increase your organization's profitability.
Productivity is a central KPI in workforce management because it is directly related to the efficiency and performance of your employees. Productivity is revenue per hour worked. Measuring productivity gives you insight into overall store performance. In doing so, the goal is to maximize productivity. Therefore, it may also be well worth investing in practices, tools or technology to increase efficiency and productivity.
Employee availability is a challenge for many organizations. By this we mean the extent to which your employees are available to work at the times they are needed. In a tight labor market where employees have more and more autonomy, not only finding staff, but also the availability of existing staff is a challenge. It is therefore of great importance to keep monitoring availability at all times and have rosters in place well in advance. This is essential to avoid unnecessary overtime, or worse, not having enough staff to cover operational needs.
Effectively managing and planning the workforce is essential to achieving success in any organization. By focusing on the right KPIs, such as labor costs, cost per hour, productivity and availability, you can continuously improve your organization's performance and make timely adjustments when needed. Good workforce management software plays an indispensable role in collecting and analyzing data to optimize these KPIs.
