In 2019, we talked about some fantastic subjects as it relates to building an operationally excellent organization. To kick off 2020, I want to talk about one of my favorite topics: workforce management (WFM). 

 

A wise man once said, “It’s all about having the right people, in the right place at the right time, doing the right thing.” This statement couldn't be truer than when applied to WFM and is applicable to every industry and company size. 

 

WFM develops and manages business forecasting, employee scheduling, and real-time adherence (RTA). Much like operations, it needs to be in place before an employee is hired and is continuous throughout the employee lifecycle.

 

In an operational excellent state, WFM will generate volume forecasts for product orders, support contacts, create staff schedules, and manage employee time off. It works to minimize peaks and valleys, monitors real-time schedule adherence, and provides information such as transaction volume, processing time and employee behavior to operations teams. This, combined with the other pillars of operational excellence, continuously improve organizations and provide data for employee accountability and development.

 

Workforce management should be measured by: utilization, occupancy, service level, error rate, and forecast variance. Here’s why: 

Utilization: This is the amount of time you spend working on a task that is your primary function divided by the total time you are working for a given period of time. 

 

Why it matters: Most work shifts are 8 hours a day yet research suggests we are only productive for less than 3 hours of that. That means we are only being utilized for 37.5% of our working time or less. Of course, there are things that you have to do such as taking breaks, training, and a variety of peripheral tasks that are not the primary focus of your job. But let’s be real-- is 37.5% really the right number? COPC  found that high-performing companies should have a utilization target as high as 86% which is more than double the utilization of the average worker today. 

At the end of the day, the right target will vary and be based on your industry,up-skilling, re-training, attending meetings, and doing everyone’s favorite job description “all other duties as assigned”. From a business point of view, you need to know how much of that 8 hour work day your employees are really “at the right place, at the right time doing the right thing”. If you don’t, you can’t staff correctly and you’ll either have too many employees or unsatisfied customers. 

 

Occupancy: This is the amount of time working on a task divided the amount of time available for a task. 

Why it matters: This is similar to utilization except it  focuses on the ongoing production environment.

 

While utilization looks at how much time you have available to work, occupancy is about the time you spend doing your job function. If your job function is taking orders at a fast-food counter, what percentage of the time do you actually spend solely on taking orders? Just like utilization, this measurement leverages forecasting to ensure that the right number of people are in the right place.

Imagine if those 3 hours we talked about in utilization was only half of the time you were actually doing what you should be doing? The balance for occupancy comes from avoiding employee burnout. Humans are not machines, and require downtime even during the workday and while working. We can’t work non-stop without taking a breath and at the same time, you don’t want your team to get too bored and lose valuable skills. So while there is no magic number, occupancy numbers typically range between 65% and 95% to ensure a lack of boredom and a low rate of burnout.

 

Service Level: This is the number of activities processed within a given time divided by the total of activities processed. It’s often displayed as rules like 80/30 in the contact center space. That is to say, 80% of all contacts are responded to within 30 seconds.

 

Why it matters: This one is all about getting things in a timely manner. You see visual representations of this whenever you are in a fast-food restaurant. Have you seen those orders on the digital screen behind a restaurant counter and see that the order will go a different color? Typically they move from blue to yellow and finally to red. Red indicates that a service level target has been missed. You see the same thing in certain restaurant slogans, “Your pizza in 20 minutes or less or its free!” Again this is a service level agreement. 

 

Let’s take a look at the pizza delivery scenario. The pie maker has set a target of 20 minutes. But why? Here are two inputs that go into setting that target:

 

 

  • We know that the majority of our customers will wait up to 20 minutes before they become unhappy. 

 

 

 

  • We have the operational capabilities to deliver the majority of our pies within 20 minutes.

 

 

Often the company will do the analysis to get the first point and then build the operational structure to deliver. Does the pie maker plan on delivering 100% of their pies in that 20 minutes? No. They have done a separate analysis to figure out the second part of it: what percentage of customers do they need to keep happy so they don’t lose them; and perhaps most importantly, what percentage of customers can they afford to keep happy without losing money.

 

Service levels are all about speed and delivery and without a good understanding of your operations and customer behavior, there is a good chance of losing revenue or bleeding cost.

 

Error Rate: The percentage of any task that is assigned without an error. Typically used for functions, like approving time-off requests, processing payroll, etc. 

Why it matters: Like the inverse of first contact resolution (FCR), error is about ensuring the accuracy of the tasks that you complete. However, error rate can be applied to any task that anyone is performing as long as there is a defined and measurable result. Calculating the cost of a single error can be a tenth of a cent to several hundred million if the right people are not in the right place.

 

Forecast Variance: The difference between the predicted results and the actual results which is typically used for staffing and volume.

 

Why it matters: While very similar to error rate, this is more about how well you know your customers and how in tune your team is with the product, marketing, and even engineering teams in some cases. This is where you analyze how close your prediction was to the actual result which can be related to volume, staffing or how long it takes for your employees to deliver that pizza. In customer surveys, this would be the margin of error that is allowed and in most cases, operationally excellent companies can forecast within 2-5% of the actual.

 

Workforce management (WFM) has a tremendous impact on how successful a company can be and without a good understanding of this focus area, it is impossible for a company to achieve operational excellence. That being said, WFM just like all the other focus areas we have talked about in this series and does not operate in a silo on its own. It must work with every other focus area to be able to continuously innovate and meet customer demands. 

 

In our next article, we will get the opportunity to look into the heart of customer experience by focusing on business intelligence and quality assurance. If there was any single focus area that was central to the success of ensuring that your company is on the path to operational excellence this would be it. 

 

In the meantime, take a step back and look at the focus areas we have already discussed. You can find those articles and more here.

 

Ben Hawkins

Director of Consulting Services, CMQ/OE
January 15, 2020