ROI No-Brainer: Workforce Planning in the Cloud — Strategic Whiteboard Series
January 13, 2020
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Hey everyone, my name is Matt Ruff, and I’m here to talk to you on how you can realize the return on investment for planning for the costs of your workforce in the cloud. So, for today we have three main goals. I want you to be able to understand what workforce planning is, learn how you can take your processes to the next level and realize what benefits you can see from this process. So, when we talk about workforce planning, we mean planning for all the costs of the employees and contractors within your business.
So, the cost of those employees and contractors is typically the biggest cost for most service organizations and for most manufacturers probably their biggest or their second biggest cost. So, making sure that you have good insight into the future as to what your costs are going to be is critical for all organizations. There are really two types of companies and they plan two different ways. There are the companies that do it the bad way and there’s companies that do it the good way. A lot of companies today will still plan for all the costs associated with their workforce in Excel spreadsheets.
When you plan in Excel spreadsheets you get a lot of benefits with Excel but overall, you’re extremely limited. You don’t have the ability to version your data. You don’t have the ability to do what-if analysis you don’t have the ability to securitize the data very well. You don’t have all your data located in a centralized location. All those things put a big limit on how well you can use that data and how well you can gather insight from the data to drive your business. What companies who are really successful in planning for the cost of their workforce do is they use a system or a tool typically that tool is in the cloud now and by utilizing cloud based software you can gather all of your information into one spot, centrally plan it with security you can plan what if analysis based off of it and you can really drive your organization to the next level.
As you can see, we discussed some of the challenges associated with the old way of workforce planning. We’ve discussed some of the benefits that you’ll get with the new way of workforce planning and what I really want to focus on is what is the process to plan for these costs and what I’ve done is I’ve laid out a six step process here that anyone who has a workforce planning tool will use and I want to go through step by step. So, the goal in planning for the cost of your workforce, the goal here is for it to be very simple.
We want you to take as little time as possible to collect all this information so that you can spend as much time as possible analyzing this information. A lot of organizations that are planning to use the bad way of planning in Excel take a lot of time collecting all the information and then they don’t have a lot of time to analyze the information at the end. What we’re trying to do is flip that process, so it takes less time to gather the information and you have more time to look at the data. So, the tactical process for going through this is very simple. The first thing you’re going to do is you’re going to take an extract of all your employees and their associated costs and benefits that exists in your HR tool. So, every company has an H.R. tool where all their employees exist, where all you know their paychecks are cut from. This is a tool that is you know that everyone should be able to easily take an extract out of and have all this information at their fingertips. That would be employee salaries, bonus, any sort of tax information, where the employee’s located, you name it and all that information resides in an H.R. tool. And what we’re going to do is we’re going to take that information out of the H.R. tool and we’re going to send it into an EPM cloud tool.
That’s the first step. Loading all your employees into that tool is then going to give you the foundation to do any sort of planning and adjustments that you need in the future. Step two is determining the drivers that are key and really impact your business. So, when you’re planning the cost of your workforce everyone across the globe has very similar costs. You have insurance and benefit costs you have payroll tax cost. You have the cost of salary and bonus and any adjustments that are made to that.
So, the you know this a model for workforce planning can be built relatively standardized across industries. And so, what you’re going to do is you’re going to have your FP&A team sit down and you’re going to spend time discussing what are the key drivers that impact our business. You’re going to spend more time discussing these drivers and figuring out exactly what you want to drive the costs associated with your business and the less time entering these costs into spreadsheets. What we want you to do is sit down talk about these costs and enter them into a system one time. We don’t want you to have to go in and enter them into hundreds of spreadsheets because that’s not a value-add activity. Once you figure out the key drivers and the values associated with each, you’re going to enter them into the tool. OK. Step three is then to apply these drivers to the appropriate employees. So, if you’re a multinational international company you’re going to have payroll taxes that vary by state in the US by province in Canada and by all the different countries that you have. So, when we collect the key drivers in step two one of the things, we would collect for example is payroll tax by location.
Step three is then applying the payroll tax to every employee as appropriate. So, if you’re an employee that’s located in Maryland you will get the payroll taxes associated with a Maryland employee. But if you’re an employee located in Quebec, you’re going to get the Quebec provincial taxes and the associated Canadian taxes. Once we use the system to apply those drivers to every person, we’re going to calculate the entire database. So, you’re going to have all your employees in one place you’re going to enter in all these drivers that apply to various people within your organization you’re then going to apply the drivers to each employee as appropriate and you’re going to run a calculation and at this point you’re going to have all the costs of your existing workforce calculated out for a period. If you’re doing a budget, you’re going to then have your next year budget first cut done. So, once you have the first cut done now you want to go in and you want to analyze that information. So, step four is doing exception-based roster planning. So, you’re going to go in the application you’re going to see the costs associated with all your employees across all your respective departments and cost centers and you’re going to ensure that those costs are correct.
So, you’re going to be planning on an exception basis as opposed to planning all these costs from scratch. So, what you’re going to do is you’re going to ensure that your employees have been given the appropriate drivers. You’re going to transfer employees from one department to another you’re going to add position recs that you didn’t have existing in your H.R. tool which is where you sourced all your employee data to start with. And then you’re also going to remove employees as needed or just add contractor positions. Once you go ahead and make all these adjustments, you’ll recalculate your database and all the costs of your workforce will be fully calculated out for you to analyze and review. Step five is very simple.
So, once we update all these costs for the workforce in the EPM tool we then want to be able to view it at a higher level. So, for most of the executive leadership at your company they’re not going to want to see this information at the detailed level by employee. What they’re going to want to see is they’re going to want to see it by cost center or by department or by clusters of cost center or department. So what we want to do is we want to take that data, summarize it by all the employees and get it into a departmental view where I can run P&L’s and reporting off my data at a much higher level. Step six is then to take this to the next level.
So, once you once you have your P&L’s populated with data, you’re going to want to run reports and dashboards office information so that you can truly analyze it across your business. As you go through this analysis, you may find yourself going back through some of the steps and adjusting data as needed. But what you’re not doing is you’re not taking a brand-new cut and planning all your information over again. You’re just doing exception-based planning is needed. If you’re in the middle of your planning process and you realize that you’re going to have a larger increase to your health benefit costs than anticipated what you can do is you can run what if analysis at this point where you take your entire data set you copy it into a new spot and then you maybe change some of the key drivers and rerun all of the process and you’ll be able to very quickly see how one change can impact all of your employees at the low level or all of your departments and or cost centers at the high level.
So, this process is incredibly quick to go through and the reason for that is you want to be able to go through the process as needed to adjust as you go through the process.
I personally think that you would be crazy not to implement a workforce planning tool for your company. The benefits are vast and more than we can really get to today. But just a few key takeaways are to implement workforce planning is typically very simple and straightforward because you have a lot of the data that exists in your H.R. tool. You’ll be able to take your employees away from collecting data and churning through Excel spreadsheets and all the errors and issues that come along with that into a tool that allows them to analyze the data and really help you make decisions on the future.
All right everybody thanks you so much for watching our whiteboard video session today. If you would like to contact us directly our information is at the bottom of the screen and we’d love to talk with you. As you can see there really is no reason for you not to realize the benefits of implementing a workforce planning tool in the cloud. Thank you.