A plain English guide to strategic workforce optimization – for higher productivity, efficiency, and engagement.
Workforce optimization is about making your workforce the best it can be – so your business is more competitive, productive, and profitable.
It’s about getting the best return from one of your biggest investments – your people.
And by return, we don’t just mean revenue, though that’s very important. We mean other metrics that signal business success too. Like customer satisfaction, employee retention, and overall operational efficiency.
Workforce optimization is about positioning your people to succeed. It's the classic goal of having the right people in the right place at the right time.
Or – as our CEO Tim Copeland puts it – an environment where neither time nor talent are wasted.
But it goes beyond just strategic recruitment, role design, and deployment. It’s about providing people with the fit-for-purpose processes, tools, technology, training, and support they need to excel.
Workforce optimization is about making your people and processes the best they can be, to enhance team performance and overall business success.
Let’s break it down:
It also incorporates capacity planning and strategic workforce planning, to ensure you have the right supply of people to match future business demand.
The ultimate goal of workforce optimization is to harness the full power and productivity of your people, in pursuit of the strategic objectives of your business.
To quote McKinsey & Co, talent + productivity = value.
Successful workforce optimization maximizes the value and ROI of your workforce – also known as Return on Talent.
If that sounds callously corporate and capitalist, don’t worry, it’s not just about money.
Workforce optimization strategies recognize that happy, healthy employees are best for business and encompass many people-first practices too.
It’s a holistic approach to getting better at business, using the people power at your disposal.
Anything that touches on the human elements of your business can fall in the remit of workforce optimization.
Workforce optimization strategies cover things like:
Perhaps, most importantly, it’s about hitting that Goldilocks spot where people are productive and engaged – without being stressed and overstretched – so they can be their best selves and do their best work.
We’ll go into all of this in more detail later.
You don’t need us to tell you times have been tough recently. We’re still feeling the impact of the global pandemic, great resignation, and great renegotiation on talent availability.
Now the Big Stay promises more staff stability. But poses the question are workers content or complacent? And are these the workers you want and need?
Throw in political instability, economic uncertainty, and global competition (for both customers and employees) and it's clear that businesses still face an uphill battle to grow and prosper.
In such a volatile external environment, workforce optimization is an important business strategy.
By focusing on internal factors – particularly something high-cost and high-impact like human resources – you can manage expenses and enhance efficiency, even when external factors are beyond your control.
And because workforce optimization also encompasses staff training and development, it can make your business more agile, responsive, and resilient in the face of ongoing challenges.
The benefits of workforce optimization fall into two main categories.
These combine to create fertile ground for sustained business success and growth. Let’s dig a little deeper.
Workforce optimization improves productivity in so many ways.
An optimized workforce is more cost-efficient and less wasteful.
Accurate resource scheduling avoids overutilization (which leads to lost productivity and costly burnout) and underutilization (which means you’re spending on staff you’re not fully using).
Streamlined processes and appropriate use of technology mean staff can work quickly and efficiently, avoiding unnecessary bottlenecks or burdensome manual processes.
All of this reduces operational costs while increasing outputs.
Often, your employees are the face of your organization. This means happy employees are key to happy customers. Happy employees provide better customer service. And employees who are given autonomy at work are more likely to be proactive, innovative, and problem-solving.
This can improve customer loyalty and satisfaction, and deliver higher revenue and growth. Businesses with highly engaged employees see a 10% increase in customer satisfaction scores and a 20% increase in sales, according to Gallup.
Workforce optimization encompasses employee well-being – with an interest in maintaining productivity and engagement through balanced workloads and work-life balance.
Ensuring employees aren’t overwhelmed with work reduces stress and creates a happier healthier work environment. This contributes to higher productivity. And reduces costs and disruption associated with burnout, employee absences, and turnover.
Employee engagement
Workforce optimization also includes succession planning, career pathing, and upskilling staff. This can lead to higher employee satisfaction and engagement because people know they’re valued, invested in, and have a future with the organization.
Think your employees are already engaged? Gallup research begs to differ. As of 2023, only 23% of employees globally are engaged at work, 62% are not engaged and 15% are actively disengaged. Worker attrition and disengagement cost companies about $282 million annually, according to McKinsey & Co.
Workforce optimization starts with identifying who you need for your business to succeed – in terms of roles, skills, and numbers.
This encompasses a variety of tasks – including forecasting based on business goals and market trends, conducting a skills inventory, and capacity and capability planning.
The ability to conduct thorough and meaningful planning relies on access to accurate, up-to-date data from your workforce management systems.
For example, trends in demand, turnover rates, utilization rates, in-demand roles, productivity metrics, etc. Without this information, you’ll be unable to forecast or predict staffing needs accurately.
Don’t forget role design in this process. Role design is concerned with creating impactful meaningful jobs that contribute to business success and satisfy employees.
According to McKinsey & Co, 40% of respondents cite unclear roles and responsibilities as a cause of inefficiency in their business. Here’s how to define roles and responsibilities in your team.
You’re now equipped to identify any talent gaps you need to address through:
Your HR team should have strategies for attracting, hiring, and onboarding the right talent. This includes everything from employer branding and candidate pipeline management, to optimized recruitment processes.
Data from your workforce management systems is invaluable for knowing who, when, and how to hire.
Skills management and talent discoverability are concerned with getting the right people in the right roles to have the biggest impact.
McKinsey & Co call it the ‘talent tightrope’, stating that ‘in today’s uncertain economic climate, organizations need to focus more on finding ways to match top talent to the highest-value roles. The idea isn’t new, but it’s the right one in this era of hybrid work models, increased employee mobility, and skill shortages.’
McKinsey’s State of Organizations 2023 report found the highest performers in a role are 800% more productive than average performers in the same role. But between 20 and 30 percent of critical roles aren’t filled by the most appropriate people. So matching the right people to the right tasks is critical.
A resource management platform provides complete visibility into the staff and skills at your disposal, so you can discover and deploy the best people for every project.
Performance management is about monitoring and optimizing people’s performance towards the organization’s overarching goals.
This process helps identify high performers – those MVPs that deliver higher productivity – plus areas where employees may need additional support or development to achieve their full potential.
Performance data helps monitor metrics like goal attainment, employee productivity levels, and competency development, so you can benchmark and improve people’s performance.
Training and development are key components of workforce optimization.
86% of employees say they’d switch jobs for one with more opportunities to grow and businesses that invest in employee development see 58% increase in retention and 24% in productivity.
You can match data from skills assessments and performance reviews with your capability and capacity forecasts, to determine the most valuable training for different employee groups.
Efficient scheduling and deployment ensure that the right people are in the right place at the right time.
This involves optimizing shift patterns, managing workloads, and aligning staffing levels with business demands.
Accurate scheduling is particularly important in project-based organizations, businesses with shift patterns, and companies that experience fluctuations in demand.
You can use historical data from your resource management platform – along with forecasting and predictive analytics – to optimize staffing levels and match people to the right tasks.
Remember, it's not just about skills matching and capacity.
Resource deployment should also factor in performance (giving priority projects access to the highest performers) and upskilling (using stretch assignments for staff development).
In today’s uncertain business climate, more than one-third of respondents in our survey list efficiency as a top three organizational priority. Boosting efficiency is about more than getting the same work done with fewer resources. Deploying resources more effectively to where they matter the most promises substantial benefits, including improved organizational health, higher shareholder returns, and better and faster decisions. - McKinsey & Co, State of Organizations 2023
We’ve touched on the importance of employee engagement already, so won’t labor the point. All the research shows that satisfied, engaged, and happy employees are more productive – and they’re less likely to leave, so you dodge the cost and disruption of staff turnover.
Use strategies to boost engagement through an inclusive and inspiring work environment, reward and recognition for hard work, and provide opportunities for career growth. Exit interviews and staff surveys can help identify any areas for improvement.
Process improvement and automation
You can’t optimize people’s performance without addressing the tools and processes they use. Even the most motivated individuals will be unproductive if they’re stymied by unfit-for-purpose systems.
Continuous improvement methodologies, such as Lean and Six Sigma, can be applied to identify areas for enhancement. And data from your workforce management systems can highlight inefficiencies and process bottlenecks.
Plus, there’s no substitute for getting ‘into the mud’ and talking to people about the challenges they face and the tools they need. Discover more top tips in What Successful Directors of Operations Do Differently.
Like most business processes nowadays, successful workforce optimization uses analytics to make accurate, data-informed decisions about your staffing strategy.
We’ve already touched on some of the technology you can use but here’s a more comprehensive list of useful workforce management software.
HR software provides a centralized platform for managing employee data, performance and training information, payroll, benefits, compliance, and more. They often include modules for recruiting and onboarding, plus employee self-service. All of this supports timely recruitment and performance management, provides a seamless employee experience, and aids in retention.
Resource management software includes tools for resource scheduling and deployment. They provide a centralized place for all of your resource data – like skills, interests, availability, and capacity – which enhances talent discoverability and allows you to assign the right people to the right tasks.
This ensures optimal resource utilization, maximizing employee productivity and engagement, while reducing burnout. Data supports accurate forecasting and capacity planning, so you know exactly who you need and when.
Know what to look for in our buyer’s guide to resource management software.
Performance management systems are platforms designed for setting goals, tracking performance, and providing feedback. They help identify high performers, so you can assign your most valuable players to your highest-priority projects, and identify areas for improvement and development.
Learning management systems deliver and track training programs. LMS solutions support a variety of learning formats and provide tools for creating and managing training content, tracking employee progress, and assessing the effectiveness of training.
Talent management systems are tools designed to manage the entire talent lifecycle, from recruitment to retirement. They integrate various HR functions, providing a holistic view of employee data and career progression to help organizations nurture and retain top talent.
Employee engagement platforms are tools designed to measure and improve employee engagement and satisfaction. They include features such as pulse surveys, feedback tools, recognition programs, and communication channels, helping organizations foster a positive workplace culture.
Analytics and reporting tools provide insights into key metrics such as turnover rates, productivity, and employee satisfaction. These tools enable HR and management teams to make data-driven decisions, identify trends, and forecast future workforce needs using big data and machine learning. Most of the tools above will include their own data and analytics tools.
Hundreds of businesses use Runn to optimize their workforce.
Runn is a leading resource management platform with powerful but intuitive tools for:
