The nature of business is ever-evolving, and as such, the task of dealing with a pluralistic workforce is a major concern. Businesses are gradually shifting towards solutions that will help them reduce expenses and increase efficiency. To this end, it is imperative to introduce the Labor Management System (LMS), which is vital for all companies.
Recent data highlights the urgency of this need: According to the Deloitte 2023 Global Human Capital Trends survey, 84% of business leaders recognize the importance of inclusively leading an expanding workforce, including those inside and outside the organization.
This is not a trend that has emerged recently; it is a necessity brought about by the changes in the business environment. From big stores, which have to manage employees at different shifts across different stores, to manufacturing facilities, which have to manage workers through different lines, the need for effective workforce management is more pressing than ever.
But what is driving this transformation? Why are more companies adopting LMS as their preferred solution? What is labor management?
Let’s explore the LMS and understand how it revolutionizes workforce operations across industries. We will then consider advantages such as cost savings and compliance and why the decision to adopt an LMS could be the right decision for your business.
What is a Labor Management System?
A Labor Management System is a comprehensive software platform designed to help organizations manage their workforce efficiently. It extends beyond basic time tracking, offering a suite of tools to streamline various labor management aspects.
Key functionalities of an LMS include:
- Time and attendance tracking
- Employee scheduling
- Workforce planning and forecasting
- Performance management
- Labor cost analysis
- Compliance management
- Reporting and analytics
By integrating these functions into a single system, an LMS provides a holistic view of workforce operations, enabling managers to make informed decisions and optimize labor resources.
What is Labor Management in Practice?
Labor management can be defined as the act of organizing, directing, and controlling human resources in an organization. A sound LMS would ensure that these processes were done effectively and accurately through the process of automation.
Labor Management Example
Consider a large retail chain that implements an LMS to manage its workforce across multiple stores. The system automatically creates optimal schedules based on forecasted foot traffic, employee availability, and skills.
It captures working hours and employee attendance, determines the actual costs of labor in real-time, and offers managers information on the tendencies in productivity. In turn, the retailer benefits from optimal staffing, which leads to enhanced customer satisfaction, lower labor costs, and employee satisfaction caused by fair staff scheduling.
Also Read: HR Dashboards: Examples and Best Practices
Benefits of Using a Labor Management System
Implementing an LMS can yield significant benefits for businesses across various industries. Here are some key advantages:
1. Improved Efficiency and Productivity
An LMS automates many time-consuming tasks, such as manual time tracking and schedule creation. This automation frees up managers to focus on more strategic tasks.
Optimized scheduling ensures the right employees are scheduled for a particular task at the right time, maximizing productivity. Recent studies have shown that companies utilizing workforce management solutions saw a 5.2% increase in productivity in Q3 2023.
2. Cost Reduction
Accurate time tracking and optimized staffing help control labor costs. An LMS reduces overtime expenses by ensuring proper shift coverage and minimizes overstaffing. Also, there is a significant reduction in cost as most of the administration costs are cut out.
According to a study by Nucleus Research on the subject, companies that adopted workforce management solutions achieved a payback of $12.24 for every dollar spent in just under 5 months.
3. Enhanced Compliance
Labor laws and regulations can be complex and vary by region. An LMS assists in compliance by recording the correct time, producing reports, and reminding the manager of compliance problems such as overtime or missed breaks.
4. Better Decision-Making
Another advantage of an LMS is real-time data and analytics available to the management of the organization. Managers get timely information on labor costs, production rates, and staffing levels so that they can make proper decisions at the right time.
5. Employee Satisfaction
An LMS can make a huge difference in the employee’s experience. Self-service portals are possible features in which the employees can view schedules, request time off, and manage their information on their own.
This is because; when organizations practice a transparent scheduling system and a fair distribution of workload, employees’ satisfaction level is likely to increase, and thus, they are less likely to quit their job. According to research, companies that have engaged employees are likely to be 21% more profitable.
Also Read: How to Evaluate and Purchase HR Software for Your Company?
Why is a Labor Management System Needed?
The necessity for a Labor Management System has grown significantly due to several factors:
1. Addressing Growing Complexity
As organizations grow and develop, coping with a greater number of employees becomes more challenging. Since the schedules are not the same, the workers are in different locations, and the level of skill is not equal, administering manual labor is difficult and indeed prone to mistakes.
2. The Rise of the Gig Economy
The employment status has become more flexible with the availability of the gig economy such that most organizations have full-time, part-time and contractual employees. The various types of worker classifications can be effectively managed with an LMS because of the flexible scheduling it allows.
3. Increasing Competition
In the existing business environment, competition is high; therefore, the ability to source resources is one of the key determinants of success. The necessity of an LMS to business is because it assists the business organization to cut expenses, increases the productivity of employees and gives an overall boost to the company’s performance.
The workforce management market is projected to reach $10,188 million by 2027 in the international market, as estimated, reflecting the increasing recognition of effective labor management.
Also Read: Performance Management Tools Every HR Leader Needs In 2024
Who Can Benefit from a Labor Management System?
Labor Management Systems can benefit a wide range of industries and businesses of various sizes. Here are some examples:
- Retail: LMS assists in handling shift work, estimating the required number of employees, and staffing during peak hours according to sales.
- Manufacturing: LMS can also be used in allocating employees to production lines, monitoring the performance of employees and ensuring that they adhere to the set safety standards.
- Healthcare: The healthcare sector employs LMS in staff scheduling to provide the right number of staff, solve challenging rotation schedules, and meet labor laws’ requirements.
- Hospitality: LMS is useful for scheduling in different areas of the hotel and restaurant, for managing fluctuations in demand, as well as for regulating labor expenses.
- Logistics and Warehousing: LMS assist in scheduling the workforce in accordance with the incoming and outgoing shipments, measure productivity and deal with temporary staff during the busy season.
Also Read: Best Talent Management Statistics HR Needs to Know
Conclusion
An LMS is an effective solution for the manifold issues of modern employee management. By eliminating time-consuming and repetitive tasks, offering information, and enforcing rules, an LMS helps to manage a company’s most significant asset—its employees.
An LMS is an effective solution for the manifold issues of modern employee management. By eliminating time-consuming and repetitive tasks, offering information, and enforcing rules, an LMS helps to manage a company’s most significant asset—its employees.
The question that arises in contemporary business environments is no longer whether the company requires an LMS but when the organization can implement it. This is because today’s business world has become very competitive, coupled with increasing complexity. Getting an LMS is the best way to prepare for today’s and tomorrow’s ever-evolving and competitive marketplace.
To elevate your organization’s employment management with a transformative approach, consider Engagedly. It extends redefined training methods to help you unlock the true potential of your employees.
Book a demo today to learn more.
Frequently Asked Questions
1. What is the purpose of labor management?
The purpose of labor management is to optimize workforce productivity, control labor costs, ensure compliance with labor regulations, and improve overall operational efficiency in an organization.
2. How does a Labor Management System differ from a Human Resource Management System (HRMS)?
Though both systems have some relation with employee management, an LMS focuses on the daily management of the workforce, like working hours and shifts. While an HRMS is more specific to the processes of recruitment, remuneration, and training of employees.
3. What is LMS labor?
LMS labor refers to the workforce management capabilities of a Labor Management System. These include functions like time tracking, scheduling, and labor analytics specifically designed to optimize workforce operations.
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