Not only do you need to know where you’ve been, you need to know where you are going. Managing and controlling wage costs has become an even bigger challenge for many businesses, in particular those reliant on a flexible workforce where one week is not the same as the next due to shifts and the peaks and troughs of the business. Targeted with maintaining productivity and profit margins, managers now spend a great deal of time reviewing revenue forecasts and the associated salary forecasting. As a result, continuous salary forecasting is no longer the nice to have, it’s a necessity.
In the past, monthly, quarterly and annual updates were sufficient. They were generally fixed and a contingency would be applied to allow for any changes during the month, which meant that they were never 100% accurate. Today, that’s no longer good enough.
No more rear-view mirror predictions
Wages are one of the largest expenses for most operations. Total wage costs in some businesses can be in the 30-35% range. Consequently, any variation, even of a small percentage can have a massive impact – up and down, when it comes to salary forecasting.
Basing predictions on up-to-date data is a business imperative for some business operations. Simply increasing the frequency with which you revisit and revise your forecasts is not enough. Revisiting the forecasts is a costly, time consuming but essential exercise. That means you should no longer develop forecasts based on old, stale data. That’s why maintaining real-time visibility is key.
Avoid the big black salary forecasting hole
If you are not revisiting salary forecasts based on real-time data, you’re blind when it comes to decision making. Leveraging real time enables smarter management of costs and cash flow. And the ability to make more frequent, strategic and informed decisions that will contribute to margins, allocation of spend and better ROI.
This all seems very obvious, but much harder to achieve – back to the rear-view mirror analogy. Businesses that have a flexible workforce, with hourly paid staff have an inherently more challenging task. Hourly wages are variable and schedules change throughout the month and on day-to-day basis. And therefore subject to more extreme variations. If salary forecasting is only viewable once a month, its essentially a big black hole of data that is not delivering any value and certainly not contributing to smart business management.
Today, our business leaders, C-suite and board members are changing their reporting cadence. No longer are they relying on a quarterly update, which was likely to be considerably out of date by the time it was reviewed. They want to be focussed on the here and now.
With continuous forecasting, you will always have a set of figures that are meaningful and accurate, upon which to manage finances and make decisions.
HR data can often be very elusive depending on how you manage your data sets, and how your processes talk to each other. Make sure this is something that you get as standard, delivered as part of your HRIS and Workforce Management solution. It’s a must have – not a nice to have.
Continuous forecasting allows you to live in the present. And make data-driven decisions that will directly benefit the business and save money too.
elementsuite HR Software