All businesses are now experiencing pressure to do more, with fewer resources, a low budget and increasing expectations of both the employees and the customers. To handle this, most organisations adopt two methods: Workforce Management (WFM) and Workforce Optimisation (WFO).
They can sound the same at first. However, there is a big difference. WFM is concerned with how to manage people effectively now. WFO is the future-oriented optimisation of performance. Having a clear understanding of when to use one or when to use both can directly influence cost management , productivity, and long-term growth. In this section, you will learn the definitions, key differences of Workforce Management vs Workforce Optimisation, similarities, and practical use cases of Workforce Management (WFM) and Workforce Optimisation (WFO), supported by real-world examples and stats.
What is Workforce Management (WFM)?
WFM is about effective planning of the workforce, tracking and managing the employees, which helps the business to run smoothly. At its fundamental level, WFM is about aligning the workforce with organisational needs, ensuring that the right people are in the right place at the right time. It minimises inefficiencies, controls costs, and guarantees labour law compliance.
Businesses that implemented a comprehensive WFM solution saw an 36% decrease in labour costs over three years.
- Scope: Daily workforce operations with emphasis on short-term efficiency
- Focus: Staffing levels, scheduling, attendance tracking , absence management, and compliance
- Key Activities: Predicting the workload, building shifts, monitoring attendance, approving leave, & ensuring labour law compliance
- Technology: WFM applications typically have forecasting functions, automated scheduling, time and attendance management , and analytics boards
- Example: A customer support centre that uses WFM to predict peak calling times and manages schedules to ensure quick response without having to incur high costs on overtime.
What is Workforce Optimisation (WFO)?
Workforce Optimisation (WFO) is a strategic plan to enhance employee performance , productivity and engagement. It extends beyond everyday workforce management and incorporates performance analytics, quality tracking, and skill building. WFO enables organisations to get the best out of their employees and align workforce capacities with business goals to help companies minimise expenditure, improve service quality, and achieve long-term growth.
Strategies aligned with WFO objectives, like HR-led productivity programs, can accelerate performance by up to 11%, according to Gartner .
- Scope: Long-term workforce planning and continuous performance improvement
- Focus: Productivity, employee engagement, skill optimisation, and quality assurance
- Key Functions: Performance monitoring , quality improvement, coaching and training, forecasting future workforce needs
- Example: A customer support centre uses WFO to monitor the performance of its agents and determine the training requirements, as well as optimise the schedules, leading to increased customer satisfaction and faster resolution times.
What are the Key Differences Between WFM and WFO?
| Workforce Management (WFM) | Workforce Optimisation (WFO) |
|---|---|
| Focuses on managing the workforce efficiently in the present | Focuses on continuous improvement and future performance |
| Addresses day-to-day operations such as scheduling, attendance, and compliance | Includes long-term strategies such as productivity, engagement, and skill development |
| Operates in the short-term time period | Operates in the long-term timeframe |
| Uses scheduling tools, attendance tracking, and shift management software | Uses analytics, AI tools, performance dashboards, and engagement platforms |
| Monitors overtime, absenteeism, shift adherence, and compliance | Tracks productivity KPIs, customer satisfaction, skill utilisation, and training efficiency |
| Guarantees staffing coverage and compliance | Improves motivation, skills, and engagement |
| Helps businesses in minimising immediate labor costs and avoiding gaps | Allows businesses to enhance service quality, stimulate innovation, and attain sustainable growth |
| Example: A retail chain employs WFM to schedule staff for seasonal sales to prevent overtime expense | Example: A call centre employs WFO to train agents and enhance customer satisfaction by 15% |
What are the Key Similarities Between WFM and WFO?
| Aspect | Similarity |
|---|---|
| Objective | They both strive to enhance workforce productivity and efficiency. |
| Data-Driven Approach | Both rely on employee information for planning, monitoring, and making decisions. |
| Employee Focus | Both consider employee scheduling, attendance, and performance. |
| Technology Use | They both utilise software applications for simplifying workforce operations. |
| Alignment with Goals | Both align organisational goals with workforce activities. |
When Should You Use WFM or WFO?
When to Use WFM
- Industries with Variable Workforce Requirements: WFM is suited for companies that experience frequent fluctuations in their staffing needs, such as retail, healthcare, and contact centres. It makes sure that schedules are aligned with demand accurately.
- Minimising the Cost of Labour: WFM can also ensure that the right number of employees are scheduled to work to reduce overtime, prevent understaffing, and manage labour costs.
- The Enhancement of Operational Efficiency: Automation of the scheduling process and time tracking will enable managers to concentrate on other tasks, simplifying the working process and increasing productivity.
- Ensuring Compliance: WFM systems ensure that an organisation complies with labour laws and regulations as they relate to scheduling, timekeeping, and overtime.
When to Use WFO
- Strategic Workforce Planning: WFO is ideal when it comes to long-term strategies to assist the organisation in optimising talent, performance, and engagement in the long term.
- Enhancing Employee Performance: WFO allows employees to perform to the best of their potential through the monitoring of task-level productivity and quality metrics.
- Improving Engagement and Skill Development: WFO determines training requirements, matches skills and other attributes with company goals, and facilitates overall growth of the workforce.
- Data-Driven Insights: Analytics and reporting with WFO enable organisations to make informed decisions towards productivity and strategic workforce management.
Conclusion
We hope that this comparison of workforce management vs workforce optimisation has helped you understand the differences between the two. WFM ensures that the current workforce continues to operate efficiently , and WFO will help create a better, smarter workforce for the future. Together, they assist companies in increasing employee productivity , engaging employees, and developing issues into opportunities.
Frequently Asked Questions
They create a happier workforce, increase agility, and reduce costs with smarter scheduling and performance optimisation.
WEM is a combination of WFM, WFO, and employee experience tools to enhance engagement, retention, and productivity.
The industries that are more likely to benefit include retail, healthcare, manufacturing, IT, and contact centres because of their variable workforce needs and customer-interactive work.
WFM provides scheduling and compliance; however, without the WFO, companies are unable to achieve long-term productivity and engagement.
