What Is Workforce Optimization?

The rise of hybrid work arrangements, the need for new skills, and a volatile labor market all make managing a workforce more complicated than ever. Businesses need a comprehensive strategy that includes adopting data-driven tactics to better understand their workers’ capabilities and how best to allocate them to achieve business goals. This article explores the tools and technologies companies can use to optimize their workforces to help improve productivity, reduce costs, and better serve their customers.

What Is Workforce Optimization?

Workforce optimization (WFO) encompasses all the strategies that businesses employ to align their workforce capabilities with their needs and objectives. These strategies combine human capital management (HCM) and enterprise resource planning (ERP) applications, data analytics, input from stakeholders, and management best practices to assign tasks to the employees with the most appropriate skills at any given time. This systematic approach to workforce management can improve operational efficiency and employee engagement and increase customer satisfaction.

Key Takeaways

• WFO combines technology, internal data, and HR best practices to help decision-makers align employee skills with business needs.
• WFO helps companies identify skills gaps and adjust hiring and training practices.
• Modern WFO solutions automate tasks such as performance tracking and scheduling, with the goal of improving employee (and customer) satisfaction and reducing costs.

Workforce Optimization Explained

Almost half of learning and talent development professionals say their executives “are concerned that employees do not have the right skills to execute business strategy,” according to LinkedIn’s “Workplace Learning Report 2025.” Enter WFO, in which companies analyze their workforce’s current capabilities and compare them to demand for those kills, spotlighting any gaps. This initial analysis would then inform personnel decisions at every step, from initial hiring and onboarding to performance tracking and continuing education.

Taking that process a step further, modern WFO relies on HCM and ERP applications to continually collect data, providing a foundation for proactive workforce decisions and visibility into how those decisions affect other aspects of the business. Whether it’s a manufacturing company adjusting staffing levels to accommodate production schedules or a customer service department planning coverage based on predicted call volumes, the ultimate benefit of WFO remains the same: a cost-efficient, productive, and responsive workforce.

Workforce Optimization Features

WFO software comes with multiple capabilities, each addressing a specific aspect of staff planning. Here are several key features.

• Performance reporting: Detailed analytics and automated reporting help managers track key performance indicators (KPIs) measuring productivity, service quality, and other factors. These KPIs help leaders identify trends early on and pivot strategies to serve staff and performance goals.
• Time tracking: This capability lets businesses monitor employee schedules, attendance, and time usage. The data helps managers set expectations, accurately calculate payroll, and comply with labor regulations.
• Task management: Automated task assignment and tracking capabilities distribute assignments based on employee skills and availability, in accordance with any custom rules or priorities. By automatically allocating tasks, companies can ease workflow bottlenecks and assign and complete tasks more efficiently.
• Skills management: These tools give companies updates on employee competencies, empowering them to develop more targeted training and continuing education courses. Detailed skills maps also spotlight any gaps. In fact, 91% of respondents to LinkedIn’s survey agree that continual learning is more important than ever for career success.
• Scheduling: These tools balance employee availability, skill sets, and business demands to generate effective work schedules. They automatically adjust to changes in staffing or workloads, maintaining optimal coverage when people request time off, take leaves of absence, or move to new positions. This is especially helpful for companies managing employees on flexible schedules, a situation that’s expected to become more common: Flexibility is the most commonly chosen factor workers look for in a new job, according to Korn Ferry’s “Workforce 2024” survey.

Benefits of Workforce Optimization

When properly implemented, WFO can deliver significant improvements, including boosts to productivity, reduced employee turnover, increased customer satisfaction, and a strengthened bottom line. Let’s explore the major benefits of WFO in greater detail.

• Increases business efficiency:

  WFO systems can automate routine tasks and help ensure that staff have the resources they need to do their jobs. Companies can minimize overstaffed and understaffed shifts to reduce downtime and bottlenecks. Furthermore, WFO’s process standardization, such as uniform performance metric tracking and automated payroll processes, supports business efficiency and makes it easier to scale operations across multiple locations or expand into new markets without reducing performance standards.

• Improves productivity:

  With data-driven task allocation and scheduling, employees spend more time working on activities that complement their skills and experience and less time in redundant training courses or interrupting colleagues or supervisors to request assistance. Managers can also use WFO tools to reduce the time they spend on monotonous tasks, such as collecting data and generating performance reports, focusing instead on higher-level problem-solving. This decreases the time that staff at all levels must spend on mundane work, while simultaneously improving productivity, output quality and quantity.

• Enhances employee engagement:

  More balanced workloads and appropriate employee allocation afforded by WFO strategies let businesses show their staff that they recognize each team member’s value and how each individual contributes to the company’s overall success. WFO tools also help managers set clear expectations, develop more predictable schedules, and align skill development and career advancement with each worker’s interests and abilities. These factors all contribute to less burnout, increased engagement, and lower staff turnover.

• Saves money and time:

  Done right, WFO allows companies to significantly shrink their labor costs and save time. For frontline staff, WFO increases productivity and output without the need to hire additional workers, and it refines scheduling to decrease overstaffing and unexpected overtime expenses. Administrative staff can use WFO tools to eliminate hours of manual planning work, such as meticulously trying to create the perfect shift schedule to meet everyone’s availability or rushing to fill scheduling gaps.

• Improves the customer experience:

  When properly skilled employees are consistently available, customers are more likely to get what they need in a timely manner. Beyond reducing wait times, WFO processes anticipate and respond to changing consumer demands, including staffing up during peak seasons or enlisting specialized support during a product launch. This attentiveness can lead to more loyal and frequent shoppers, as well as larger average purchase size and word-of-mouth referrals.

Workforce Optimization Technologies

Modern WFO typically features multiple technologies working together to built a more effective workforce. Here are the technologies most commonly used today.

HR Software

Core HR software, or a human resources management system, serves as the foundation for WFO by gathering employee data, performance metrics, and administrative tasks into one easy-to-use platform. HCM systems typically provide decision-makers with a comprehensive view of recruiting, onboarding, employee performance and development, payroll, retention, succession planning, and other people processes.

Artificial Intelligence

AI algorithms help companies analyze data to predict staffing needs, identify skills gaps, recommend assignments, assess changing business conditions, and adjust operations more precisely than ever before. Moreover, AI models can continuously improve their predictions and recommendations as they process more data, leading to increasingly refined WFO strategies over time.

Automation

Automation can improve error-prone and slow workforce processes, such as tracking employee performance, creating onboarding checklists, and calculating payroll for multipart compensation packages (commissions, benefits, overtime, holiday pay, and so on). Businesses can also automate industry-specific compliance processes, including generating automatic reminders for certification renewals and regulatory reports.

Collaboration Tools

Collaboration platforms, such as videoconferencing software and shared digital workspaces, help even the most far-flung teams communicate effectively and get real-time visibility into the status of different projects.

Workforce Optimization Deployment Methods

There are three main ways to deploy WFO applications—on premises, in the cloud, and hybrid—each requiring different levels of investment for both initial implementation and ongoing maintenance.

• On premises: Deploying WFO applications on premises provides leaders with full control over the system and data but typically requires substantial IT infrastructure investment and expertise to manage. Businesses with strict offline security requirements or highly customized processes often benefit most from on premises WFO systems.
• Cloud-based: Cloud deployment lets users access WFO tools from any location with an internet connection. These subscription-based SaaS solutions typically can be implemented faster, carry lower up-front costs, and are easier to update with new features than on premises solutions. Because cloud service providers typically maintain SaaS WFO solutions, they often require minimal IT support.
• Hybrid: Hybrid WFO software deployments give companies more flexibility by letting them store sensitive employee and performance data on premises while still leveraging cloud capabilities for certain processes, such as scheduling and payroll. Many businesses maintain hybrid deployments as they transition from a legacy system to a cloud-native one.

Improve Workforce Performance With NetSuite SuitePeople

To optimize their workforce, businesses need to collect and analyze lots of employee and performance data. NetSuite SuitePeople applications pull together HR, payroll, and finance data to align staff performance with organizational goals. It also automates manual recruiting, onboarding, performance management, and other WFO processes, and it provides real-time analytics to help improve staffing decisions. The cloud-based SuitePeople platform can also scale as a business and its workforce grow.

NetSuite’s Customizable HR Dashboard

Workforce Optimization FAQs

What is the purpose of workforce optimization?

The main purpose of workforce optimization (WFO) is to help companies make better decisions about staffing, scheduling, and skills development.

What is the difference between workforce management and workforce optimization?

Workforce management typically focuses on day-to-day administrative tasks, such as scheduling, time tracking, and attendance. Workforce optimization builds upon these foundational elements to improve recruiting, onboarding, training, and other key people processes.

Who uses workforce optimization?

Companies of all sizes can implement workforce optimization principles, but the most common users include customer service, manufacturing, retail, and field service organizations.