Workforce management software (WFM) with labor budgeting tools helps bridge “top-down” and “bottom-up” budgeting, connecting corporate financial goals with store-level realities. In a traditional top-down approach, corporations set a broad annual financial budget, which can be out of sync with daily store operations. This can often result in inaccurate labor planning, overspending, or understaffing, directly affecting profitability and operational efficiency.

With WFM, labor budgets are created from the bottom up, based on real-time store-level data such as demand, staffing needs, and performance forecasts. This helps ensure that financial targets align with operational requirements, creating a unified budgeting approach responsive to high-level goals and granular store needs.

Why Does it Matter?

The disconnect between top-down financial budgets and store-level labor budgets is a significant issue because it creates inefficiencies, inaccurate forecasts, and misaligned expectations. Without alignment, stores may overspend on labor or face shortages impacting customer service and sales. This inefficiency can hurt overall profitability and lead to a cycle of poor forecasting and reactive budgeting rather than proactive, optimized labor planning.

Bottom-Up Budget as a Bridge

A bottom-up budget acts as a crucial link between the high-level financial plans set by corporate and the weekly store budgets that reflect day-to-day operations. By gathering detailed data from the ground up—like staffing needs, employee availability, and local sales forecasts—this approach gives a clearer and more flexible picture of labor requirements.

It ensures that the top-down financial targets are not only achievable but also practical at the store level, reducing inefficiencies. This approach transforms labor management into a dynamic, data-driven process that not only aligns with corporate goals but also ensures stores are staffed adequately to meet demand, control costs, and improve productivity.

A budget aligned with the labor model reduces time, eliminates intra-period planning, and enables operational leaders to replan continuously throughout the year. Improved alignment enables finance to respond quickly to the impacts of potential budget changes.

Why Leverage WFM For True Bottom-Up Labor Budgeting

Workforce management software is essential for creating accurate bottom-up labor budgets by using real-time data and insights from the store or district level. These systems capture detailed information about staffing needs, employee availability, and actual demand at the store or department level. This granular data ensures that labor budgets reflect the true day-to-day realities of the business.

As a result, companies can make dynamic adjustments to labor costs, making budgets more accurate and responsive to actual needs rather than relying solely on top-down estimates. By incorporating real-time forecasting, automated scheduling, and compliance management, WFM systems help align labor budgets with corporate financial goals while optimizing staffing and controlling costs.

Legion AI Optimizes the Labor Budgeting Process

Legion’s sophisticated labor models enhance strategic planning and enable the creation of long-range labor plans that align with your business goals. By leveraging data-driven insights and predictive analytics, Legion’s labor model helps you anticipate future labor needs, manage costs, and enhance operational performance.

Budget planners have the flexibility to create and manage labor budgets either centrally from headquarters or from the ground up at the field level. Budgets can be planned for up to 12 months, with the option to extend projections up to 18 months ahead. As regions or districts submit their budgets for review, you can easily adjust inputs to compile a unified top-down budget or consolidate bottom-up budgets across all locations.

With Legion, you can model various what-if scenarios to adapt and react to business changes, new strategies, or support long-range plans. This includes adjusting operating hours, introducing new channels, store openings or closures, or different wage rates for specific periods.

Legion Labor Budgeting automatically models multiple what-if scenarios to create dynamic budgets and identify profit-optimized “best bet” labor decisions that balance costs and revenue impacts. To ensure precise and accurate budgets, you can accommodate unique and complex standards and granular labor requirements, including multi-level compliance rules, diverse shift patterns, and wage and hour regulations calculations.

Legion brings finance and operations together by providing an end-to-end process within a single platform that seamlessly fits your existing budget process. Legion Labor Budgeting enables bottom-up or top-down collaboration when creating budgets by stores for the entire year. Once the labor budget is finalized, it can be executed and automatically enforced in the Legion Automated Scheduling module, ensuring your financial goals are tightly aligned with store execution.

Request a demo to see Legion Labor Budgeting in action and learn more about how we can help you create optimized labor budgets.