1st May 2018
The Changing Face of HR and Payroll
Traditionally HR professionals have spent up to seventy percent of their time on administrative activities, but the pressure is now on for them to focus more on transformational work and so deliver more to the business. HR departments are addressing this expectation both through structural changes that enable them to standardise policies and procedures and through use of technology.
However many HR departments have undergone a significant restructure in recent years. The main drivers for this change are cited as:
- The need to improve services offered to the organisation
- Enabling HR to become a more strategic contributor
- Repositioning HR to fit the wider organisational model.
- Reducing costs
- Providing more responsive customer service
The Role of Technology
Businesses see the use of technology as key in effecting this change. Improving the integration of HR with other core applications is a priority as it allows key information to be shared and therefore offers added value to the business. Making HR activities and processes available via the internet is also a major requirement, as this is a key way of reducing the administrative burden on HR.
Some key questions to ask when considering integrating your Payroll and HR software systems could be:
- Do I believe that the flow of Management Information within my business can be improved?
- Do I know whether management reports can be produce on demand, accurately on any day?
- Can we accurately calculate the return on investment for an HR software upgrade, and does it make financial sense?
- Does our current system save us money, enhance our employee satisfaction and contribute to improved customer satisfaction?
- Are we utilising the human capital in the HR department as effectively as possible? Does our HR and Payroll reside on different platforms?
Although HR & Payroll are dependent upon each other, they're completely different business processes. That's why, even though they ought to reside on the same platform, they often don't.
Often companies outsource to a payroll bureau or use modular payroll software. They may hire a broker to administer benefits and try to perform some of the HR functions in-house.
The result? Well - payroll deductions are more often wrong than anyone likes to admit. Data updates are slow, and vendors of one system frequently don't know how to work efficiently (or at all) with other vendors. Often such turbulence results in the company's internal staff working double time in order to ensure that benefits and payroll "talk" to each other.
Integrating benefits and payroll on a single, enterprise-level platform, if done properly, is fast, accurate, and it doesn't require 24/7 supervision. Then by utilising the latest manager and employee self-service technology you can now deliver the platform's data via the Internet: your employees don't have to fill out paperwork, or trouble your HR staff on routine administrative matters. Everything they need is available via any desktop browser.
The Five Major Benefits of Integrating Your HR and Payroll
1) Plugging the profit leaks through tighter management of expenses
As your payroll costs can easily spiral out of control, effective, timely information and payroll management becomes imperative to your company’s bottom line. But whilst your HR managers are accountable for the detection and prevention of cost leakages – especially in the area of payroll management, the final responsibility for this usually lies with your top managers in your finance department.
It is therefore in the best interest of your finance department to work closely with your HR staff to achieve the possible savings and reduce preventable leakage.
The size of your company is immaterial, as the consequences of ineffective payroll and benefits management quickly add up to a sum of money that demands serious attention from businesses small and large. It is therefore becoming increasingly important that your human resources department have the right tools to manage your payroll and employee benefits. The proper tools will help identify and contain unnecessary cost leakages before they burn a major hole in your profits.
The three main areas in which leakage of variable costs (and sometimes what you believe to be fixed costs) can be addressed are:
- Managing paperwork and the administrative burden
- Reducing exposure to liability
- Improving efficiency and company morale
Many of the issues in these three key areas can be effectively controlled through the automation of all or part of the payroll and benefits management process, using a human resources information system (HRIS) linked to an employee self-service (ESS) system.
2) Reducing the Paperwork Burden & Improving your Reporting Efficiency
The volume of paperwork generated during the administration of traditional payroll systems and your human resource management function is phenomenal - both for the employer and the employee. For instance, if 300 employees work multi-shifts and at variable pay rates,then the associated time card administration will require hours of linear calculations absorbing hours of your HR department’s time.
The additional pressure of possible resultant human errors, from either the employee or the administrator will inevitably lead to disgruntled employees. How much time and effort will be required to identify and correct the single incorrect calculation or input? And don’t underestimate the possible financial impact that a disgruntled workforce could have on your bottom line.
Manual processing of employee payroll and benefit requests and enquiries adds about 50% to the resource requirement of the HR department. Every time a single employee’s payroll details need changing manually, you should work out the manual cost of the change versus that same cost if done automatically. The maths paints an obvious picture that’s hard to ignore.
Automating the Payroll process with the HR function will result in greatly reduced paper administration – at all employee levels - and will virtually eliminate all the input errors. Additional integration benefits include the automatic update of employee records and entitlements. For example when an individual is terminated, their payroll and benefits are automatically terminated at the same time. This means that you are no longer susceptible to cash-flow leakage as a result of this commonly made
For many centralised organisations that have multiple sites, HR personnel can find themselves spending considerable amounts of time and money traveling to different locations to gather and calculate payroll and benefits. This is a drain on resources and can quickly be eliminated through the automation of all HR processes and through tools such as online pay-scales and explanations.
A really good HRIS should virtually take users by the hand and guide them through the creation of a Payroll Reconciliation Report. This report calculates what your company’s payroll costs should be, and easily identifies discrepancies between the company’s records and your banking records. In the above mentioned 300-person company, a reasonably priced but effective HRMS could pay for itself within a couple of months through the identification of these discrepancies alone, not to mention
the other obvious savings that will greatly reduce this payback period. And in so doing, significantly increase the ROI that your Finance Director has his eye on!
3) Reducing Your Levels of Exposed Liability
Managing compliance issues becomes more and more complex every year. With HMRC constantly changing and updating legislation, you need to make sure your payroll system is up to date and compliant with HMRC standards. With a myriad of compliance issues, be aware that any errors / omissions or oversights can expose your company to significant liability.
Such ‘prescriptive’ legislation presents the opportunity for your HRIS to become truly universal, virtually eliminating data entry and information errors. It offers employees the opportunity to have a far greater understanding of (and control over) their
benefits entitlements, and access to their payroll information.
4) Improving the Morale of Employees and Increasing Efficiency
Taking care of the above two issues will also go a long way to improving the morale and efficiency of your employees and your company.
Taking it from the vantage point of one of your employees, accurate and timely remuneration and benefit entitlement is very important to their level of job satisfaction. As an employee, it is also very important that your personal information is correct and up-to-date so your remuneration and benefits claims can be processed uncontested. The ability to instantly and confidentially access your attendance summaries, and check what benefits you are enrolled in, is fundamental to employee satisfaction.
To this end you’ll need to consider how efficient your new solution will be. From the perspective of your HR employees, consider this fundamental question: Does the ease of use combined with the reports available, mean that operators can spend more time analysing data to highlight efficient and non-efficient sectors within your organisation? In practical terms, will this mean that labour can be allocated accordingly, to ensure maximum returns and output is achieved?
5) Empowering All Levels of Management to Maximise the Return on your HR Department
More often than not, the HR professional employed by your company is a highly trained individual with expertise in many areas such as recruiting, employee satisfaction, retention, training, and education. All of these matters are crucial to the ongoing health of any organization. However, most of these professionals frequently spend up to 70% of their working day answering simple employee questions and solving problems related to benefits, instead of concentrating their efforts on more
Providing your line managers with easy access to accurate reports and information such as attendance records, appraisals and other information, makes for a much more efficient management process. So does getting automatic alerts (such as when reviews are due) - and being automatically provided with the tools to complete the task.
Good employees are highly sought after and are one of your most valuable assets. Taking care of them is important.Offering advantages such as self-service, speedy response, and accurate and always available information will differentiate your organization from other potential employers, ultimately improving employee opinion of the organisation as a whole.
The best performing companies all have HR departments that have the mandate to work strategically to fulfill the overall objectives of the organization. For your company to maintain competitive edge in today’s market, your corporate HR department must also be granted this opportunity.
We hope you now have a better insight into the very real benefits that are readily available to any Company that properly researches and implements, a combined Payroll and HR Information System.