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Payroll Best Practices – What Are They?
What may be a best practice for one payroll department may differ for another payroll department, depending on the culture, goals, and opportunities for growth. As defined by Mr. Roger A. Smith, CPP, and payroll consultant, best practices are a collection of processes, policies, and technologies that have been adopted and have helped organizations achieve world-class performance.
Ensuring your organization, or your department, is committed to supporting best practices is important in today’s world. There is more competition, so if you are not doing it better, faster, and cheaper, you lose business. Employers want HR and payroll departments to increase customer satisfaction, ensure labor law and union compliance, and increase productivity with less money – all of which can be accomplished with the use of the right technology. However, technology cannot go it alone. You have to look at individual steps to ensure you implement best practices.
Best practices are not about working harder and longer, they are about re-evaluating current processes and often implementing radical changes to make a difference. It is common for organizations, departments, and personnel to continue with the same processes because the processes are familiar – the issue is that the environment is constantly changing and best practices must adapt to counter those changes.
How Technology Supports Best Practices
Technology today supports many aspects of HR and payroll processes, including detailed time and attendance, self-service functionality, payroll processing, compliance with regulations, enhanced accuracy, time savings, and increased productivity to name a few. Automating your workforce management processes is key when implementing best practices for your department.
Automated time and attendance is a self-service method of accurately gathering time worked for each employee. Employee time and attendance can be collected using badge readers, web browser-based clocks, web timesheet entries, phones, or other equipment. Not only is time and attendance data collected, but pre-defined policies can be configured into the system to automate calculations for pay rates, overtime, shift differentials, meals, and more to ensure payroll is on time, every time.
Self-service functionality for employees and managers is at the top of the list in today’s payroll world. Self-service functionality provides better customer service to employees, increases productivity for payroll and HR departments, makes employees and managers accountable, and ensures accuracy by automating processes and rules. Self-service functionality empowers employees to view schedules, available paid time-off, request time-off, look up benefits, and other information at any time without having to contact HR or payroll. It also provides managers with automatic notification of employee exception alerts, approvals, and schedules.
Individual Events, not just Processes
When creating best practices for your department, look at the individual events and not just current processes. For example, a new hire, employee review, or tracking employee hours are events that could be carried out better. Let’s look at an example of tracking employee hours in a manufacturing and union environment that is currently a manual, paper-based process. Hourly employees who work the lines typically have various pay rates based on hours, jobs, production, distribution, and quantity produced. So, every time an hourly employee changes jobs within a day, a new timecard needs to be filled out indicating which job is being worked. Also, when the employee meets his or her monetary bonus for quantity produced, a new line item on the timecard must be completed. In a paper-based environment like this, it is common for each employee to have up to 15 or 20 timecards a day for a payroll clerk to enter into the payroll system…that is, after tracking down the manager to approve the timecard.
Time and attendance technology can streamline this process in a number of methods, but we will use badge swiping for this explanation. Each employee’s badge has a bar code indicating the base pay rate for that employee. Next to the badge reader will be multiple bar codes for specific jobs, quantities, etc., all of which are coded in the system to calculate accurate pay for each employee. This eliminates manually writing out timecards, eliminates data entry for payroll clerks, and manager approvals are completed electronically through the system with automatic notification. Automation also eliminates errors that are more likely to occur with manual processes.
Adapting best practices into your environment is important to stay ahead of the competition while cutting costs. Look for the next webinar and article on “How to Implement Best Practices,” in January 2008!
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