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How Technology has Affected the Payroll Industry
Technology has become indispensable in both life and business, and the evolution of the payroll industry is no exception. Payroll technology has come a long way in the past century – from virtual non-existence to the promise of many future possibilities. Before we know it, employees will work from home, using their brainwaves to indicate work start and end times, while capturing additional information required by their employer. It would be nice to simply think about your vacation request, and then know it’s done!
How close do you think the workforce is to this capability? First, let us look at how far technology has come. Then, you decide.
Past, Present and Emerging Payroll Technologies
If you go back 2,500 years, the abacus was used to calculate pay for Roman soldiers. It was bulky and there was no reliable method of keeping records for past and future payments.
In the late 1800s, it was the comptometer that was used to calculate payroll. While an amazing device for its time, it featured only nine keys – 1 through 9.
It was not until 1960 that the first generation of computers was available. At 70-80% uptime, this would be unacceptable in today’s world.
Automated time collection took its first step in the 1980s, when U.S. Census Bureau employee Herman Hollerith invented punch cards. However, by today’s standards, it was still a lengthy process requiring several seconds to compute a calculation.
As we moved through the decades, we witnessed the arrival of Apple I and IBM PCs, along with the advent of data centers. Today, we have servers and more servers, and our desktop computers provide a hundred times the power of the 1970 data centers. In 2000, six million households had Internet access. Last year, there were more than 80 million households connected to the World Wide Web. Computers are used in nearly every business environment and there is no doubt that our demand for anywhere-anytime computing has changed the lives of all.
Today’s Technology
How does technology increase productivity and accuracy while improving the daily responsibilities of the payroll professional? Workforce management software solutions automate time collection, activity-based costing, accruals, compliance with the Family Medical Leave Act (FMLA) and the Fair Labor Standards Act (FLSA), union contract compliance, employee self-service functionality, scheduling, and more. Numerous devices collect this information for payroll and HR departments, including interactive voice response (IVR), biometric readers, wireless timecards, web clocks, and kiosks, among others.
IVR is telephone technology used to collect and disseminate information for simple tasks, such as reporting time, electing benefits, enrolling for training, and verifying employment. This device can easily be integrated into a workforce management system, making the data available in real-time so that a payroll clerk does not have to re-enter the information.
Biometric readers are used to eliminate “buddy punching,” which is common when using punch cards and time clocks. A biometric reader recognizes handprints, thumbprints, palms, irises, and facial and/or voice features, making it impossible for other employees to check someone in or out for the day.
Employee self-service is popular today, allowing employees access to information they would otherwise have to contact HR or the payroll department to get. Employees can view vacation/sick time and benefits, update personal information, enter time and project codes, request time-off, and much more. Employers have found that employee self-service enhances job satisfaction, reduces manual work, and reduces the number of interactions between HR or payroll departments and the employees, allowing everyone to increase productivity.
Direct deposit banking technology is used by more than 65-percent of employees who have it available. For every check that goes through direct deposit, the employer saves 25 cents to $1; and employees save $2-3 for the time it takes to cash the check. There are more than ten billion ACH transactions a year. How often do you go to the bank?
Workflow Technology
Technology also automates the workflow and processes that affect the employee lifecycle, including – new hire processes, performance reviews, job changes, retirement and pensions, self-service functionality, and time collection and approvals. An automated workflow system helps ensure proper procedures are taken with employees for all types of situations. Therefore, when a new hire starts, a process is in place for orientation, reviewing policies, touring the facility, and assigning office equipment and supplies.
Anytime-anywhere wireless access to workforce management solutions is also popular today. Employees in the field can submit labor information, such as start and end times for a specific job or work order, into the system. This also gives employers and employees the option of telecommuting.
Telecommuting is easy in today’s world of technology. Using e-mail, instant messaging, wireless internet access, and the telephone, employees and employers can easily be contacted any time of day. The cost to employers is less than $100 a month for an employee to work at home, and the benefits of telecommuting are huge: reduces absenteeism, increases productivity, and attracts and retains good employees. While telecommuting is not right for every employee, it is an option that didn’t exist several years ago.
So, what about reading brainwaves? Well, although still in the experimental stage, it is available today. Scary? Sure, but the possibilities are endless and unknown. The next 10 years promise to be very exciting as our technology continues to evolve.
Mr. Roger Smith, CPP and payroll consultant, is presenting the on-demand webinar: Payroll Technologies: Past, Present and Emerging. Mr. Smith has an extensive background in the payroll industry, recently retired from EDS, and is a frequent speaker for the American Payroll Association. View his presentation before June 22, and you will be entered into a drawing to win a copy of the BLR Special Report on FLSA Overtime: Making Your Way Through the Exempt/Nonexempt Minefield.
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