Process Modeling to Reduce Payroll Processing Costs
Today’s global economy has a common theme – cut costs. Yet, at the same time, organizations do not want to give up quality or results. In fact, better quality and better results are expected. As a payroll professional, how do you accomplish this and how do you get started? Process modeling can be a good method to help you get started.
Process modeling communicates an understanding of current practices and facilitates process improvement. Often times, there are initiating factors or events that require process improvement. In the payroll area, for example, it could be that labor law or union contract compliance is an issue, or perhaps the employer took notice of current payroll processing costs. Both of these examples are important, and even critical, to an employer.
Process improvement is a three-step routine. First, understand the current state, then design a better system, and finally develop a game plan to get from here to there. You do not want to get from here to there alone – it is more effective to organize a team of individuals with different skill sets and knowledge who want to participate.
There are three process modeling methods: continuous improvement, benchmarking, and reengineering. As a team, decide which process modeling methodology will work for the organization.
The continuous improvement method saves time and money because there are smaller ongoing changes. The disadvantages are that the improvements are incremental and there are none of the out-of-the-box ideas that can often be the best ideas.
Benchmarking methodology compares your organization with other organizations to see where you stand. This can be effective if you have the money and resources to adopt best-in-class processes other organizations have already implemented. On the other hand, this can take away employee involvement because you are implementing ideas already in motion.
Reengineering methodology incurs time and often times the cost associated with it, but it allows you and your team to define the ideal process using a clean sheet. An example mentioned before was to create a process model to decrease payroll processing costs and implement it in your live environment.
The first step in reengineering is to gather data on current payroll processing methods. Where are the costs incurred? Is your organization using a manual process to collect payroll information, such as hours worked, labor distribution, overtime, as well as using manual processes for workflow management, including approvals for timesheets, time-off, etc.?
To determine whether an automated process would decrease costs, the team gathers information on the number of labor hours that were spent on clerks manually entering and re-entering data, managers reminding employees to turn in timesheets and then someone approving those timesheets. Are the timesheets paper-based and, if so, what is the cost of the materials? The list on possible payroll costs is long, especially for manual processes.
The team may find that an automated system significantly reduces labor time and the ROI can be seen in less than year. In addition, payroll personnel and managers have more time to do other jobs and be more productive.
As a team, you gather the information to create a process model that will work for the organization, get the approval from the top, and make your employer happy. |
