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Payroll management best practices

“By moving to an e-payroll platform, we’ve been able to slash overall payroll costs by 81 percent over a one-year period.” - Mark Hopton, Manager, Corporate Payroll Services, American Greetings

A payroll system that adheres to best practices can bring you significant dividends - savings to the tune of $630 per employee per annum - as a study conducted by The Hackett Group, an Atlanta-based benchmarking services provider, found.

So what are these best practices that have been saving precious time and dollars for companies across the board? Here goes.

Do away with legacy payroll systems: Paper-based payroll systems call for a constantly increasing requirement for space and bring in massive inefficiencies. Other traditional computer-based systems such as Excel too are plagued with issues. We recommend, instead, modern cloud-based software to manage the payroll needs at your organization. These come with a host of benefits, such as near-zero downtime and elimination of the need for payroll-related IT infrastructure.

Integrate payroll with other internal systems: A number of internal systems, such as time and attendance monitoring, leave, human resources and expenses are closely linked to payroll. To get the maximum ROI from your employee payroll management system, it has to allow information from all these systems to flow seamlessly into the payroll system. This brings together islands of automation to achieve significant synergistic performance gains.

Consolidate and optimize pay cycles: Companies often have different pay cycles in place for different categories of employees. Minimizing the number of pay cycles can mean a reduction in the number of times payroll has to be run for a given period, thus bringing time and effort savings. Also, moving out of a biweekly pay cycle to bimonthly or monthly pay cycles has the potential to reduce payroll-related costs by no less than 30 to 50 percent. This can be the single largest factor in reducing the payroll cost overhead.

Outsource if and when appropriate: Outsourcing may be the right option for companies that do not have the required in-house expertise to handle global payroll. However, modern HR Software and payroll software comes with extensive hand-holding and training through webinars, multi-channel support desks, and more. These learning opportunities ensure that the required domain expertise is built up.

Build powerful reporting and analytics into HR and payroll software: Payroll often represents the largest cost head in companies. The critical information present therein can, therefore, be used to generate reports that will make trends clear to the leadership, or even determine the company’s future course of action. The availability of real-time information around payroll also makes it possible for companies to identify impending cost overruns and course-correct on the fly. Better decisions can be made about hikes, overtime, bonuses, cost centers and more.

Balance transparency and confidentiality: While transparency regarding the payroll process can mean far fewer queries to HR and lead to improved employee satisfaction, sensitive payroll data, such as individual employees’ salaries and banking information, is to be kept confidential.

Don’t reinvent the wheel; replicate these best practices which have delivered results time and time again and achieve higher efficiency and facilitate strategic decision making around payroll.