Archive for December, 2013

December 16, 2013

6 Simple Automations To Drastically Cut the Cost of Payroll Production


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It is generally taught that there are three way to increase your profits in business:

  1. Increase your customer base
  2. Increase your prices
  3. Sell more to the customers you have

Perhaps because it’s not related to sales & marketing, one very important way to increase your profits is usually missing from the list – reduce the cost of production.

Whether your Payroll Service is a pure cost centre or an income generating shared services centre or  BPO, there are key areas where significant dollars can be saved by implementing automations.  Here are my top few:

1. Automate masterfile changes by implementing employee self service

  • Allow your employees to change their own addresses, voluntary deductions, bank accounts and so on to minimise the volume of work, eliminate late or non-submitted forms and alleviate the need for a close off period days prior to the payroll process date

2. Automate manual timesheet data entry by creating excel upload templates or entry & approval via employee self service

  • If your payroll team is still entering individual timesheets into your payroll/HRIS system, it is time to reconsider your process and/or your payroll/HRIS system and the cost to the business of the practice of manual data entry

3. Automate the payroll report production process by producing batch reports rather than manually creating each report, each step of the way

4. Automate payroll data validation by csv data dumping your payroll reports into an excel balancing sheet filled with delightful cross checks and validations to completely automate the balancing of payroll reports. No red pen or calculator required.

5. Automate payslip delivery by emailing payslips or uploading them to employee self service.  The practice of printing and delivering payslips by hand or post is antiquated and a complete waste of business revenue.  In a world where the average person owns 2.38 mobile phones (not precise science there), the argument that people won’t be able to access their payslips is almost a redundant argument

6. Automate & minimise employee enquiries by providing employees with the information pre-emptively, on their payslips or by implementing employee self service

  • If you analyse your enquiries you will be able to substantiate your calculations and understand exactly what information should be pre-emptively provided to employees
  • If you can, create reports/forms for your employee self-service for each of the requests that are usually a time consuming, manual process in the payroll service, such as employment and earnings verifications for employees, reproduced group certificates or year end payment summaries for tax, forms required for Centrelink/Social Security.  All the data is accessible by the system and just needs to be configured to magically appear in each report/form.
  • For those enquiries that cannot be resolved with employee self service, such as adjustment or termination payment calculations, simply create excel based auto calculators in excel.  If you get a little tricky you can have a multiple sheet workbook that you manually enter the required data into, then it calculates the termination payment in full, populates the termination advice to the employee and populates any associated forms that would be required with a termination payment

Based on a smallish payroll of 1,000 employees, the cost savings can be quite astounding as you will see from the sample calculations below (no amount of manipulation would allow me to insert a spreadsheet):

(Based on a Payroll Officer earning $50k p.a. + 25% Oncosts)

1. Implement Employee Self Service

* Automate Employee Masterfile Amendments (Average of 10% of total employees requiring record changes each pay, therefore 0.05 mins for 10 transactions per week = 26 hours saved per annum

* Automate Leave Form Processing (Based on 4 leave forms per employee per year, therefore 0.05 mins for 76.92 transactions per week = 200 hours saved per year)

* Automate Employee Enquiries (Based on 20% of employees enquiring each pay, therefore 0.17 mins for 200 enquiries per week = 866.67 hours saved per year)

2. Automate Time Sheet Data Entry (Based on 80% timesheet/20% autopaid, therefore 0.05 mins for 800 timesheets per week = 1,872 hours saved per year)

3. Automate Payroll Report Production (Based on 5 payroll reports per pay, reducing the time by 50% = 6.5 hours saved per year)

4. Automate Payroll Report Reconciliation (Based on 5 payroll reports per pay, reducing the time by 50% = 6.5 hours saved per year)

5. Automate Payslip Delivery (Based on 0.03 mins per payslip, 1000 payslips per week = 1733.33 hours saved per year)

6. Automate Manual Processes & Calculations

* Adjustment Payments (Based on 0.2% Error Rate, 1 hour per adjustment handling time from calculation to payment = 52 hours saved per year)

* Termination Payments (Based on 1% Turnover Rate, 1 hour per termination handling time from calculation to payment = 260 hours saved per year)

Original Cost of Manual Activities Listed Above – $203,146 plus payslip purchase price @ $0.10 per payslip = $208,346

Savings Realised – 1399.67 hours, plus payslip purchase price @ $0.10 per payslip (additional cost gains may be made from the printing & distribution costs)

Total Savings per annum = $164,075

As you can see from the massive cost savings available for 1,000 employees, it is well worth investing your time to analyse your payroll production costs and discover a wealth of cost and efficiency opportunities.  Ensure you take into account the potential cost savings against the required investment in employee self-service, but there should still be a pile of change left over.

If you have any questions you would like to raise personally, please email Louise Vidler at The Professional Payroll Manager.

© 2013 Louise Vidler T/As The Professional Payroll Manager.  All rights reserved.

All materials contained on this web site not otherwise subject to copyright of other parties are subject to the ownership rights of Louise Vidler T/As The Professional Payroll Manager. Louise Vidler T/As The Professional Payroll Manager authorises you to make a single copy of the content herein for your own personal, non-commercial, use while visiting the site. You agree that any copy made must include the Louise Vidler T/As The Professional Payroll Manager copyright notice in full. No other permission is granted to you to print, copy, reproduce, distribute, transmit, upload, download, store, display in public, alter, or modify the content contained on this web site.

December 8, 2013

Turn Your Payroll Service into a True “Service Excellence” Centre


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The term ‘Payroll Service’ is often an oxymoron, for in many organisations where there is a payroll department, there is a complete lack of actual customer service.  Please don’t take offence, I know we all work hard and have relenting deadlines to achieve, but we as an industry need to take a good hard look at instilling service excellence, and some individuals in the industry, just need to learn to treat others as they would expect to be treated.

Almost every day of your life you have a customer service experience.  You owe it to yourself and your customers to take stock of these experiences and note how each interaction affects you emotionally and ask yourself honestly, if your customers experience the same emotions in their dealings with you or your team.  The basic emotions people experience in a customer service situation are one of: Joy; Satisfaction; Frustration; Disappointment; or Anger.  It is up to you how each customer walks away feeling.

There are a few things in payroll I am an advocate of: compliance, efficiency, integrity and service excellence.  The first three are relatively easy enough to turn the tables on with some effective management and some good business practices.  Service excellence though, is the tough cookie.  You, your team, your culture, your leadership and your business processes will determine the level of service that is achievable.

Important steps to achieving service excellence are:

  1. Understanding exactly what service excellence means
  2. Understanding the current perceived level of service – yours, theirs and the reality in between
  3. Taking a serious look at your interactions with your customers (every single person or entity you transact with) to identify your “moments of opportunity”
  4. Deciding what service excellence would actually look and feel like at each of those “moments”
  5. Setting the wheels in motion to elevate your service standards and practices

Understanding Exactly What Service Excellence Means

Service is defined as an act of helpful activity; to help or aid; to do someone a service

Excellence is defined as the fact or state of excelling; superiority or eminence

To achieve service excellence, you don’t need necessarily require a budget, you don’t need to employ a management consultant and it’s not entirely necessary to implement an enquiry management system.  You do need however, to make a decision as a team to define what the standard will be and commit to exceeding it, and you absolutely will need to build solid processes and business systems to consistently achieve excellent outcomes.

Understanding the Current Perceived Level of Service

In the standard payroll office, you usually never hear from your main customers – the employees – unless they perceive there is a problem.  You don’t have people ringing in to thank you for a pay well done.  So if your phones are ringing off the hook, you have some serious work to get through to become a service centre of excellence.

If your phone is not ringing off the hook with payroll queries though, don’t think you can sit back and relax.  Are your customers happy?  Are management satisfied with your performance?  Do people in the organisation value your work?  Just because the pays are being processed correctly, does not mean that your customers are happy with your service.

You will need to obtain some brutally honest information from employees and management, such as what they think of your service; what they would like to receive from you; where they think you could improve; and what they think could be done differently.

Going down this road can be a difficult one for some, as you will always receive some seriously negative feedback, at the very least.  Your opportunities though are endless, as you can justifiably and quantifiably turn around the service levels and increase staff morale.  If you ask the right questions, you will receive invaluable information to assist you in turning your payroll process into a valued service centre.

There are various ways to find out how your service is perceived:

  • Conduct a service survey with your management and employees
  • Conduct open feedback sessions with small groups of your customers
  • The simplest one of all – constantly listen to what people are asking and telling you in their daily queries

In addition to understanding what your customer’s perception of your service is, it is imperative to understand your payroll team’s perception of their own service.  Do they think they are providing brilliant service?  Can they identify opportunities for improvement?

As anyone in service or management should know, the key to identifying service opportunities is to understand the “pains”.  Wherever someone experiences an issue, a dissatisfaction or cries out for a better way, these are the where the opportunities to implement improvements exist.

If your customers have difficulty accessing information, this is a “pain” that can be addressed by making it easy for them to access the information they need.  If your payroll team are overwhelmed with enquiries, you can address your team’s “pain” by implementing a FAQ or building a system to ensure the common queries are answered pre-emptively.

If management are consistently seeking reports from your team, build these in to your processes as automated functions and make them available for use by management.  The possibilities to eliminate pain points are endless.

Take a Serious Look at Your Customer Interactions

Once you’ve asked all the right questions of your team and your customers to establish the perception of your service, you then have to fill in the reality between the two, by taking a good hard look at how your service is conducted.  Ask the following questions as a starting point:

  • How does your team interact with customers?  Are they helpful?  Are they respectful?  Do they welcome customer interaction or dread it?  Do they explain or blast policy or rules at them?  Is their conduct of an excellent standard?  Are customer queries an interference to their work at hand?
  • What do you provide? What is the standard of it?  Is it professional?  What purpose does it service?  Is it useful?
  • Is there quality and efficiency in the processes involved in responding to enquiries?
  • What are the commonly asked questions and requests?  Should you be pre-empting these and delivering information and resources to minimise or eliminate the questions and requests?
  • How difficult is it to do business with your payroll service?  Is someone available at all times to respond to questions?  What are the wait times or turnaround times on responses?  Do you enforce unreasonable shut off times?  Do your team members send all calls to voice mail when they are busy?

Deciding What Service Excellence Will Actually Be

You, as the Manager, need to determine what the acceptable service standards will be and what “excellence” will look like.  Based on your team members, your opportunities and constraints, based on the outcomes required of your position and based on the political arena of your organisation.

If you have a Service Level Agreement (SLA) in place, obviously you will need to ensure you continue to meet, or exceed, the service levels defined in the agreement, but in the process of transforming your service levels, this may also be a great time to revise the SLA and make it more meaningful and service oriented.

One of the things I am always astounded by is that payroll teams are happy enough to shout that payroll is a “critical” business process when it comes to requiring the support of IT and other teams to get the payroll into the bank accounts on time, but they don’t always assume the same “critical” determination to an individual employee whose pay has been missed or short paid.  This is a key area for improvement and would be one of the employee’s greatest pain points in many organisations.

Recognise that while a non-payment or a short payment to an employee may simply be perceived as a transactional error to someone in your team, who has more important tasks to achieve today, to the employee though, this may mean the difference between feeding their children or putting petrol in the car for another week.  It is never our job to judge, but to deliver on the promise of on time and in full payment of wages.

Setting the Wheels in Motion to Becoming a Service of Excellence

Implementing a Service Charter or a Service Standard would be a great starting point for determining the base line of your service levels.  As the Payroll Manager, you must start with a foundation of what you want your Customer Service Charter to be and then involve your staff to help build it.

I would recommend calling for submissions, then building a draft document for your team to work on further.  This approach shows them that you value their input and gives them ownership from the onset.  Once the charter or standard has been established, have it printed and have all team members sign the document.  Post this document in a prominent position in your work area and if you are really committed, hand it out to your customers.

Further to the Charter or Standard, you then need to start drilling down on particular pain points and moments of opportunity, and start working out how you can transform your service with each of these.

Included in the foundations to great customer service is creating relationships with them and respecting them.  Work on ways to get your staff to meet, to learn about and to put faces to the names they interact with on a daily basis, such as:

  • Include staff members on site visits
  • Place photos of customers and little snippets of information where your team can see it constantly and ‘get to know’ their customers
  • Keep a database on your customers and log all their calls, issues, complaints, praises
  • Have your staff take turns to ensure that every single customer is contacted on a regular basis to ask if there is anything they can do for them to improve the service.

Embed the achievement of service standards into your team’s position descriptions, performance objectives and outcomes and as a baseline measurement for salary reviews to “encourage” your team to deliver on the standards and to understand the importance of servicing their customers well.

Start building the tools, resources and processes to deliver your new levels of service.  Begin setting in motion as many small changes as you can, while simultaneously working on the larger scale improvements.  Here are just a few ideas for you:

Employees

  • One of my pet hates is “onboarding”, where there seems to be a fairly common care factor of zero that a new employee is desperately waiting on their first payment.  The number one task of a payroll service is to pay employees correctly and on time and many fail to achieve this for new employees.  New employees sometimes have no idea when they will receive their first payment.  If they were lucky enough to have completed their paperwork prior to commencing, they presume they are set up in the system.  Communicate with them and with the person responsible for their paperwork, make it easy for them, give them expectations and delight them with your efficiency
  • Attempt to be available to your employees during their working hours, which is difficult if your business has 24/7 shifts, but technology exists to stretch your opening hours beyond 9-5
  • Give them information that assists them to make informed and timely payroll decisions and submissions
  • Don’t shut off the phones because you are busy processing payrolls or having a meeting.  Always have someone available to pick up the calls
  • Make it easy for people to reach the right person, post it on the lunch room walls, post it on the intranet, print it on the pay slips, give your supervisors and managers a handbook, do what you have to do.  Let them know who is who and who is next up the line if they run into issues
  • Build an employee handbook or an intranet knowledge base to share deadlines, FAQ’s and include updates on information such as taxation changes, public and school holidays, employee benefits and more
  • Employee self-service is still unheard of in many businesses even though the benefits and ROI are well documented.  If you haven’t got it, start pushing for it and if you have, start exploiting it for all it is worth.  I know of major organisations who refuse to allow their employees to edit certain areas of employee self-service, specifically bank accounts as they believe it will cause more drama if the employees enter them incorrectly.  Make the employees explicitly aware of the format required and the consequences of getting it wrong and you shouldn’t have any major issues, considering it’s in the employee’s best interest to get it right

Internal Customers

  • Become a vital information resource for the business units you serve by understanding what the information requirements are and finding ways to consistently provide automated information that they can access, rather than continually request from you
  • Understand the deadlines that others are working to in order to prioritise the requests for information
  • Understand what business managers are attempting to do with the information they request, so you can provide it all correctly in the first instance and not have to reproduce reports or rework data and calculations

External Customers

  • Requests for information from external sources and verification of employment queries can be a relentless and time consuming exercise.  Put in a system to simplify the process, mandate internally what the target turn-around times will be and create a report in your HRIS system that automatically produces the data to make the process efficient.  If you have the luxury to do so, allocate these automated tasks to a junior level team member.

Once you start implementing service focussed improvements into your operations, your customers will see and feel the shift.  You will earn greater respect from your customers because they will know you value them.  You will enjoy stronger business relationships with people throughout your organisation and while your team may not be so thankful in the beginning, they will be once you’re on the right track and they are under much less pressure.

Service excellence is achieved by doing the thousand little things right, and working your butt off to consistently do all those little things with excellence.

If you have any questions or some thoughts you would like to raise personally, please email Louise Vidler at The Professional Payroll Manager.

© 2013 Louise Vidler T/As The Professional Payroll Manager.  All rights reserved.

All materials contained on this web site not otherwise subject to copyright of other parties are subject to the ownership rights of Louise Vidler T/As The Professional Payroll Manager. Louise Vidler T/As The Professional Payroll Manager authorises you to make a single copy of the content herein for your own personal, non-commercial, use while visiting the site. You agree that any copy made must include the Louise Vidler T/As The Professional Payroll Manager copyright notice in full. No other permission is granted to you to print, copy, reproduce, distribute, transmit, upload, download, store, display in public, alter, or modify the content contained on this web site.

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