Archive for ‘HRIS System’

February 17, 2014

Why an In-house Payroll Service Needs to Differentiate Itself from the Competition


No in-house payroll team is safe anymore.  The ever present reality is that if your organisation hasn’t already looked into the viability of outsourcing payroll production, in an attempt to realise significant cost and efficiency benefits, it is only a matter of time until it does.

Payroll BPO is a Global Competitive Market

At the local level you compete against small business operators claiming to be the most experienced outsourced provider in the market and there are bookkeeping and accounting firms, payroll associations and HRIS software providers all supplying payroll BPO services.  Then there are those businesses whose core business is Payroll Business Process Outsourcing (BPO), who vary in size and capacity enormously.  The global market has added extra dimension to the BPO market, creating massive competition in cost competitiveness.

All BPO’s are Flogging the Same Horse

Find me a Payroll BPO who is not selling the promises of:

  • The realisation of efficiencies and time savings
  • Reduced production costs and overheads
  • Continuity, Risk Management and Total Compliance
  • Superior Speed, Technical Expertise
  • Greater operational control for the business
  • Technological Superiority
  • Reduced Recruitment Costs and Staffing Flexibility
  • The ability for your business to concentrate on it’s your core business

Can BPO’s Really Achieve the Miraculous?

The ability of any BPO in the marketplace to achieve this remarkable list of business improvements relies on many interconnected factors… many of which aren’t fully understood by those in the deciding seat.  It is important to understand what real differences exist between in-house and outsourced payroll functions and whether outsourcing is really the miracle it’s sold as.

Here are just a few areas that require thorough analysis in the decision making process, rather than blind belief:

HRIS System Capabilities

The quality and capabilities of a BPO’s HRIS system will depend on the size of the BPO business.  The corporate payroller who decided to start a payroll outsourcing business will be utilising an off the shelf accounting package or a lower cost cloud based system.  National and global BPO’s will be building robust, client tested systems and will have more experience in implementations, which should guarantee a smoother transition… unless that system needs to be customised heavily to achieve your requirements, which can lead to untested and unparalleled disaster.

A true understanding of the capabilities and the shortcomings of the systems used by BPO’s will enable you to make a real comparison between your in-house system and the BPO offerings.

Business Processes

BPO’s would not survive without solid business processes and strict deadlines.  When working with a BPO you will be afforded windows of time for processing and queries and your own business systems must be advanced enough to succeed in your business relationship and to get your payroll delivered on time, every time.

If your in-house system is in chaos due to data integrity issues, receipt of late inputs and misconfiguration of your current payroll system, you will not realise some magical transformation by simply outsourcing this mess to a BPO.  Garbage in will always equate to garbage out.

Economies of Scale

The whole basis of achieving economies of scale is to define the one process that fits all, allowing for only slight deviations for individual business requirements.  If your business can fit itself into the BPO’s processes, all is well, but if your business requires deviations to the BPO’s standard business processes and has a list of required value added services, the cost of the service rises proportionately.

Cost Savings

I’ve managed two outsourcing services and it has always bewildered me why people buy in to this.  Cost savings are achieved by any payroll service, in-house or outsourced, by minimizing the time it takes to produce a payroll and the ancillary costs associated with payroll production.

If an in-house service wants to ensure their longevity, then my advice would be to get your costs down to bare minimum by implementing automations, reducing paper and payslip costs, maximizing your HRIS system and establishing if the current wages cost of the payroll team can realistically be reduced.  The people in your organisation who will be, or who currently are, looking at outsourced options, will see cost as a major incentive.

All BPO’s have a stock standard service that basically includes accepting an upload file or your business entering the data into their system; performing the payroll calculations and producing the stock standard reports.  If this is all you want from payroll, then by all means jump in and realise those cost savings.  If however, you want a little extra here and there, grab your wallet and watch those cost savings begin to diminish.

Let You Get On With Managing Your Business

This selling point is touted by every BPO provider globally, but I believe it’s a myth as the business only outsources a portion of the total end to end process.  Someone at the business still needs to create and manage the inputs; check and authorise the payroll reports; attend to the employee, management and third party enquiries; reconcile the payroll; perform the management and statutory reporting functions; and above all else ensure the compliance of the data and the process.

Additional Charges for Out of Scope Functions

Want a report that’s not in scope? Want to change the pay rates due to an award change or salary increase?  Want to retrieve historical data from two years ago? It can be quite alarming, once the contract is signed by a business owner or manager, who may have little to no concept of the requirements of payroll, just how much additional information needs to be retrieved from the HRIS system.  Much of this will be out of scope and will cost the business, either in the charges for the reporting or for the time it takes in-house to devise a workaround.

Superior Technical Expertise

This one always gets me… how can this sweeping statement be made by some BPO’s when your organisation may already employ a perfectly competent payroll person, or even a whole team of them.

Some larger BPO’s may in fact employ specialists in employment law, or IT and so on, but that may not necessarily translate well into the product or service the BPO customer buys.  Before a business buys in to the guru status, it should understand exactly how much specialist knowledge exists in its own business via its payroll team members and establish how the gurus will provide an actual realisable benefit to their payroll production, if they were to outsource the payroll.

Total Compliance

The way the compliance dream is sold to businesses concerns me, as it appears to the buyer that simply by outsourcing your payroll, you are guaranteed that every facet of your payroll all of a sudden becomes compliant, and you needn’t worry your little head about it ever again.  This is the farthest thing from the truth.

When you hand over the control of your organisations greatest expense and probably most organisations greatest compliance nightmare, you don’t cease to be liable… you don’t cease to monitor and examine… and more importantly, you should never cease to control.

The simplest configuration error, or the insufficiently tested customisation can wreak havoc on pay rates, tax, superannuation, salary packaging…everything.  Compliance in every facet and down to the tiniest detail, remains at all times the business’s responsibility, not the BPO’s.  Put simply, don’t buy in to the total compliance sales pitch.

Offering of an End to End Payroll Service

Hmmm… by whose definition?  I’ve always understood end to end payroll to be all of the processes from the receipt of new employee documentation and employee timesheets, through to the completion of all associated company and statutory reporting, and including all employee, management and third party enquiries and requests in between.

I’ve not seen a BPO yet that encompasses what my definition of end to end payroll is.  Nor have I witnessed a BPO yet that doesn’t require a designated person on the ground in the business to compile all of the data and be responsible for employee queries.

Risk Management

There are so many aspects to the risk management and mitigation of payroll that would be hard to fit into a paragraph, but a few of the main concerns to be addressed for those contemplating outsourcing are:

  • Disaster Recovery Plans and IT Risk Management
  • Risks to confidential employee and business data and bank accounts
  • Risk of BPO business failure/collapse
  • Fraud and Corruption Risks
  • Payroll Controls (including authorisations and error prevention and capture)
  • Compliance Risk
  • Quality Control Frameworks
  • Country Specific Risks

One More Reason Stakeholders Seek Alternative Solutions

Noise.  If your payroll service rings so loud in the ears of the stakeholders, consider yourself a branded target for outsourcing.  If you have a high error rate and there are constant complaints making their way to the leaders of the business, get your error rates sorted very quickly and eliminate the noise.

Understand Your Competition

The point has already been made… every in-house payroll service is in competition with the sizeable BPO market.  In any business, you must understand… truly understand… who and what your competition is and what your competitors are offering, in order to continue to compete against them.

In-house Payroll Managers who are blind or oblivious to this, need to wake up.  BPO’s are knocking incessantly on the doors of the decision makers in your business, trying to get their foot in the door.

Now that you understand more about the BPO Market and how the business you work for is on the prospect list of a gazillion BPO providers, you have two choices… start looking for a job in a BPO or start ensuring your in-house payroll service remains a viable business option for your organisation.

Differentiation is One of the Keys to In-House Survival

For any business to outshine its competition, it needs to identify or create differentiation between them and all the other operators in the market.  Their customers must be able to clearly see the points of difference and those points of difference had better be ones that draw customers in, rather than turn them away.  Your in-house payroll service is no different.

Outsourced service providers all over the world are professing how amazingly more cost effective your organisation’s payroll process will be.  They are claiming that their world standard business processes will not only enable outstanding efficiencies, but reap the rewards of economies of scale and all but ensure the organisation’s payroll compliance.

Do yourself and your payroll team a favour and start raising the bar on your service, analysing and minimising your costs, elevating your team’s capabilities and eliminating any “noise”… and start today!

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

© 2014 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.

Advertisements
February 2, 2014

Reading Contextually Between the Payroll KPI’s


Image
The Minimum Essentials Payroll KPI’s outlined the KPI’s all payroll services should have implemented and touched on benchmarking.  Benchmarking can be dangerous territory for the unitiated, because it is so subjective.

Simply comparing your end result numbers against another organisation, industry or a global best practice and deciding that your payroll service must work to achieve best practice may result in degradation of your service levels and compliance.  You must apply “context” to the benchmarking data, in order to truly achieve any level of benchmark against others.

To apply the “context”, it is essential to understand that behind every number is a complex array of factors including:

Scope of the Study

First and foremost, the scope of the benchmark study and the compilation methods of the data used to calculate the metrics, especially how the cost of payroll production has been calculated.  The cost of payroll production is a base line measurement for a major part of the benchmarking process, so it is important to ensure that everyone is compiling their costs using comparable methods and with the same definition of end to end payroll.  Company “A” may interpret end to end payroll as the process from receipt of timesheets into the payroll service to the deposit of funds into employee bank accounts, whereas Company “B” will rightly incorporate the compilation of employee timesheets and production of post payroll reporting, and include the cost of all employees involved in the process.

Automation & Integration of Systems

Automations and integrations achieved by the HRIS and related systems significantly reduce the cost of payroll production as automation plays an integral role in the efficiency of the payroll service.  If your payroll is fully integrated with time and attendance and employee self-service and the general ledger, you are half way there.  Every process that is performed manually, multiplied by the number of times the process is performed, adds up to a significant potential cost saving over the course of a year.

Volume of Management & Statutory Reporting

Management reporting and the volume of it, varies from business to business and if you have the luxury of HRIS and related integrated systems that automatically produce the reports and email them to the recipient list you are miles ahead of the payroll service that is manually compiling data for management reporting

Statutory reporting is often an onerous task and the more data you can pull down from your systems, either as data into excel spreadsheets or as completed reports from your systems to automate the reporting processes will result not only in efficiency, but should also result in greater compliance by virtue of the reduced manual intervention.  The ultimate HRIS system for me would include one with the capability of calculating the payroll tax, fringe benefits tax and other required reports with all the bells and whistles that submit the electronic returns.

Method of Pay Slip Distribution

The automation of pay slip distribution can be a giant cost and efficiency gain to organisations that is under rated and under utilised by so many organisations.  If your organisation is taking the time to print, separate, seal, collate and physically send pay slips across the organisation, it’s time to start asking your employees if they’d like to receive their pay slips via email and/or investigating the return on investment of employee self-service.

When benchmarking your payroll service against another, factor in the varying methods of pay slip distribution, especially where there are sizeable organisations with a national presence.

Business Process Automation

Automations achieved by business processes need to be taken into account when analysing one organisation’s KPI’s against others:

  • If your payroll service operates with highly manual processes and a considerable quantity of hard copy forms, you will never achieve best practice in efficiency and as a result of that, cost.  Best practice efficiency results from the automation of processes such as employee self-service to enter leave applications, supply of information to reduce employee queries and upload of information by HR/P&C or employees to minimise transactional processing by the payroll service.
  • Physical data entry of timesheets by the payroll service is another detriment to the achievement of efficiencies in comparison to payroll services that utilise excel uploads, time and attendance system integrations and other automated processes.
  • Physical data verification of timesheets and employee information is time consuming and should be minimised as much as possible.  This is said, on the absolute proviso that comprehensive audit and validation checkpoints and reports are produced and verified to ensure that all potential errors will be identified in the process.  If you cannot achieve complete automation, take what you can and implement baby steps within the various components of the payroll process.
  • The number of autopaid employees, which is usually reserved for salaried employees and those permanent employees who don’t vary their hours or work overtime greatly.  This is not a benchmark that can usually be addressed by the payroll service, as it is dictated by legislation, award coverage and organisational policy.

Complexity of the Business and Its Payroll

Greater complexity results in a higher volume of business processes and the aim should be minimise and eliminate the complexities, where possible.  Some complexities such as number of business entities or industrial agreements cannot be changed and the objective is to achieve economies of scale in the payroll processes.

When comparing organisations for benchmarking purposes though, it is useful to understand the level of complexity involved in order to truly benchmark one payroll service against another, for example:

  • Company “A” may be a single registered entity, whereas Company  “B” may be made up of fifty separately registered entities.  Company “A” runs 52 weekly payrolls per year, whereas Company “B” is required to run 2600 weekly payrolls per year, which will result in a huge disparity between the two companies cost of payroll production and their efficiencies.

The Level & Volume of Services

One payroll service that processes only uploaded timesheets, does not have payroll accounting or statutory reporting performed within the payroll service and does not have ancillary employees benefits management functions will appear to outperform and be more efficient than an organisation whose payroll service includes manual timesheet entry, a great volume of management and statutory reporting and complex benefits management.

Additionally, the service level demands on the payroll service are hard to measure but definitely come into play in one service’s ability to outperform another.  The difference between an organisation that has a dedicated support line, or a policy where employees can call their payroll representative directly at any time of day and an organisation that has an archaic policy of allowing employees to contact payroll only at certain times of the day will lend weight to the payroll service’s ability to achieve best practice efficiency.

The volume of enquiries is a standard measurement for payroll best practice and will be determined by a multitude of factors, including the level and volume of services provided plus the error rates being achieved by each service and a multitude of other organisational or industrial issues.

The Salary Costs of the Payroll Team

A big factor in the cost of payroll production is the cost of your payroll team, and again requires a multitude of considerations before simply benchmarking one company against another, such as:

  • Does your organisation pay award rates or market rates?  How do the salaries of your payroll team per FTE compare to those you are benchmarking against?
  • Where is your organisation located? A capital city centre will always demand higher salaries than a regional area.
  • What are the positions included in your payroll team?  Do you have only transactional payroll processing staff, or do you have HRIS Systems staff, analysts, payroll accountants, employee benefits administrators, multiple leaders and managers and such?  The inclusion of payroll team members in addition to the purely transactional staff is always going to show a higher payroll production cost per FTE and as such needs to be taken into consideration when comparing the data.

Additional Variables Impacting KPI Analysis

Other variables that need to be analysed contextually include:

  • The number of employees processed and/or supported per Payroll FTE should be interpreted taking into account all of the factors discussed above.  One payroll team member can quite easily produce 1500 pays per week, while another would struggle to produce 250.  This is based not only on the competence of the team member, but also on the level of automation, complexity and what portion of the end to end payroll function each of the team members are performing
  • Data Quality is of prime importance to the achievement of compliance and efficiency and where one organisation is falling behind another due to data quality, a valid argument with cost based analysis can be achieved to highlight the importance of Input = Output.
  • The volume of Out of Cycle Payments and Special Pays as a metric in a report can be read as a poor performing payroll service who clearly needs to implement some payment policies and undertake some cause analysis on these “errors”.  On the other hand, it could also be read that organisational policy or awards dictate a service standard that the payroll service has to adhere to, or that the organisation needs to support the payroll service in having all staff understand the importance of data quality and timeliness.
  • The cost of Out of Cycle Payments and Special Pays will be a key driver for management to address, where they can, the organisational policy to improve the volume and cost of out of cycle payments.  When you consider that an out of cycle payment takes, at the very least, half an hour from calculation to completed payment, this raises the cost of payroll production significantly if you have high volumes.
  • Retrospective payments are a contributor to cost of payroll production whether you have a system that automates the process or not.  Aside from the calculation of retrospective payments, they usually have to be checked as a separate process within the payroll process and cause fluctuations/variations in the payroll (employee and company totals) due to back payments that again have to be manually verified as a separate process step.
  • The employment turnover of payroll staff will add to the costs and efficiency of the payroll service, but is something that will not be understood in the realm of benchmarking.  An individual organisations turnover can only be understood by understanding the data behind the data.

There is No Like for Like in Payroll

Any comparison you make of your KPI’s to others is a subjective comparison and the contributing factors must be taken into consideration, as best you can, to make a considered judgement of your achievements against best practice.

In payroll benchmarking, there is really is no like for like due to the variances in operating systems; policies, processes and practices; complexities; and of the interpretation of “end to end” payroll.

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

© 2014 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.

January 20, 2014

The Minimum Essential Payroll KPI’s


As a Payroll Manager, you are responsible for managing what is the greatest cost of most organisations and with that comes the continued attention of Finance, C-Level Management and the Board.  You are being monitored and usually measured on cost and efficiency and you are always at risk of being outsourced to a more viable option.

As a manager of a service offering in your organisation, you need to be a “business” manager who is focused on achieving organisational goals and outcomes, on providing service to your “customers” that could not possibly be matched by competitors and on the cost of payroll production.

If you are not already measuring, monitoring and acting upon Key Performance Indicators (KPI’s) in your payroll service, you need to start NOW.

KPI’s are quantifiable indicators that reflect the organisational goals and are supposed to be drivers of change and measures of progress.

Payroll has long been viewed as a purely transactional processing cost centre, whose only organisational goals are to minimise the cost of processing and keep payroll noise to an absolute minimum.  While these are primary goals for cost reasons, many other complexities come into play as to why payroll costs what it does.

Only by measuring and taking calculated steps to improve the KPI’s, will you be able to truly reduce payroll costs, as many of the reasons for the cost of payroll are completely outside of the Payroll Managers control such as data integrity, industrial complexity and statutory requirements for example.

Personally, I have a few issues with the apparent simplicity of payroll KPI’s and the comparison of organisations against each other, or against best practices.  The measurement of cost, transaction volumes and time to complete tasks alone does not truly measure the performance of a payroll team as there are an abundance of variables coming into play for every number recorded.

No two payroll operations are like for like.  There are different operating systems, differing policies and company practices, differing complexities and differing definitions of end to end payroll.

I also believe that the global standard for compilation of payroll KPI data misses three very important categories: Service Excellence, Best Practice Business Processes and Compliance.

A payroll service’s primary function is to produce on-time, compliant employee payments… but getting the money into employee’s hands is far from the end of the payroll process.  Management and statutory reporting can be a huge portion of a payroll team’s workload, as can be the day to day enquiries of the workforce and other organisations relating to employee payments and financial matters.

Additionally, every payroll service on this earth, no matter their size, should aim to have best practice documented processes, checklists, segregations of duty and audit steps throughout the process, so this should be included in the KPI’s and be a major objective of the payroll team and the organisation.

These are the Minimum KPI’s Payroll Should Be Measuring as per global industry practice:

(HR/P&C KPI’s are excluded as the focus is solely on payroll production)

THE COST OF PAYROLL – intends to measure the cost to business of the end to end payroll process, which usually encompasses the sum total of wage and operating costs of the payroll team and the cost of implementing and maintaining HRIS and related systems.  For a true cost of end to end payroll, all people in the organisation that contribute to any component of the end to end payroll process should be identified and accounted for such as:

  • IT costs involved in implementation and maintenance of HRIS and related systems
  • Payroll Accounting costs
  • The wages cost of staff compiling timesheets for payroll input
  • Supervisors and management wages cost for time spent on payroll processing and enquiries
  • HR/P&C wages cost for time spent on the transactional components of payroll processing

The combined results of these metrics will assist you to determine the cost drivers of payroll production:

  • Cost of Payroll (Total Wage Cost All Employees) as a Percentage of Revenue
  • Number of Payroll Processes Per Annum
  • Cost of Payroll Production Per Employee Serviced  (Total Operating Cost of Payroll Service per employee serviced by the payroll)
  • Cost of Payroll Production per Payroll FTE

PRODUCTIVITY – intends to measure how productive the payroll team as a whole and individually are, by measuring the ratio of payroll people to the number of employees being serviced.  Additional metrics allow identification of issues affecting productivity.  Standard metrics include:

  • Number of Pays Processed Per Payroll Processor FTE
  • Number of Out of Cycle Payments Processed
  • Number of Retrospective Payments
  • Number of payments requiring manual intervention or follow up
  • Input that contains unclean data

EFFECTIVENESS – intends to measure whether the payroll team are achieving the required outcomes (on-time, compliant payroll production) and identify factors that may be inhibiting their effectiveness.  There are a host of metrics utilised to measure effectiveness and include:

  • Error Rate including Overpayments
  • Payroll Staff Turnover
  • Volume of enquiries and the speed at which they are responded to
  • Automations (including metrics on production time on manual forms/transactions, employee self-service, payroll processing automations, reporting, payslip production)
  • Data Integrity
  • HRIS and related Systems Integration

Additional KPI’s That We As an Industry Should Be Advocating:

SERVICE – regular measurement of the perception of service by those we serve, including:

  • A regular rating by employees to establish the current perceived level of service and identify improvement areas (perceived or real)
  • A regular rating by your internal customers and by supervisors and management on their perception of the payroll service
  • Regular ratings against the achievement of Service Level Agreements
  • Compilation of data on queries such as long term unresolved employee queries, union action as a result of payroll actions and other day to day categories of enquiry in order to identify service demands and improvement areas

COMPLIANCE – as a core function of the payroll service, measurement of the continued achievement of organisational and statutory compliance including:

  • Outcomes of audit reports
  • Compliance with company policies and procedures
  • Achievement of management reporting deadlines
  • Correct, on time and compliant statutory reporting and payments
  • Achievement against monthly internal compliance reviews
  • Breaches of employment legislation , award requirements, etc
  • Breaches of service level agreements

BEST PRACTICE BUSINESS PROCESSES – there is enough global evidence, supporting legislation and standards that demand that all payrolls should be produced utilising best practice business processes to ensure corporate governance, financial transaction security and so on.  The measurement of the payroll service’s achievement towards best practice business processes should identify:

  • All processes and sub processes in the production of payroll are documented and reviewed regularly for compliance and best practice
  • Documented checklists are utilised for payroll processes and signed off by relevant overseers at each vital step of the payroll process
  • Payroll balancing is exhaustive and each authoriser throughout the process understands the full extent of what they are authorising
  • Segregation of duties is well documented, authorisations are achieved and a process for monitoring each step of the payroll process exists
  • Error identification and fraud prevention process checkpoints are  included throughout the processes and checklists
  • Business policies are documented for information security, confidentiality, privacy, authorisations, etc and the requirements of each policy are implemented within the processes

If your payroll service is measuring and monitoring the metrics and KPI’s listed, I applaud your efforts!  If you are part way there, then I urge you to build in these additional KPI’s and identify further improvement areas for your service.  If you are not measuring, open up a new excel spreadsheet NOW! and start pumping in the numbers you need to measure your base line data.

The data on its own though is insufficient, as you need to identify targets for each of your KPI’s and monitor these as you implement your improvements, to ensure your efforts are actually achieving the intended outcomes.

Many payroll services benchmark themselves against others, or against industry, country or global best practice KPI’s.  Before deciding how you will utilise benchmarking, it is important to understand the dynamics behind the numbers.  Essential to your understanding though, is that you must drill down into the numbers to understand the measurement method of the benchmarks you apply; the complexities of the organisations you measure yourself against; the HRIS systems and processes in place; and a host of other reasons that another payroll service may be producing twice as many employee payments as your team, with half the staff.

Remembering that KPI’s are quantifiable indicators that reflect the organisational goals and are supposed to be drivers of change and measures of progress, it is imperative that you understand what the goals actually are for the payroll service and include measurements that will provide actionable data that identifies what issues exist and what improvements need to be implemented.

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

© 2014 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.

January 2, 2014

Are Employers Missing The Mark When They Demand Particular HRIS System Experience of Candidate Payroll Managers?


This question was raised with me by an experienced and respected Australian Payroll Professional and my immediate response to the question was “Yep!  I’ve been there!”…

Why do so many employers base the position criteria around particular HRIS systems, thus eliminating many otherwise perfectly qualified payroll professionals from applying?

I would love to learn the views of both payroll managers and those responsible for recruiting them, as to whether there are valid reasons to decree specific HRIS systems experience of payroll management candidates.

Although my own resume clearly shows that I have vast experience with a diverse range of HRIS systems and I’ve achieved significant improvement outcomes with each of them, I too have been rejected from the candidate pool from the outset because I can’t tick the particular HRIS system experience box demanded by certain job advertisements.

My view is that there are certainly roles and circumstances where this demand is warranted, such as stand-alone payrolls where there is no handover time and experience is required to hit the ground running, or for some HRIS system implementations that require exemplary knowledge of a particular HRIS system to achieve the outcomes for the business (with a big HOWEVER here, because successful HRIS system implementation requires a great deal more than just expertise in a HRIS system).

The greatest considerations of employers/recruiters, in my mind, before a job advertisement stipulates that experience in a certain HRIS system is a pre-requisite, should be:

  1. What are the outcomes required of the Payroll Manager in relation to the HRIS system?
  2. Which HRIS systems are comparable to the one in place at this employer?
  3. How can candidates demonstrate their cross functional capabilities from comparable HRIS systems?
  4. How do I as a recruiter, not exclude the best candidates from applying for this position?

The experience that should be sought from Payroll Management candidates should be based purely on their ability to achieve the outcomes of the particular role they are applying for and if a candidate can demonstrate they have similar or multiple HRIS system experience, they may actually be a far better candidate than twenty others with ten years user experience of the HRIS system used within the employing business.

What are the outcomes required of the Payroll Manager in relation to the HRIS system?

The following questions should be raised in order to determine the HRIS system specific position requirements and outcomes:

  • What exactly do we require the candidate to know about the HRIS system in question?
  • Why is the candidate required to possess certain HRIS systems knowledge?
  • Will they be processing the payroll?
  • Will they be documenting business processes?
  • Will they be required to maximise the functionality and efficiency of the HRIS system?
  • Will the candidate have a handover period or will they be thrown into the fire?
  • Does the candidate need to understand HRIS system configuration?
  • Will the candidate be required to create/write reports within the HRIS system?
  • What level of skill and experience is required in HRIS Data Analysis?
  • Will the candidate be required to maximise the efficiency of the HRIS system and build automations?
  • Do we have other Subject Matter Experts in the business with the required HRIS systems knowledge?

The outcomes required of the candidate in relation to the HRIS system will determine whether the candidate really needs to have experience in a particular system; whether proven experience in a similar operating system will be suitable; or whether it is even a requirement worth asking for.

Which HRIS systems are comparable to the one in place at this employer?

Payroll Software, SaaS providers and HRIS systems around the globe offer a multitude of points of difference but essentially, payroll is payroll and if you understand payroll, accounting and HRIS systems administration, there shouldn’t be a payroll/HRIS system that can’t be learned on the run by a professional payroll manager.

For those who can’t imagine how this may be possible, here are just some of the ways that professionals manage to learn new systems on the fly:

  • There’s always a Help button and usually a fairly decent user manual
  • More often than not there is a hefty support contract that can be utilised to seek additional information
  • Utilising Subject Matter Experts within the business
  • User groups, networking groups, forums and colleagues within the industry
  • Trusty old Google provides a world of answers
  • Payrollers are hoarders and there’s always someone who has the report writing training manual, configuration documentation or other precise information you are seeking
  • Most HRIS systems have a functional test database where professionals can model and test the outcomes they are attempting to implement

How can candidates demonstrate their cross functional capabilities?

Just because a group of candidates may have worked with a single system for the last 10 years, this does not automatically validate their ability to maximise HRIS system efficiencies, create reports or undertake data integrity validation.  It is important to understand exactly what their user experience is and whether they are actually super users, if that is a requirement of the position.

Again, the outcomes required of the position are an important pre-cursor to enable the recruiter to seriously examine each candidates HRIS systems experience.  Your candidate pool may be filled with people proficient only in producing payrolls and creating a handful of adhoc reports and may never even have heard of the concept of maximising the ROI of a HRIS system.

If I was employing a person who had 5-10 years’ experience in a payroll system and in payroll supervisory or management position, then I would be expecting they should be able to demonstrate a long list of improvements they’ve implemented along the way to that system.

I believe recruiters should be asking candidates to demonstrate their experience and previous outcomes in:

  • Improving data quality within HRIS systems to ensure data integrity and compliance
  • Creating cost and production efficiencies by implementing processes, creating automations and removing duplication of effort
  • Advanced report writing experience (or excel capabilities with extracted data) to increase analysis and reporting capabilities
  • Understanding the concept of and delivering  ROI on a HRIS system

How do I as an employer or recruiter, not exclude the best candidates from applying for this position?

In simple terms, employers and recruiters must truly understand the role… especially the required outcomes, as already discussed.  Where the employer stipulates particular HRIS system experience as a pre-requisite, an honest and open discussion by the recruiter will reveal whether this is a real or perceived position requirement.

Simply raise the questions voiced in this article with the employer:

  • What are the particular HRIS System outcomes required of this position?
  • Can this only be provided by a candidate experienced in one HRIS system, or are there comparable systems or transferrable skills?
  • Is there an existing Subject Matter Expert in the business that can be utilised by a Payroll Manager candidate with superior HRIS systems improvement experience, but lacking experience in the required HRIS system?
  • How can recruiters be sure that dedicated experience in a single HRIS system isn’t more than simple payroll processing knowledge? Does the candidate know how to manipulate data, write reports, analyse system efficiencies?  How will candidates demonstrate their experience in achieving the HRIS system outcomes required?

So, it’s over to the employers, recruiters and payroll manager candidates now… what is your experience?  Do you have a view point on whether HRIS systems experience is a transferrable skill?

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

© 2014 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.

%d bloggers like this: