Posts tagged ‘#accounting’

March 23, 2014

Payrollers! Are You Prepared for the New Australian Privacy Principles in force on March 12, 2014?


privacy

The new Australian Privacy Principles came into effect on March 12, 2014 and replace the National Privacy Principles and apply to all organisations (with some exceptions), as well as Australian government agencies.

The objective of the Principles is to ensure that organisations manage personal information in “an open and transparent way” and some of the key areas that relate to payroll functions include:

  • All organisations must take reasonable steps to implement practices, procedures and systems to ensure the organisation complies with the Australian Privacy Principles and to provide a system of dealing with enquiries and/or complaints
  • All organisations must have a clearly expressed and up to date policy about the management of personal information, including:
  1. The kinds of information the organisation collects and holds
  2. How the organisation collects and holds the personal information
  3. The purpose of the collection, holding, use and disclosure of the information
  4. How an individual may access personal information and correct any information
  5. How an individual may complain about a breach of the Principles
  6. Whether the organisation is likely to disclose the personal information to an overseas entity
  7. If the organisation is likely to disclose personal information to an overseas entity, the countries in which that may occur
  8. Organisations must not collect personal information unless the information is reasonably necessary for one or more of the organisation’s functions or activities
  • Organisations must not collect “sensitive” information about an individual unless an individual consents to the collection and the information is reasonably necessary for one or more of the organisations functions or activities
  • If “sensitive” personal information is collected as a requirement by law or a “permitted general situation exists in relation to the collection of the information”
  • Where an organisation holds personal information that was collected for a particular purpose (the primary purpose), the organisation must not use or disclose the information for another purpose (a secondary purpose) unless the individual has consented, or the individual would reasonably expect the organisation to use or disclose the personal information for the secondary purpose, or if the use or disclosure of the personal information is required  or authorised under an Australian law
  • Before an organisation discloses personal information about an individual to an overseas recipient, the organisation must take all reasonable steps to ensure that the overseas recipient does not breach the Australian Privacy Principles
  • An organisation must take reasonable steps to ensure the integrity of all personal information to ensure the information is accurate, up to date and complete
  • An organisation must take reasonable steps to ensure the personal information is protected from misuse, interference and loss and from unauthorized access, modification or disclosure

If an organisation refuses to correct the personal information as requested by the individual, the entity must give the individual a written notice that sets out the reasons for the refusal, the mechanisms available to the individual to complain about the refusal and any other matter prescribed by the regulations

All organisations must take reasonable steps to implement practices, procedures and systems to ensure the organisation complies with the Australian Privacy Principles and to provide a system of dealing with enquiries and/or complaints

All organisations must have a clearly expressed and up to date policy about the management of personal information, including:

If you are a Payroll Manager or hold a position of responsibility for the management, security, disclosure and use of personal information you can be fined under the Act for non-compliance, apparently up to $340,000.  I’ve not studied the Act yet to understand whether this is per offence, which could be a devastating blow for an individual who is responsible for the disclosure of a substantial numbers of employee’s information, where there is a security breach or a non-compliant business practice.

If your organisation hasn’t made a big deal out of the new Australian Privacy Principles as far as payroll is concerned, especially if you outsource any part of your payroll function, you have a couple of days to establish how your payroll function will ensure compliance.

According to this Smart Company article on 5th March 2014 “The laws will apply to businesses that turn over more than $3 million a year and collect personal data.

However, there are some small businesses which turn over less than $3 million that will still need to abide by the new legislation. For example, the laws apply if the business is a health services provider, related to a larger business, trades in personal information, or is a contractor which provides services under a Commonwealth contract.”

For more information on the changes to the Privacy Act, visit the Office of the Australian Information Commissioner (OAIC) website.

If you are unsure whether the Privacy Act applies to your business, check out the Privacy Checklist for Small Business from the OAIC.

More articles on the Australian Privacy Principles from Australian Law Firms:

Australia: Are you compliant with new privacy laws coming into effect 12 March 2014? By Dan Brush of CBP Lawyers on mondaq.com

Australia: Major changes to Australia’s Privacy Act: Why they matter for foreign IT suppliers doing business in Australia by David Smith of Corrs Chambers Wesgarth on mondaq.com

Australia: Timely Guidance from the Privacy Commissioner – APP Guildelines Released by Sophie Bradshaw of Corrs Chambers Westgarth on mondaq.com

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 13, 2014

The #1 Unknown Australian Salary Packaging Consequence Your Employees Need to Know About


While business is to be commended for the efforts to share the benefits of salary packaging with employees across the board, it still confounds me that employees are entering into salary packaging arrangements oblivious to the REAL financial impact on their finances.

If you are going to offer a broad based Salary Packaging program to your employees, you MUST educate your employees, or at the very least strongly encourage them to seek independent financial advice from the ATO, their financial planner, tax adviser or accountant.  An employee will be far more encouraged to seek advice, if they understand along with the pros, that there are some serious cons.

The greatest unknown by most Australian employees is the impact of Reportable Fringe Benefits on their assessable income and the consequence of that increased assessable income on their entitlement to government benefits, multiple tax offsets, child support obligations and entitlements and HELP/SFSS repayment calculations.

Employers present calculations to the employees showing the net pay difference between a packaged and non-packaged salary, often without any reference to the potential consequences of their increased Reportable Fringe Benefits amount on their payment summaries.  Employees sign up to the salary packaging programme wholeheartedly, rejoicing in their “extra” income… until they submit their tax return.

Once their tax return is processed, many employees learn a very hard lesson.  Their windfall in undertaking salary packaging, has just earned them lost tax benefits; or an increased debt to the ATO for HELP/SFSS; or the Child Support Agency advises they now owe considerably more Child Support or will receive considerably less; or Human Services advises they owe for overpaid benefits.

While some payroll people may think that the likelihood of this consequence is minimal, consider the number of employees you have with HELP/SFSS debts; that we live in a society where almost half of marriages end in divorce; and that a majority of families with children under the age of 18 are entitled to Family Assistance.

Over the years I’ve implemented this in a few businesses and employees still come to the payroll team at year end and ask why payroll didn’t take enough tax, or why they weren’t advised, when they quite obviously were.  To counteract the employees who don’t read fine print, simply ensure this information is not fine print.  A one page document that they sign and date, prior to undertaking any salary packaging, that clearly outlines the potential consequences and that they need to seek independent financial advice, is all you can do without physically clubbing them over the head or booking the appointment with the financial planner for them.

I can only encourage you to make the effort to implement this information into your salary packaging documentation and enable your employees to ask better questions of their financial advisers and to make more informed decisions.  You will be thanked for it by the reduction in furious or devastated employees, waving their Payment Summaries around at tax time.

This is what you MUST make your employees aware of as a minimum:

Salary Packaging may (because some items are classified as “exempt benefits”) result in an increased “Reportable Fringe Benefits” value on your Payment Summary, which will be used (in addition to your Gross Earnings) to calculate your assessable income for the following:

  • Medicare Levy Surcharge
  • Medicare Levy Surcharge lump sum payment in arrears tax offset
  • Deductions for personal super contributions
  • Super co-contribution
  • Tax offset for contributions to your spouse’s super
  • Mature age worker tax offset
  • Higher Education Loan Program (HELP) and Financial Supplement (SFSS) repayments
  • Dependent tax offsets, including
    • Dependent spouse
    • Child-housekeeper
    • Parent, spouse’s parent or invalid relative
  • Housekeeper tax offset
  • Senior Australians tax offset
  • Pensioner tax offset
  • Your child support obligations and entitlements
  • Your entitlement to certain income-tested government benefits (including Family Assistance)

Before undertaking salary packaging, you are advised to seek independent financial advice from the ATO, a financial planner, tax adviser or accountant.  If any of the above income assessable items affect you, it is imperative that you seek independent financial advice on the impact of salary packaging and increased Reportable Benefits.

The Fringe Benefits Tax year is April 01 to March 31 each year.  The total Reportable Fringe Benefits for this period will be documented on your Payment Summary the following June.

Employees who receive individual fringe benefits of $2,000 or more in a Fringe Benefits Tax year, will have the “grossed up” value of the fringe benefits reported on their Payment Summary.  This is the Reportable Fringe Benefit and the “grossed up” rate is 1.8692.

Therefore, if you receive $10,000 in taxable Fringe Benefits for example, this amount is multiplied (“grossed up”) by 1.8692 and becomes your Reportable Benefits total of $18,692 on your Payment Summary.

The additional amount of $18,692 is added to your gross earnings to calculate your income tested entitlements, outstandings and tax offsets as listed above.

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.

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.

December 16, 2013

6 Simple Automations To Drastically Cut the Cost of Payroll Production


ppm logo - Edited (2)

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.

March 18, 2012

Salary Packaging and Tax Effective Employee Benefits


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Human Resource teams go to great length to research and offer Employee Benefits Programs to employees to achieve their organisational goals and Finance Managers work their hardest to evaluate and implement cost minimisation strategies. The provision of well researched and planned employee benefits can achieve both!

The age old debate between Tax Minimisation and Tax Avoidance remains, but where you can legally obtain a tax deduction why wouldn’t you! Employers should be looking to these tax advantages and promoting them to their most valued assets, if they truly feel that they are the organisations’ most valued assets.

Kerry Packer, the iconic Australian billionaire media magnate and rival to Rupert Murdoch said in a tax investigation in 1991 – “I am not evading tax in any way, shape or form. Now of course I am minimizing my tax and if anybody in this country doesn’t minimize their tax they want their heads read because as a government I can tell you you’re not spending it that well that we should be donating extra.”

A Disclaimer for Me

The information contained in this article is based on Australian knowledge only and any action taken as a result of this article is to be thoroughly investigated as to its’ currency and legitimacy with the appropriate taxation legislation in Australia and any other country you seek to apply any information from this article to. While I am only discussing Australian options, there will be similar options in other countries and these will provide food for thought for your particular country, organisation and circumstance.

A Disclaimer for You

Individuals Are To Be Explicitly Encouraged to Seek Professional Financial Advice!

I’ll say it another way… You absolutely must advise individuals to seek professional advice from their taxation department, their financial planner or accountant prior to taking up any financial related salary packaging or employee benefits programs. Each employees’ financial situation varies significantly and there are financial consequences in salary packaging and encouraging people to utilise tax advantages that may not suit their individual financial situation.

Why Would We Bother?

A carefully planned salary packaging system can provide various cost savings to an organisation. Many automatically think that the company has to incur the fringe benefits tax (FBT) on employee benefits. On the contrary, the salary package can be structured to incorporate the FBT component, or employees can make voluntary after tax contributions to minimise the FBT liability, or both.

I will restate the “Knowledge is Power” and “Fore Armed is Forewarned” from the previous article. A benefit of working for your company does not have to be a physical benefit; it can be the provision of empowering information that assists the employee to make decisions for a better future. Some of the information in this article is simply that, tax advantages that are open to individuals no matter which company they are employed by, that they simply may not realise it exists.

If you are the one that opens their eyes, then they will hold you or the company higher and value the contribution you have made to them. If you dedicate some time to seek, offer and advise employees of tax effective salary packaging and tax deductions or offsets, they will believe that you truly do care and that you are serving their best interests. You will gain credibility, build business relationships, contribute to employee morale and more. From a human resources perspective, there are so many reasons to bother and these are listed below.

Liaising with Human Resources & Finance

There are very few organisations where the Payroll Manager will be able to get most of these offerings across the line without liaising with HR & Finance, with some managers even wondering how you dare to have the audacity to bring them to the table. I recommend you do your homework and have prepared submissions that sell the implementation to both your HR & Finance people.

Highlight the benefits to both the organisation and the employees, do your numbers, study the social wellbeing aspects, calculate your numbers and present the ideas that will require organisational approval. If you can work with the management of HR & Finance to bring some or all of these ideas to fruition, your employees will be thankful, at the very least.

Key Arguments for Finance

  • Potential cost savings of carefully planned salary packaging
  • Zero cost effect to the organisation of the tax minimisation offerings
  • Potential to reduce turnover, thus reducing the cost of employment and the cost of payroll production

Key Arguments for HR 

  • Actively contributes to Employee Engagement
  • Contributes to Corporate Social Responsibility
  • Steers you in the right direction to becoming an Employer of Choice
  • The provision of valuable financial information contributes to relationship building, trust and loyalty
  • Employees achieve more with the same rate of income and perceive they are being rewarded

What’s In It for the Employees?

  • Employees obviously receive greater benefit from their salary or wage
  • The increased perception of working for an organisation that does actually value them

Beware of Award or Industrial Instruments Excluding Employees

In Australia, we are undergoing a modernisation of our industrial relations system and the employment awards within it (although some would question the use of the word “modernisation”). There have been awards that specifically exclude salary sacrifice arrangements, so ensure you review your employees’ industrial instruments for exclusions.

What are Non Salary Packaged Tax Minimisation Options for Employees?

The Australian Taxation Office has common tax offsets available to individuals. It is well worth investigating the offsets in your country and utilising your knowledge base (from Innovation 1 – Creating a Knowledge Base) to advise employees who may not know these exist or that they are entitled to claim them.

Pre-Declaration of Income Tax Returns by Employees (ITWV Variation)

In Australia this is known as an Income Tax Withholding Variation Application (ITWV) or if you are old like me, the former terminology is the 221D Variation. Do not presume that wage earners are automatically excluded from this as I’ve met many people with multiple investment properties, hands in businesses and all sorts of tricky financials who are school teachers, tradespeople and process workers.

The ITWV Variation Application allows employees to apply for a variation on their tax rates by anticipating their future tax return. Instead of waiting until the end of the financial year to claim, if approved, they will receive a reduced tax rate during the current financial year and will receive additional net pay on a per pay basis.

Publish information and forms on your knowledge base for employees who may not know that they can apply for tax variations on their earnings.

After Tax Voluntary Superannuation Contributions

Any employee can contribute additional after-tax monies to their compliant superannuation fund. There is no immediate financial benefit from this, but it has the potential to change an individuals’ future. If the employee is a low or middle income earner though, they may be eligible for the Superannuation Co-Contributions Scheme, where personal after-tax superannuation contributions may be matched by the government, up to $1,000.

After Tax Voluntary Spouse Superannuation Contributions

Additionally, if an employees’ spouse works part-time and is on a low income, they may be eligible for rebates on contributions (to a threshold) that they make to their spouses’ superannuation.

Deferred Income Payments

It is legal, under Australian taxation law to defer employee payments (by request of the employee) so the tax implications in one financial year are minimised. It is only viable to do this if the following financial years’ earnings are not going to be impacted greatly by the withheld payment. If an employee is going on parental leave, taking an extended period of leave without pay, or retiring this is an option that could have significant financial benefit for the employee.

Workplace Giving

Although this is technically salary sacrifice, it does not usually fall within the same structure or framework as the offering of salary sacrificed employee benefits as it is governed by separate legislation and is to be made available to all employees.

If your organisation is active in the community and values its’ corporate responsibility, you could work with your management team to encourage the board to commit to matching contributions. Your employees will feel that the company is working with them to improve the community. This program has so many benefits in the eyes of employees, it’s hard to understand why after years of the legislation being enacted, so many organisations still haven’t got a Workplace Giving Program in place.

Open discussion with registered business owners or ABN Holders to test the legitimacy of them contracting to your organisation.

This is an area of risk, but again, if researched and managed properly is a potential winner for organisations and employees. There are many people employed by organisations that have businesses registered and are true or legitimate contractors. Organisations should really investigate the cost savings of employing these people as contractors, providing they can pass the employee-versus-contractor test under the taxation system.

Use your Current Creditor List as a Potential Employee Benefits List

Almost every organisation has creditors (and debtors for that matter) who wouldn’t mind expanding their businesses and creating a few new customers. If your business is sizeable enough, it is worth speaking to a few of these other organisations to see if they would like to offer benefits or discounts to your employees, to potentially increase their customer base. Employees will see the benefit in discount or special offerings for:

  • Vehicle leasing or purchasing
  • Banking or Financial Products
  • Tools and equipment
  • Computers and computer software
  • Practically anything is of value to someone!

Partner with Personal Service Professionals to Provide Employee Benefits

Find professionals that are willing to offer their services at a discounted introductory price, with the potential to create a larger client base. Any professional who understands the lifetime value of a customer, would jump at the chance to service a reasonably large potential client base.

If you directed 100 new clients to a professional on the first occasion, the lifetime value of that customer base alone would far outweigh any introductory discount on the initial service. A percentage of the initial 100 clients will refer the professional to their friends and family. If that professional returned every six to twelve months and secured new employees as customers their business will grow exponentially just from your partnering invitation.

What can you offer?

  • Will & Estate Planning
  • Financial Planning
  • Budgeting Assistance/Debt Reduction Strategist
  • Health Insurance Analyst
  • Home Loan Analyst
  • Tax Preparation Services
  • Legal Services

You could also partner with local businesses to provide discounts or loyalty programs such as Car Washes, Cafes, Dry Cleaners, Automotive Repairers, Home Maintenance & Cleaning, Tradespeople… the list is endless and your employees will love it.

Salary Packaging Employee Benefits… now it becomes more complex

Public Benevolent Institutions (Charities) and Hospitals in Australia In Australia

Public Benevolent Institutions, Hospitals and similar industry bodies are legislated separately for salary packaging. If your employer falls under this legislation, fringe benefits are offered and taxed separately and differently to the standard Fringe Benefits Tax legislation.

Employee Benefits are “Fringe Benefits”

Under the Australian Taxation System In Australia, employee benefits are not income taxable but are fringe benefits taxable (including benefits provided to spouses, family members and associates as a result of the employment of the individual).

Minimise the FBT liability by Employee Contributions

FBT liability is incurred by the employer and is a major discourager to organisations. Employees who make voluntary FBT contributions can minimise or eliminate the employers FBT expense. Your organisation can offer salary packaging with a company policy that provides that employees will incur the FBT liability and incorporate it into their salary package or have them make after tax contributions.

Organisations can Claim Back the Goods & Services Tax (GST)

Where the organisation provides a benefit, then the amount expended on the benefit becomes the organisations expense. The benefit provided to the employee is a good or a service purchased or leased by the organisation and therefore, the organisation is entitled to claim the GST back on that expense (taking into account Goods & Services Tax legislation, record keeping requirements and the actual “claim ability” of certain items).

Without an effective and efficient management system, managing the GST claim back of employee fringe benefits can be an administrative nightmare. As with all complex administrative processes, a good think, a good plan and good management will resolve the issues.

A warning for employers who provide employee benefits

If you provide cash benefits to employees, such as Expenses Payment Cards, the obligation is on the employer to ensure employees are purchasing legal goods and services. An expenses payment card program should not be implemented without the explicit requirement to produce valid receipts to support the expense, which should tie in to the expenses payment card statements, which the employer should receive digital copies of for record keeping and benefits management purposes.

A warning for employees who receive employee benefits

If an employee receives an employee benefit under a salary sacrifice arrangement (including all purchases on expenses payment cards), the employee is not entitled to any of the following:

  • Claim an income tax deduction for the expenses
  • Claim GST on the item as they did not purchase it
  • Depreciate the asset on an income tax return

It is important that employees understand this, as they may be falsely claiming deductions on tax returns.

Example 1: Right to claim Educational Expenses Tax Deduction In Australia, we have the ability to claim deductions for certain educational expenses for our children. If an employee has an expenses payment card issued by the employer as an employee benefit and uses that card to purchase a computer, monthly internet connection fees and stationery for their claimable school child, they will not be able to claim these items as a legitimate tax deduction. These items were legally purchased by the employer and the employer has the right to the expense as a business deduction and any associated GST. For the employee to claim a legitimate tax deduction on these items, they would have to purchase them out of income taxed earnings.

Example 2: Claiming a purchase as a legitimate business expense If an employee also happens to own a business and purchases business items on an employer provided expenses payment card (or physically receives these items as an employee benefit), the employee is not entitled to claim these items as legitimate business expenses, not claim the input tax credits on them. These items are not eligible for depreciation under the employees business either, as they are not legitimate business expenses. The goods or services were legally purchased by the employer and as such are legitimate business expenses for the employer not the employee.

Example 3: Using Employee Benefits for Investments (Properties or Other Investments) Serious issues arise when employees utilise employee benefits (including expenses payment cards) to fund investments (properties or otherwise) or purchase items for investment properties. Again, an individual cannot claim a tax deduction where the investment or the purchase has legally been made by the employer, through the provision of an employee benefit.

Example 4: Claiming Home Office Expenses on a Rented Home where the Employer Makes Rental Payments under a Salary Sacrificed Arrangement An employee has their total rental payments paid under a salary sacrifice scheme and all other expenses are paid by the employee from after tax wages, including their utility bills. If the employee or their spouse is a business owner and seeks to claim their home office and a portion of the utilities as a tax deduction, they are not entitled to do so. It is not a legitimate tax deduction as the employer is legally paying the rent on the home. They are entitled to claim a portion of the utilities however as these were paid from after tax wages. If your organisation offers benefits that could impact individuals in these ways, it is imperative that you advise them of these issues. Mortgage/Rental payments and expenses payment cards are the two primary areas of concern, but there are others.

Basically, employees need to understand that if they are not paying tax on it, they shouldn’t be able to claim a tax deduction on it!

What Can You Offer With Your Salary Packaging?

An employee can be provided any legal benefit and if the organisation agrees, just about anything can be paid or provided under a salary sacrifice arrangement, again provided it is legal. Any offer of salary sacrifice should be accompanied with strong encouragement to the employee to seek professional financial advice, as some benefits can actually expose the employee to financial losses in other areas.

An example of this is the salary sacrificing child care fees in Australia, which would increase the employees’ assessable income with the additional fringe benefits value added to their gross reportable income. This in turn, could reduce the employees’ claim to childcare rebate, making the employees’ child care fees even more exorbitant than they already were.

If you have a staff cafeteria, it is common to offer meal expenses payments as an employee benefit whereby staff make their purchases as they choose and the bill is paid by the employer to a pre-determined annual value.

Other offerings can include:

Health and Wellness Programs

  • Weight Watchers or similar
  • Quit Smoking Programs
  • Nutritionist
  • Gym Fees
  • Health Insurance

Life & Other Insurances

  • Life Insurance (there is now a minimum requirement in super funds)
  • Funeral Benefit
  • Total & Permanent Disability (TPD)
  • Accident Cover
  • Trauma Insurance
  • Income Protection

Note: Income Protection insurance is claimable as a tax deduction at Item 24 on the Individual Tax Return, so professional advice should be sought on the tax effectiveness of salary packaging Income Protection Insurance.

Payment of Student Loans

Employers could offer payment of student loans (HELP/SFSS Debts in Australia).

Employee Benefits Exempted from Fringe Benefits Tax

The Australian Fringe Benefits Tax legislation has the “minor benefits” exemption. A minor benefit is a benefit which has a ‘notional taxable value’ (grossed up value) of less than $300. Where you provide an employee with separate benefits that are in connection with each other (for example, a meal, a night’s accommodation and taxi travel) you need to look at each individual benefit provided to the employee to see if the notional taxable value of each benefit is less than $300.

Don’t think you can provide a myriad of minor benefits to an employee though, as a consistent provision of benefits of this kind, could be construed as an expenses payments fringe benefit.

Please note that employers must report on Payment Summaries, all Fringe Benefits items $2000 and over (grossed up value, per the Payment Summaries gross up method) and this has to be taken into consideration by employees for determination of assessable income for other financial situations.

Industry related education and training courses would be accessed by more people if they were more affordable. Offer employees access to it appears that someone else is footing the bill for it. While this is salary packaging, I’ve separated it from the salary packaging section, as an industry or “in the course of your profession” course does not fall under standard employee benefits incurring fringe benefits tax.

Professional memberships and subscriptions to trade journals or industry publications can be provided to employees either as a company offering or under a salary sacrifice arrangement, if the budget doesn’t extend to servicing all of your employees’ professional subscription and membership requirements.

There is provision in the Fringe Benefits Tax Assessment Act (Section 58N) to provide Emergency Assistance as exempt employee benefits. Benefits you provide by way of emergency assistance are exempt from FBT. Emergency assistance is assistance for immediate relief of a victim, or potential victim, of an emergency where the assistance is any of the following: first aid or other emergency health care; emergency meals, food supplies, clothing, accommodation, transport or use of household goods; temporary repairs; any similar matter.

Read up on this before you offer it though as there are restrictions on the provision of “health care” and these few paragraphs do not cover the complexity of Emergency Assistance as exempt employee benefits.

Salary Sacrificed Superannuation

Salary sacrificed super contributions are not a fringe benefit and are treated as employer contributions. Employers receive the tax benefit of paying additional funds into employees’ complying superannuation funds. There are complex restrictions on salary sacrificed super though and both employers and employees must remain vigilant of the contribution caps, maximum thresholds, concessional components and age based limits.

The tax on entry of funds into a superannuation fund is 15% (and 16.5% on exit), so an employee pumping salary sacrificed super away needs to take into consideration their retirement needs and the tax rate that would apply to this money if they earned it as salary or wages.

Beware of the caps! There are caps on the amount of concessional (before tax) and non-concessional (after tax) contributions you can make each year. If you exceed the cap, there is an excess contributions tax of an additional 31.5% of the amount exceeding the cap.

Access to Financial Assistance Outside of Your Organisation

This was mentioned in the Innovation 1 article, but is such a pertinent item in todays’ crazy world with environmental disasters, high divorce rates, the rise in terminal illnesses, the collapse of the housing markets and all the other day to day tragedies we face as a community. Your employees may be in desperate need of financial assistance and most of us don’t like to advertise our desperation, so if we post on our knowledge bases ways to access financial assistance, we are providing an invaluable community service to our employees.

Look on your local council, state & federal government and welfare department websites for information that would assist your employees. Private companies also are able to assist in times of financial crisis, such as mortgage providers freezing loan repayments, superannuation funds releasing funds for crisis and so on.

Advising Employees of Available Tax Deductions & Tax Offsets

It costs nothing to post information on your knowledge base about employee eligibility to legitimate tax deductions and tax offsets. Many organisations are wary of their liability in providing such information, which is easily waived by posting tax department published PDF files or internet links to your taxation departments publications.

Some people do not realise that they are entitled to claim for the travel between work and their training institution, or the difference between what they normally would travel for work and the extended travel to a training course or business meeting. This is a value add for your “customers” that may have a significant impact on them.

Self Education expenses is another area where employees may benefit from more information as they do not realise the extent of the deductions they are entitled to.  Additionally there is the Housekeeper Tax Offset; Education Tax Refund; Family Tax Offsets; and Investing on Behalf of Children.

Now to Get Started…

The offering of employee benefits is a minefield, but it’s a minefield worth crossing if you truly want to offer your employees the best value out of their salaries and wages and provide an employee benefits program that engages rather than alienates employees.

If you are unsure what your employees would be interested in, ask them! Even if you got together a working party and included a cross section of your employees in that working party to begin the big picture design. If you do your homework and it falls on deaf ears, at the very least you can begin to populate your knowledge base with the wealth of information that employees could utilise on eligible tax deductions and tax offsets. If they know about these options, they can plan for them and save their receipts.

Should you decide to embark on this path, I wish you well in your endeavours and as always would love to learn more from you or help you in your journey. You can open discussion via this site or contact me directly at louisevidler@optus.ap.blackberry.net

© 2012, Louise Vidler

Excerpts from the Australian Taxation Office:

About tax minimisation and tax avoidance schemes

You are entitled to minimise your tax liabilities through investment activities and to receive the benefits provided for under the law. Tax minimisation is when you legitimately arrange your tax affairs to reduce the amount of tax you pay. These arrangements comply with both the letter and spirit of the law. However, investment schemes and legal structures that do not comply with the law are considered to be aggressive tax planning arrangements – referred to as tax schemes. A tax scheme is an artificial or contrived arrangement to avoid or defer tax obligations. Schemes often involve a series of complex transactions. They typically move funds through several entities, such as trusts, in order to avoid or minimise tax otherwise payable. Schemes may also involve distorting the way funds are being used to enable a taxpayer to claim deductions they are not entitled to.

What is a salary sacrifice arrangement?

A salary sacrifice arrangement is also commonly referred to as salary packaging or total remuneration packaging. It is an arrangement between you and your employer, whereby you agree to forgo part of your future entitlement to salary or wages in return for your employer providing you with benefits of a similar value.

What are the requirements for an effective salary sacrifice arrangement?

The requirements of an effective salary sacrifice arrangement are: • the arrangement is entered with your employer before you perform the work • there is an agreement between you and your employer • there should be no access to the sacrificed salary – if a fringe benefit that has not be provided by your employer is cashed out at the end of a salary sacrifice arrangement accounting period, the amount cashed out is your salary and is taxed as normal income.

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

© 2012 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.

March 16, 2012

Bringing in the WOW! Factor


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People can smell emotional commitment from a mile away. Tom Peters, Author

Compiled with edited extracts from various works of Tom Peters, as who else could describe the WOW Factor better than the man who invented the term.

The ‘WOW Factor’ is a registered trademark of the author Tom Peters, who coined the phrase some ten years ago. He came to fame as the co-author of In Search of Excellence and has since published multiple brilliant books on how to deliver ultimate customer service in all facets of business operations.

What is the WOW Factor?

  • It is that feeling where your heart races and your face smiles when you have received fantastic or even brilliant service.
  • It is when people or companies have stepped out from the crowd of look alikes and done something to make you smile!
  • When something is done or said to make you a brilliantly satisfied customer (or employee)!
  • It is when something is done to make you a devoted customer!
  • It is when something is done that you simply did not expect!

How do I get the WOW Factor happening?

  • Make the words glow, tingle, thrill, dazzle, delight and wow the primary basis for evaluating the quality of your products and services.
  • In the age of email, supercomputer power, the internet and the global village attentiveness – a token of human kindness – is the greatest gift we can give someone.
  • Obsess on the little stuff! 1000 little things are greater than one big thing
  • It is simply when you walk out as a customer and just say… WOW!

How do I get the staff customer focussed?

  • Forget barking orders.
  • Forget issuing a Customer First Vision Statement.
  • Prominently post customer statistics all over the place.
  • Distribute all good and bad customer letters to everyone.
  • Plaster pictures of customers (buyers, products, facilities, etc) all over the place.
  • Start making weekly awards for little acts of customer service heroism

If employees are inundated with practical customer information rather than vague exhortations, they won’t be able to keep their distance. They’ll begin to ‘think customer’ – and maybe even ‘dream customer’.

February 10, 2012

Why HR and Finance Must Both Hold Payrolls’ Hand


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One ongoing political battle in many organisations is who the Payroll Service should report to. Finance wins over mostly because of the sheer expense that is payroll. Then there are those organisations that see the payment of their most valued assets as an integral function of the Human Resources team, so the Payroll Service sits under HRs’ wing. Politicking aside, if organisational leaders actually sat down and measured the pros and cons on either side, it would be evident that the Payroll Service must have a solid working relationship and open communication lines with both the HR and Finance teams.

An important consideration in the #HR-v-#Finance pull of the #Payroll Service is to attempt to understand the mentality of both players, in the most general sense. Pull out your organisations’ HR and Finance mission statements and try to find commonality between them… I dare you!

Human Resources people are typically “people people” whose purpose in life is to implement strategies and programs to recruit and retain proficient, nurtured, engaged and empowered employees and to keep them safe and well in the process. In HR, grey lines exist at every turn: special circumstances and impacts of decisions with on flow effects to other employment relation issues and/or future strategies. HR people regularly have to consider the bigger picture, often for what are seemingly the minutest of details to outsiders.

Finance people are typically “numbers people” who usually perform comfortably within the predetermined and unwavering confines of accountings’ legislated rules, local and international standards, authority levels and organisational policies. They are comfortable with black and white. Being very generalistic, the purpose of Finance is to compliantly account for and report on all financial transactions within the designated timeframes.

Picture putting your HR and Finance people in a room and performing a group personality test. The room would separate into three distinct groups. In one corner are the “creatives” and “counselors”, most of which happen to work in HR, and in the other corner are the majority of the Finance team who are the “methodicals”. Polar opposites in the personality spectrums.

Left standing in the middle of the room are the in-betweeners: a mix of bewildered people who may be wondering if they have chosen the right career path, and conversely, those people whose personality types allow them to move comfortably amongst the HR and Finance personalities. (Just a note… seriously consider the latter for Payroll Management positions.)

Back in the organisation, sitting in the middle of the HR and Finance personalities is your Payroll Team, a complex mix of all the personality types. Every sizeable payroll team seems to have at least one member who cannot function outside the documented rules, without exception and at least one who spends all their time bending over backwards to ensure the staff are kept happy, possibly at the expense of some of the rules.

One of the hardest tasks for Payroll Managers is to have their team provide outstanding service within the confines of such a regulated employment, taxation and accounting environment and in the timeframes established in the majority of industrial agreements. The primary objective of a payroll service is to consistently deliver fully compliant, on time, best practice, and cost and time efficient payroll processes at a minimal cost per employee, with a zero error rate and zero impact on employee relations. To achieve this in unison with the grey areas of HR, and the black white of Finance, is a constant struggle.

While it is important to understand the differences in personality and objective between Finance and HR, Payroll does not get to sit in the middle as an innocent pawn. Payroll Managers need to understand (and teach their team to understand) HR strategy and to know the impact of their service to employee relations, with the same veracity a Payroll manager will have their team understand the legislative, accounting and compliance issues.

While ever the conflicting requirements between HR and Finance continue on either side of the payroll function, this will not be achieved with any consistency. Your HR, Finance and Payroll Management need to come together and devise a workable strategy that keeps everybody working towards their common and individual goals. HR has to come to the party on the black and white deadlines and compliance, while Finance needs to work into to their authorisations and policies some of the grey HR requirements.

Only by understanding the personalities and the objectives of each of the business units and combining these into a workable solution for the benefit of the whole business, can the payroll team then begin to provide a consistently outstanding, service excellence focused and fully compliant payroll service. The absolute one certainty in all of this is that it doesn’t matter who the Payroll Team report to in the organisational chart. It matters that there is a solid working relationship between the HR, Finance and Payroll Teams so the best of both worlds can be achieved.

Food for thought for your organisation? I welcome your feedback!

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

© 2012 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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