Posts tagged ‘service excellence’

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.

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.

December 8, 2013

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


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

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

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

Important steps to achieving service excellence are:

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

Understanding Exactly What Service Excellence Means

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

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

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

Understanding the Current Perceived Level of Service

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

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

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

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

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

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

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

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

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

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

Take a Serious Look at Your Customer Interactions

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

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

Deciding What Service Excellence Will Actually Be

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

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

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

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

Setting the Wheels in Motion to Becoming a Service of Excellence

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

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

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

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

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

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

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

Employees

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

Internal Customers

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

External Customers

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

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

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

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

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

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

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