A three step guide to assessing your payroll processes

The question, “Which came first?” may be relevant to chickens and eggs but there’s little debate to be had concerning payroll software and payroll processes. Any new software is an opportunity to review and examine the current processes for potential improvements and payroll is no exception.

However, if you select the software first, then any changes to processes and procedures will be driven and restricted by the capabilities of the technology. Far better to assess your payroll processes beforehand, as part of researching and gathering the requirements before you go in search of the ideal software package. Let’s examine the basic steps in reviewing your payroll processes.

1. Process mapping

Take some time to map out each payroll process under review. Track the information from action to action and from person to person. What you’re looking for are bottlenecks - those steps which slow the flow of data - which can be ripe for a different way of doing things. Furthermore, search for errors; some stages will cause more mistakes than others. Examine these for the causes of those mistakes; are they human, procedural or technical? How can they be avoided? Finally, the mapping process should show up any redundancies, such as unnecessary checks and monitoring; what are the touchpoints for the data?

Recommended reading: implement your new HRMS payroll functionality with minimal fuss using our nine step HRMS implementation guide.

2. Be clear about what you’re aiming for

Tempting as it is to fix mistakes and redundancies as soon as you spot them, be patient. Now that you have all the information, take time to agree the strategic priorities for your review. For example, no doubt you want a payroll process that is both faster and more accurate, but if faced with a process stage that can be tweaked for one or the other, not both, which do you choose? Knowing upfront the organizational priorities as they apply to payroll provides a clear framework to the review process. Consider the wider picture, including budgets, other ongoing organizational change projects, relevant legislation (current and upcoming), and your overarching business goals.

3. Process design

Now you can start to change the processes, addressing the issues discovered earlier. Bear in mind the following constraints and opportunities:

  • The differing roles and responsibilities (such as budgetary approval levels) in the organization

  • Opportunities for building in self-service functionality

  • Issues of risk and information security

  • Possible access via mobile apps (and even social media)

  • Compliance issues - legislation, regulations, reporting, etc

  • Impact on other HR functions such as workforce planning, time and attendance, and benefits administration

  • Employee reaction. However good your changes, they have to be fully adopted by the workforce to be of benefit.

Finally, to return to the chicken and egg question… although you should ideally never allow the software to drive the process review, it is worth researching the market in general to know what automation is broadly possible, and what isn’t.

Reviewing payroll processes is an essential step prior to selecting and implementing a new system. The potential cost of not doing so is that you attempt to automate processes that are cumbersome, inefficient, out of date, or just simply broken. Even the best software can’t fix that.

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Dave Foxall

About the author…

Dave has worked as HR Manager for the Ministry of Justice for a number of years, he now writes on a broad range of topics including jazz music, and, of course, the HRMS software market.

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Dave Foxall