Five issues to look out for when analyzing payroll processes
Payroll processes are often the most complex part of any HRMS implementation. If you are are analyzing payroll processes to prepare for an implementation or operational readiness, here are five issues to watch out for.
1. The exception becomes the rule
There will always be emergency payroll situations like a high profile hire that comes in after the payroll cutoff but needs to be paid. The problem is when the exceptions become the standard operating procedure with an emergency hire every day. When workarounds drive your daily operations it suggests that the procedures are broken and need to be reviewed.
2. ‘Superpower’ payroll administrators cause risk
A primary concern of HRMS auditors is when a user can do an entire payroll process from hiring through to generating a check and terminating without approval or review. As you look at your payroll processes a question to ask is, ‘how much risk exists here if someone can perform this task?’ If you have payroll administrators with a high level of power across multiple areas, it is cause for alarm.
3. Lack of a defined process or multiple processes creates inefficiency
Flexibility with employees is great but not when it causes more work and disorganized processes. Where possible and when the counts are high enough, payroll processes should be done via self-service in the HRMS. The next best option is a paper form in a standard format. The worst case scenario is when an employee can call or email any request as it relies on a high level of analysis and processing by skilled analysts.
4. Absence of automation
Payroll automation removes risk from processes as an HRMS always performs according to defined rules and scheduling. When you do not have automation but rely on human actions, occasionally processes are missed due to holidays or unexpected sickness. As you look at each payroll process a question to ask is, ‘why is this not automated?’ An infrequently used process like an annual government report may not be worth the effort. A daily or weekly audit report should be scheduled at a minimum with automated delivery where possible.
5. Too many users with excessive access
A rule of thumb is to grant users the minimum level of access needed to get the job done. Unfortunately a common issue is that users have access to a greater level of data than needed. Another concern is when users can perform transactions when it is not their responsibility. As you analyze your payroll processes start with the basics, ‘who should be accessing the employee data and what can they do?’
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