Best Practices: Payroll/HRIS System Selection and Implementation

All Payroll/HR Managers will be tasked with selecting and implementing a new HRIS system at least once in their career…

Excluding the actual cost of labor, HR technology may represent the largest capital expenditure and resource investment for the HR department. Because the technology is the enabler for completing transactions that are required for a business to exist and maintain legal compliance, it is critical that organizations choose the right system and then properly implement it. Poor system selection or a mismanaged implementation process can cost an organization thousands of dollars in wasted time, resources, and system expenses that cannot be recouped. A company cannot afford to select a solution, only to find that it lacks the functionality that is required to manage the employment process. Nor can many companies handle the disruption and cost of switching to yet another solution because the original system was a failure. Doing thorough due diligence on the front end pays off and will save plenty of frustration and money in the long run.

The qualification and selection process can be daunting and requires expertise in the field of Payroll/HR Information Systems. Without a defined plan, the evaluation process can be time-consuming, confusing, and end up creating more doubt and fear around change. As we all know, change is difficult in and of itself, so often times these system evaluations are stalled and an HR department chooses to “make do” with the system they currently have in place. In many cases, the reason for this is the difficulty HR professionals have in convincing management of the business case for implementing an HRIS or for changing to a more functional or integrated system. HR departments are charged with presenting a return on investment analysis in order to obtain budget approval for a system.  Instead of focusing on system features and functions, HR must be able to demonstrate the impact that the new system will have in hard dollars. This “no decision” or “stalled decision” mentality perpetuates inefficiency as the HR transaction based workload increases and the inefficient, paper-based and manual processes continue to inhibit the productivity of the HR staff.

If your company is considering a system evaluation, take the time beforehand to develop or learn the right methodology for successful system selection. Hiring a consultant to help with this process may also be a practical decision if your staff doesn’t have the time or internal expertise to develop an evaluation plan. This plan should extend past the selection process into the implementation phase. This will prove to be money well spent in the long run. To learn how Centripetal Consulting Group can provide vendor selection services at no cost to your company click here:  http://gocentripetal.com. Below is an overview of the steps that will ensure a successful evaluation and implementation process.

Planning an HR System Evaluation:

Discovery Phase – Define your current processes.  Knowing your current processes is the only way to understand where the gaps lie so they can be remedied. This phase is the most skipped or overlooked step in evaluation.

Many times it isn’t until implementation begins, that the selected HRIS vendor truly learns or understands these processes and potentially discovers that the system is unable to meet a requirement.

Make a checklist of each step that occurs from pre-hire to termination, the staff member responsible for the task, and how much time each task takes to complete. In addition, describe what the impact of not completing the task would be on the organization.  Try to quantify this impact into hard dollars. This will help the business case if the system expense ends up exceeding the budget allocated for a new system.

Develop Requirements – Once you have clearly outlined your current processes, use that same list of transactions to scope out how an ideal process would work. Don’t think about whether a system can or can’t do something at this point, just map out a process flow that would conceptually improve the overall efficiency of the current processes. Use a flow chart to make this visibly easy to follow. Next, categorize each of the transactions into sections that define each step in an HR process, i.e. time collection, payroll, benefits administration, performance management, etc. Prioritize these transactions based upon which functions are mission critical such as payroll, which will save the department the most amount of time, and which would add the most strategic value. Some tasks may fall into multiple categories. These become your system requirements and should be used to qualify vendors that you evaluate. Apart from the system capabilities, the budget for the system must be included as a requirement. Other factors such as company size, number of customers, or service deliverables that are important in a vendor relationship should also be included. If these factors have decision-making implications, such as a vendor is required to be a public entity, clearly communicate this to each vendor as a means for qualification.

Vendor Evaluation – One way to qualify vendors is to create a formal Request for Proposal (RFP) that is sent out to multiple vendors to complete. The RFP is essentially your system requirements transposed into a question/answer format. It gives you a basis or systematic method for eliminating vendors who aren’t qualified and objectively compare the vendors who are qualified by the same standards. An RFP is not necessary but in exchange, it makes sense to send the requirements to potential vendors prior to a system demonstration. This will minimize wasted time for your staff and the vendor. It makes sense to invite 3 vendors to participate in the evaluation; however, if one or two vendors show significant advantages, look at them first in the hopes of not having to look any further. Spend equal amounts of time with each vendor and make sure to clearly communicate your evaluation process to each vendor. Ask the same questions of each vendor and put parameters in place for any follow up questions. This will help maintain and objective evaluation and facilitate a means for comparing vendors side by side.

ROI Analysis – It is important to define the estimated savings that the system will create through automation. This is done by estimating the hours saved with efficiency as a function of the staff member’s compensation. Additionally, you must account for the value of where this time will be re-allocated. If your goal is to eliminate headcount in HR, it is important to detail that each transaction has been accounted for to get an accurate analysis. If the vendors vary greatly in cost and /or functional impact, it is important to include this detail as part of the analysis as it may help in getting additional budget or help to make the most economical decision which has immediate impact.

Project Plan Development/Implementation – Once the budget has been approved and the vendor has been selected, it is important to develop an internal plan for working with the vendor during the implementation. Similar to the system requirements, there should be implementation requirements that your team determines and communicates to the vendor at the onset of the project.

It is also important to demonstrate the impact and consequences of not meeting these expectations. Examples include any date-driven deadlines, interfaces that are required, parallel payroll processing, or any expectations that might disrupt the organization in a negative way.  Use a working document to show task completion of items that require completion on your end as well as the vendors. This will hold each party accountable and serve as a roadmap to indicate where delays in the project may have occurred. Develop a ranking system so you can measure the overall success of the implementation against your goals and expectations. This will help both your organization and the vendor to make any future improvements.

If these steps are followed, the risks associated with a poor vendor system selection or failed implementation is significantly minimized. Human capital is the most valued asset an organization has so it only makes sense to take the time to understand the best technology solution for keeping employee data secure, accurate, and accessible so that your company will be empowered with information that is critical for business and operational decision-making.

Do you feel as if your human resource department has turned into a mess of administrative work?

Are your core processes muddled with paper-based, manual systems?

Is senior management questioning how HR adds value to the organization?

Is it becoming harder to get additional budget assigned to your department?

If yes, is the answer to any of these questions, it may be time to look at getting out of the “paper pushing” business and take that leap towards functioning as a truly strategic department that adds value to the overall business approach. HR departments alike strive to focus their attention on key elements deemed as “Strategic HR”. This includes recruiting top talent, training/development, and organizational development strategies that focus on employee retention and succession planning. HR departments that can effectively strategize and implement these core functions are truly maximizing the value of human capital. The first step towards this end is the deployment of the right HR technology. Without access to meaningful HR related data, a business cannot measure or analyze trends within their organization. One of the key reasons that companies struggle with gaining visibility into the organization is because data is contained in multiple systems thus limiting any reporting capability needed for analysis. The right HR technology strategy is paramount to deployment of “Strategic HR” as it will minimize administrative processes, easily ensure compliance, and allow access and create meaningful reporting capabilities.

Implementing an end to end HRIS which includes employee and manager self-service is necessary for a business that is striving to become fully paperless. Since payroll is the most accurate data in any organization, it only makes sense to build an HR database off of this data. To maximize the benefits of automation and ensure data integrity, fully integrated or single database for Payroll/HRIS system is the answer. Most systems on the market today deploy role based security which allows designated employees including managers, employees, and non-HR executives to have unique access rights to certain data points that are core to their role in the organization. The system becomes a universal tool that benefits the entire workforce, not just HR. Self- service gives employees, managers, and executives instant access to the information that otherwise was only accessible by the HR department thus eliminating the time consuming requests made on HR. This alone promotes productivity and makes for a compelling ROI for implementing a new system. Explore the benefits that are realized by using an integrated system and the features to look for as your company evaluates the applications on the market today. For a no cost evaluation of your company’s needs or for assistance with a vendor selection process, contact Centripetal Consulting Group at 214-824-4439 or at www.gocentripetal.com.

Key Benefits of an Integrated Payroll/HRIS:

• Improve responsiveness to employees and management with a workflow process that streamlines HR record-keeping and maintains proper audit trails
• Maintain a competitive workforce by simplifying and speeding up hiring, training and retention programs with an accessible, integrated database
• Gain greater control real time payroll processing by eliminating the need to transfer files back and forth, reduce errors and payroll corrections
• Ensure government and payroll tax compliance with automatic updates that keep you up-to-date on the latest regulations
• Plan for talent succession by indentifying top talent and key positions for keeping the business fluid and healthy
• Increase employee retention by deployment of self-service tools that keep employees involved with the employment lifecycle
• Enhance your reporting capabilities with workforce decision data that helps you lower benefit costs, spot organizational trends and take clear action
• Containment of costs including insurance premiums, controlled labor expenses including overtime, Travel and Expense, IT and disparate system related costs
• Improve employee communications through centralized intranet portals and employee survey capabilities
• Create and leverage a standardized infrastructure that will enable executives to better analyze costs associated with their organizational structure for budgeting and forecasting purposes

Key Features of an Integrated Payroll/HRIS

• Applicant Tracking that interface to outside job boards and company website
• Electronic On-Boarding
• Time and Attendance
• Payroll Processing
• Benefits Enrollment and Administration
• Performance Management and Compensation
• Salary Planning and Budgeting
• Automated Learning/Training Management
• Employment History and Succession Planning
• Employee/Manager Self-Service
• Effective Dating
• Open platform for easy integration and import/export to third party systems

The fact is that the open enrollment process is evolving, especially for small to mid-size employers. It is migrating from a stand-alone, manual process to an automated, integrated environment where the latest technologies combine to make open enrollment as efficient, effective and productive as possible. Current research shows a migration from older, more obsolete methods of processing benefits applications to web-based initiatives that greatly streamline and enhance the entire process, thus creating a compelling employer ROI and more favorable employee experience.

The current state of “open enrollment” is a spectrum of 3 main approaches:

1. Companies that use a traditional paper-based enrollment process
2. Companies that use a stand-alone software application or web portal for enrollment data collection
3. Companies that use an enrollment application that integrates with other critical HR applications

Paper-based enrollment has been around since the beginning of the enrollment process itself. Many companies still trust this method, thinking it is a satisfactory way to produce and distribute all benefits information to their employees. But let’s look at what’s really involved in this process:

• Printing benefits information
• Checking information for errors
• Assembling benefits brochures
• Manually sorting benefits materials so each employee gets information applicable to their current status
• Distributing benefits materials either by hand, or by mail

This first part of the process alone usually takes 1-2 weeks.

Next, comes the challenge of the actual enrollment itself. Most HR departments find that they need to assist employees in filling out the paperwork, thus opening up the chances for HIPPA violations. Lastly, the enrollment data must be compiled and manually entered into the carriers system AND into the company’s payroll system for premium deductions to occur. Human intervention, namely data entry, is always an error-prone process. This process requires:

• Enrollment forms that are checked manually for accuracy
• HR staff chasing down employees to determine who has completed the process
• Benefits calculations by hand
• Manual entry of enrollment information into the carrier site
  Manual entry of deductions amounts into the payroll system
• Paperwork filed and stored on premise in employee files

This process can add an additional 2-3 weeks to the entire process.

The paper-based, manual method of open enrollment also incurs a soft cost that cannot be measured; employee dissatisfaction. Employees today are not happy with the level of communication they receive from traditional open enrollment. They want information on their terms. They want to be able to access everything they need to make an informed decision, including their own personal data, from one source. And they want to be able to access this information when it is convenient for them. Companies that do not deliver what employees are looking for risk falling behind in today’s competitive workplace.

Stand-alone software/web systems for enrollment are another common approach. This spectrum involves the implementation of an automated solution to process open enrollment. The case for such an approach is clearly made in the example above.

The key business drivers for eliminating a paper-based process and replacing it with an automated process are:

• Reduction in the time it takes to process open enrollment
• Elimination of the the cost of producing and storing paper materials
• Mitigating the possibility of human errors
• Increasing employee satisfaction

Typical applications enable storing and access of all benefits-related materials online, where employees and their families can review at their leisure. All enrollment forms are also completed and submitted online, with greater validation capabilities for enhanced accuracy. This results in major gains for the employees, including the ability to manage all their own enrollment programs, including FSA’s and 401(k) in one centralized location.

This type of portal allows employees to:

• Review material and make decisions at home with their families
• Get answers to questions directly online
• Compare and contrast different plans all through one easy interface
• Edit and update selections without having to contact HR

Employees are not the only ones who benefit from enrollment automation. Thanks to the customizable, rules-based validation capability present with this technology, the system will catch errors and incomplete information, prompting employees to make changes as needed.

Additionally, managers and administrators can run reports to discover who still needs to complete the process and send automated reminders, without having to chase down employees on a one-on-one basis. The workload on HR staff is greatly reduced, as employees can handle their own enrollment tasks.

Deploying such a streamlined new process can greatly reduce the time it takes to process open enrollment, and free up key staff to focus on more important tasks. Deploying an online benefits enrollment process can have a dramatic effect on an organization that is used to the slow, manual paper-based approach, cutting the process time in half from 4 down to 2 weeks.

An online enrollment process has some major advantages over paper-based enrollment—but it still falls short in several key areas.

Research has shown that employees and administrators are still dissatisfied with the level of information and analysis tools that are available with many stand-alone benefit enrollment applications. The fundamental issue is that in order to make informed healthcare decisions, employees, HR administrators, and financial buyers need access to data commonly found in HR/Benefits and workforce management systems. Access to demographic information alongside of benefit participation data allows a company to analyze trend so that no group is overpaying or under-utilizing the benefits. Data can be segmented into employee groups by:

Success in the human resources profession requires fast and easy access to information — and that requires an automated HR information management system. Too many times companies think they are too small of an organization to justify an HRIS.

To this, I must say that a company is never too small to automate processes. If a company develops sound processes early on, they are poised for growth and may potentially be able to avoid or prolong hiring additional resources in the future.

Selecting an HRIS is a major decision. Getting approval for such a system is often difficult as well.

To start, HR managers should assess and outline how activities are currently being performed within the organization, and, in particular, within the HR department.

An HRIS generally should provide the capability to more effectively plan, control, and manage HR costs; achieve improved efficiency and quality in HR decision making; and improve employee and managerial productivity and effectiveness.

When conducting an analysis, I suggest looking at looking at the business challenges that you are trying to solve FIRST as opposed to the features and functions of a particular software application.

The following questions are designed to assist HR professionals in putting together the facts, the figures, and the business case to convince senior management that the expenditure for an HRIS makes sense.

• What information are people requesting?
• How do you, line managers, the chief executive officer, and the chief financial officer obtain needed personnel information?
• How long does it take you to respond to a new request for information?
• What HR management needs are not being addressed and handled properly?
• How effective is your support to the budgeting and planning processes?
• Where do you stand in complying with COBRA, ERISA, FLSA, OSHA, and other statutes and regulations?
• What tasks are you being asked to do today? How well are you performing these tasks?
• What programs, services, and management support must you provide to help your organization meet its goals?
• What are the major tasks that you intend to accomplish and the results you plan to achieve in order to have a successful HR operation?

Answering these questions will provide you a solid foundation for evaluation of various HRIS products on the market. Because there are so many HRIS providers including in-house, outsourced, hosted, non-hosted, hybrids of these etc., it may make sense to look for an additional resource outside the company to help with your evaluation.

Costs to Consider When Comparing In-House Payroll Software to Outsourcing

• The purchase costs of in-house payroll, HR, Benefits Administration, and Time and Attendance applications
• Annual maintenance contract to support the systems
• Upgrade costs
• Training costs
• Internal support costs such as IT department
• Server space and back up
• Annual costs for paper stock (payroll reports), check stock, envelopes, and postage
• Tracking and processing wage garnishment checks
• Printer maintenance that processes the payroll
• Toner for the printer (MICR toner)
• Time spent for check signatures or check imaging
• Time to stuff, seal, and sort checks
• Banking fees for direct deposit
• Time and materials for year end W2s and 1099s
• Time to calculate and prepare per processing, monthly, quarterly, and annual taxes
• Hard dollar costs responding to tracers
• Fines or penalties for tax filing errors
• GL costs for preparing, posting and updating
• Preparing and producing reports
• Time for reconciling the payroll account
• Paid time off liability if not calculated properly
• Time reading timecards or preparing time clock file for import
• Percentage of payroll costs for human error

• Time theft (buddy punching)

Key Factors for choosing a payroll vendor

Whether you are starting a new business that has never used a payroll service or considering a change in providers, you must consider all aspects. The first thing that you should do is create list of features that are “must haves” and “nice to haves”. If the vendor has functionality that you would have no use for, chances are you will be overpaying and the system will create user confusion. Once you evaluate and the basics have been met, look for additional features that you could implement into your current process that would save time and create more efficiency. I’ve created a list of the top 6 things to consider when partnering with a vendor.

1. Service. Make sure you understand who and how you will be serviced after you begin processing. In most cases, customer service inquires are considered urgent, so it’s important to understand how accessible the provider is in order to set proper expectations for your employees. Will your checks be processed locally or delivered via mail? Who do contact if you have a problem? Is this a call center? How quickly can you expect your calls to be answered and/or returned? What are the hours of operations? Are online inquires supported?

2. Tax Filing. One of the key reasons that companies choose to outsource is to shift liability for employer tax filing. Does the vendor file in all 50 states? How are tax inquires handled? How quickly are tax issues resolved? How are tax tables updated via the software? Is this tax software internal or the product/service of a third party?

3. Accessibility. Is the payroll tool software or web-based? If it is on the web, what is the uptime guarantee? Are you able to view gross to net totals prior to processing? Are reports available instantly after processing? If it is software based, is the tool only available on the PC that it is loaded on or can it be placed on a network server? Will upgrades to the system lock you out or will they be done behind the scenes? Will you pay fees for additional licenses?

4. Reporting. What reports are considered standard? Are you able to duplicate all the reports that you use today and then some? Can you create your own reports via a report writer or do you have to contact service if you have a special request? Are the reports delivered via the web or only in paper format? Can you export reports into Excel and PDF? Can multiple users create and run their own reports?

5. Interface Capability. Is there import and export capability to all necessary systems such as accounting and time and attendance? Who is responsible for creating the interfaces? Does the vendor charge extra for this?

6. Cost. You certainly get what you pay for but you certainly don’t want to overpay for features you don’t use. A bundled pricing model may not be the best solution simply because it is convenient. Make sure to ask for ancillary costs upfront such as new hire reporting, adding new states for taxes, W2’s ect.

With the increasing number of payroll providers, it is important to choose a partner that has a scalable tool that can grow with your business. The decision you made to outsource was to be more efficient, so you must ensure that the vendors is flexible enough to accommodate your unique needs.

For more information, contact Centripetal Consulting Group to help in the decision making process:

Contact Us:
Amy Grimmer
agrimmer@gocentripetal.com
(214) 824-4439

Paperless pay means eliminating paperwork in every phase of the payroll process, reducing costs, and delivering faster, more convenient employee service. It also means eliminating paper waste and doing our part to preserve the environment.

Electronic payroll: the first step

Paperless pay means using today’s enabling technologies to pay employees without printing or distributing paper checks and advices. Although electronic payroll is at the heart of paperless pay, there are other essential components that collectively offer the prospect of eliminating every piece of employee-directed paper surrounding the payroll process.

Gaining efficiencies throughout the payroll process

Paper-based payrolls have many distinctive steps that earmark this traditional process as a great candidate for streamlining through automation. Payroll and HR executives are realizing that manual time collection, distribution of paper checks and the irritation of escheatment administration, all represent excellent opportunities for gaining efficiencies and reducing costs. Paperless pay uses electronic methods to replace paper and capitalize on employee self-service to reduce the need for manual labor in handling time reports, delivering conventional paper pay advices, distributing W-2s, and so on. Paperless pay is also a way to reduce the errors that plague paper-based processes, since real-time access to accurate data ensures employee-initiated transactions and inquiries are all validated and verified.

Accessibility to all

Today’s best-practice paperless pay solutions are available via the Web or telephone, so employees have convenient access to their pay information and employers are able to meet differing state requirements for accessibility. Incorporating the payroll card option means every employee can electronically receive their pay even if they don’t have a checking account. A well-designed paperless pay implementation plan can address each state requirement.

Benefits for the employer and the employee

The benefits of paperless pay initiatives are enormous. Cost reduction in the production and delivery of pay to employees is the key driver for many organizations. Employee service levels are also boosted by secure access to personal pay information as well as self-service transactions such as reporting time, managing direct deposit, or changing W-4 information. Paperless pay has come of age, with a mix of options that can eliminate the paperwork choking the payroll process. Even further, employers benefit from not having to house endless file cabinets filled with paper payroll reports. Employers can access the report they need via web without having to dig through the files. Many payroll service provides will also host and archive payroll reports – so the IT department doesn’t have to!

I recommend Perquest Payroll’s “Go Green” service. For more infoClick Here ]]> http://gocentripetal.com/paperless-payroll-everyone-wins/feed/ 0