Benefits of an Integrated Payroll/HRIS
Do you feel as if your human resource department has turned into a mess of administrative work? 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 so that you can focus more time on “Strategic HR”, such as recruiting, training/development, quality employee retention and succession planning. These are the functions of HR that are core to making the most of human capital. Improving in these areas can be a reality if your department deploys the right technology that will minimize administrative work, easily ensure compliance, and allow access and reporting capabilities to meaningful data points across the entire organization.
Putting an HRIS in place with employee and manager self-service may prove to be the answer to your administrative challenges. Since payroll is the most accurate data in any organization, it only makes sense to build an HR database off of this data. To enjoy further benefits of automation, I suggest utilizing a fully integrated payroll/HRIS system in order to ensure utmost data integrity. With most systems on the market today, role based security is deployed. This means that certain employees including managers, employees, and non-HR executives have access rights to certain data points that are central to their role. The system becomes a universal tool that benefits the entire workforce, not just HR.
The main key benefits that an HRIS is designed to improve are:
- Improved 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 identifying top talent and key positions for keeping the business fluid and healthy
- Increased employee retention by deployment of self-service tools that keep employees involved with the employment life cycle
- 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 such as overtime, Travel and Expense, IT and disparate system related costs
- Improved 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
Technology is the framework behind the success of a well-functioning HR department. The advancements that have been made with functionality delivered in a Software as a Service model are making these types of systems more affordable and more customized than ever before.
Automating Benefits Administration
With the cost of healthcare has become so controversial, it only makes sense to take a step back and look at all aspects of this expense, not just the insurance itself. Employer’s attempts to control medical rate increases have included benefits cuts or outright elimination, increased cost-sharing measures, and adoption of consumer-driven health plans. There can be inherent dangers in these approaches including decreased employee satisfaction which ultimately leads to voluntary turnover of good employees.
When the hard cost of insurance seems to be spiraling out of control it is logical to also explore the soft costs associated with the administration of the benefit plans as a strategy to mitigate this expense. Depending on the size and complexity of your organization and benefits offerings, up to 25% of your total spend could be tied up in the transactional costs of benefits administration. This warrants considering processes improvement or retooling as a means to controlling this cost.
Regardless of the size of an organization, the right technology will dramatically improve open and continuous benefits enrollment by automating manual tasks, engaging employees with self-service and optimizing benefits planning usage patterns. The resulting benefits are significant: saved time, increased productivity, improved data integrity, and consistent employee communications which
leads to increased employee retention.
Several methods for automating the benefits administration function are available to even the small market. Consider these options to determine what will work best for your organization.
1. Deployment of Employee Self-Service – The technology application that you choose must have self-service functionality that is easy to use, includes workflow capabilities, and is accessible via the internet. If you properly train employees on how to use the benefits enrollment portal thoroughly, most employees will complete it successfully the first time. Studies also suggest that more than half will do it at home with a spouse, thus making them more productive at work. Data accuracy is also improved when enrollment info is entered at the employee level as opposed to the administrator level. The more participants that have access the better. The use of kiosks should also be considered for those employees who may not have the internet readily available. Expanded reporting and survey capabilities also give added bonuses to employers who successfully deploy ESS.
2. Technology Integration – A stand alone benefits administration portal gets you halfway there, but to truly maximize efficiencies, I suggest a fully integrated Payroll/HRIS/Benefits application. Payroll data tends to be the most accurate data set in any organization, so it makes sense to build benefits technology off this data to ensure utmost accuracy for employee contact information, eligibility, premium deductions, and terminations. Many systems also include interface capability to the insurance carriers. This type of integration allows for ONE point of entry for all payroll, HR, and benefits related information. This creates a more efficient, less error prone process. Integration eliminates profit leaks with terminations and eligibility because all employee data is resident in a common place that
connects with the carrier.
3. Expense – Who should responsible for this cost? In many cases there are three different parties involved with the process: the insurance carrier, the insurance broker, and the
technology provider. You as the employer are clients of all three. I suggest putting them in touch with each other to see what makes the most financial sense for your organization.
Many times brokers will absorb this cost as a value added service. The carrier may be willing to cut you a deal to retain or attract your business. Thirdly, the technology provider may have
extensive experience with your carrier and may be willing to reduce this cost because less work has to be done on the front end. At the end of the day, it is worth the financial
investment and time up front to create the carrier feeds and maintain connectivity especially if you plan to stay with that provider for several years.
Outsourced vs. Inhouse Payroll?
If you are considering moving away from an outsourced model for managing payroll/HR, here are a few keys items to consider as you analyze the financial aspects. There are many advantages with outsourcing; however, it takes careful consideration of both hard and soft costs to make this determination.
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)
