VCS Blog

28 August 2015

One HUGE Flaw Overlooked With Payroll Automation

Posted by VCS Software
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It’s no surprise that payroll automation for small, medium, and large organizations is an absolute necessity. Manual calculations of time, wages, taxes, withholdings, overtime, vacation, commissions, and many other factors are fraught with error. A 2009 study commissioned for the APA (American Payroll Association) by the Hackett Group found that 90 percent of organizations had paperless payroll distribution at that time. And now with such a large selection of payroll service providers with competitive price points, that percentage is considerably higher.

What exactly is payroll automation? To most, the technology system encompasses four main functions:

1). Calculating time & wages

2). Tabulating and applying taxes & withholdings

3). Provision of checks or e-deposits to employees

4). Reporting essential data to business owners

The automation of these functions addresses what businesses believe are the only pieces of the payroll process. But there’s more. There is one very important element that should support payroll, but it is frequently overlooked by the majority of organizations. It’s the proactive planning of staff according to business rules. In the publication Modern HR in the Cloud, Oracle states, “Payroll is not a one-size-fits-all endeavor. Businesses today must take into account their organizational goals, their cultural, and industry practices when deciding how best to approach it.”

In other words, there is a huge cost savings that is never realized in most companies because their payroll or time & attendance system is counting hours worked after the fact. Their business rules are not addressed by the payroll system. There is little or no planning dedicated to the proper scheduling of employees according to genuine business needs, employee skill sets, and fair job allocation. Without the application of these business or union rules to staff work PRIOR to shifts and payroll, organizations are spending hundreds of thousands of extra money paying for jobs/shifts that were either unnecessary, redundant, staffed by incorrectly trained employees, or for errors/grievances incurred from insufficient coverage.

The takeaway here is that all industries (retail, medical, public safety, government, hospitality, utilities and more) need to dedicate time to fleshing out and identifying their driving coverage needs. The next step would be to apply or develop the standard rules of their operations to the coverage.

Coverage needs + business rules = workforce asset management scheduling

Then, an organized, cost- effective schedule should be developed and carried out by staff. The payroll automation system can now compute planned hours and jobs, in essence reducing overspending and inefficiencies. Proactive scheduling promotes a productive, compliant, and fiscally responsible workforce.

Workforce asset management scheduling + hours worked = annual 5% savings in payroll

Learn how to combat against numerous hidden costs often related to labor practices, productivity, and time management.