Selecting and Implementing Computerized Payroll Systems for Enhanced Efficiency

1. Section 12 –Payroll Systems & Technology Rachel Brooks, CPP Product Support Specialist Sentric rbrooks@sentric.net

2. Objectives of a Computerized Payroll System Customer satisfaction means compliance: • Federal, State, Local withholding, depositing & reporting requirements • Timely & Accurate paychecks, direct deposits & other disbursements • Adequate records of all data & transactions • Internal Reports • Guarantee security of the system

3. Interfacing & Integration • Integration: Payroll, HR, Benefits into one shared database • Interfaces: Those departments transferring data from one system to the other & to other company systems

4. Interfacing – working with other systems & Departments Definition: the place where 2 systems meet! – i.e., they can “talk” to each other, be understood, and share data • HR, Benefits, Direct Deposits • Labor Costs, Bank Accounts, GL • Time & Attendance, Accounts Payable, SSA • Outside benefit administrators; SUI, Taxes, Child Support

5. Integration of Payroll & HR Systems Definition: System that provides a shared database for HR, PR & Benefits • Reasons to integrate: • Streamline HR, PR, Benefits functions • Consistency of data in 1 database • Improvements in system • Security!

6. Service Providers - Advantages Definition: Fully outsourced – i.e., like freelance accountants! • Low fixed costs • No extra room or extra employees • New services can be added • Reduction in processing delays • Reasonable processing costs • Fewer research problems • Networking • Training & Support

7. Service Providers - Disadvantages • Lack of control over security • Filing & depositing errors • Little flexibility for late changes • Unique needs create problems • Potential high variable costs • No control over breakdowns

8. Application Service Provider: ASP Definition: provide your company with an application to process your payrolls • Installed on your servers • Accessed by you on their servers • Fee based on each employee’s payment processing • Usually no need to hire additional staff to process payroll

9. Business Process Outsourcing: BPO Definition: outsourcing of business processes & functions, including support, including payroll & benefits administration • i.e.: the BPO takes over the entire business process – PR, HR & Benefits and runs it!

10. In-House Payroll Systems Definition: Computerized payroll system located on company premises • Hardware: Computers, networks • Real time or batch processing • Advantages: • Control; Access; ↓Downtime;  Security; Scheduling; Applications • Disadvantages: • Space, Costs; Staffing; Capacity; Obsolescence; Disaster recovery; wrong computers!

11. Selecting a Computerized PR System • Integration & Interfaces? • Functions? • Who will need access? • How will data be processed • $$$$$$$ -- how much? • Get input from all users – their needs & desires

12. Selecting a Payroll System • Build a Project Team • Analyze what the System needs to do • Prepare a RFP • Select a System • Implement the System • Evaluate the System’s Performance • Controls & Security

13. Step 1 – Build a Project Team • Payroll • HR • Benefits • Accounting • Tax • Budget/Finance • MIS • Management

14. Step 2 – Analyze what System needs to do • Document current system and it’s problems • Define Objectives • Define requirements

15. Step 3 – Prepare a Request For Proposal Purpose in issuing the RFP: • Why new system is needed • Specific payroll info – size, frequency, unions, salaried, hourly • Earnings & Deductions • Functional requirements now & future • HR & Benefit integration?

16. Step 4 – Select a System • Ask for demo • References – either by phone or site visits • Ask for demo – of certain problems that vendor states can be addressed • Ensure all government reports, taxes, etc., can be handled • Ask for demo on client server, not vendor’s • Service & training support and cost? • All costs included on proposal both now & future • Require flexible & user friendly report writer

17. Step 4 cont’d: Mistakes to avoid • Failure to provide time to do the job right by team members • Omitting all departments affected on team • Failure to prioritize • Not considering future needs

18. Step 5 - Implementation • Preparation – goals, time for team members, outside consultants?, time for the project, support by upper management • Training • Gap Analysis • Converting old data & adding new • Testing • Parallel testing • System conversion!

19. Step 6 – Evaluate System Performance • Internal report requirements • Unexpected legislation • Radical benefit changes • New Unions? • System expansion These should be periodically reviewed!

20. Controls – Putting them into Place • System Edits • Auditing & Data Sampling • Batch controls • Correction procedures • Balancing & Reconciling

21. System Documentation • Include: • Confidentiality statement; • Introduction & high level overview; • Navigation; • Processing; • Calendar • “Guts” • Leave out: • Company Policies • Technical Material

22. System Documentation, cont’d • Packaging • Assign to a job – not a person! • Keep it up to date • Documentation promotes control! • Useful for cross-training • Procedures eliminate shortcuts • Ensures consistency by users

23. Providing System Security • Personnel concerns: • Segregation of duties • Rotation of job assignments • Paychecks go to payee only! • Conduct physical payouts – No Phantoms! • Rotate some duties to accounting • Background checks

24. Security, cont’d • System Security • Limit access • Secure files • Develop audit trails • Anti-virus • Backup! – and store off site

25. Security cont’d • Physical plant issues • Climate control • Overheating • Cold • Power surges • Dirt • Humidity • Power

26. Disaster Recovery • Fires, floods, hurricanes, earthquakes, terrorism, explosions: employees still must be paid! • Interim Office space • Equipment rental • Temporary housing • Backup files – off site! • Employee safety • Communication • Electronic vaulting

27. Automated Time & Attendance • Benefits: • Less time spent on processing • Fewer errors • Decreased costs • FLSA, FMLA and SOX compliance • Results in penalties if not • DOL found – 48% of those audited failed to comply with federal labor laws!

28. Selecting a Time & Attendance System • Rules Engine • Integration with HR, PR & Accounting Systems • Configuration vs Customization • Web-based • Alert notifications – • Secure • ESS and MSS • No PC software

29. Employee & Manager Self Service • What is it? – Allows employees and managers to manage time-consuming administrative tasks – such as benefit enrollments, address changes, etc. through: • Kiosks • IVR • Internet & Intranet

30. Manager Self Service • Allows managers to initiate changes to direct reports • Promotions, salary changes, transfers • Performance appraisals & salary administration • Changes can be routed for approval via workflow • Outsourcing: ASP/SaaS: • Application Service Provider aka Software as a Service • Hosted applications – such as Payroll, HR, Benefits • Employee gains access via their own computer

31. Implementing Internet Technology • Build a team • Select hardware/software • Encourage technology use • Security • Develop codes of conduct

32. Web Enabled Applications • Definition: uses the Internet as a means of accessing an organization’s data and the HRMS application logic • Pay stubs • W-2’s

33. Keep thinking (and repeating)…… I will be a CPP!