Overview of Payroll Processing
Payroll software system is technology solution that aims to streamline and automate all the tasks of employee payment and the filing of employee taxes.
One of the most tedious tasks of any organization is to process the salaries of its employees. Whether the number of employees is more or less, the payment of each personnel has to be made correct and on time. Organizations with mid-size staff members and more cannot drive the distribution of salary process manually. Appropriate HR and payroll solutions are must to ensure the exercise is carried out meticulously.
For most part of the month, the finance team of an organization struggles to resolve issues pertaining to employee payroll and capture the data sets for next month’s payroll processing. Valuable hours and efforts of finance team are spent in responding the queries related to leaves, reimbursements and other things.
Once a candidate is part of any company, there are numerous personal and professional documents and details that the company requires from him. Also, there are provisions like leaves, paid/unpaid holidays, overtime payment, holiday bonus, performance incentives which are awarded to the employee. Maintaining these nitty-gritties manually is just out of question. Richard Breitmeyer, in his post shares the agony of manual HR & Payroll systems. He states that, “It takes more effort and physical space to keep track of paper documents, to find information and to keep details secure. When mistakes are made or changes or corrections are needed, often a manual transaction must be completely redone rather than just updated.” HR & Payroll solutions can definitely pitch in to mend the gaps in Payroll processing.
Here are some benefits of using HR and Payroll solutions for your organization:-
- Increasing the accuracy of data maintenance – Manual entry of data is not very reliable when the number of resources working for the organization is more. As we know to err is human, therefore HR and Payroll Solution is more accurate than manual data processing, which includes compensation and benefits management, work force analysis, performance management and generating reports for internal and external use. A perfect HR & Payroll solution also ensures that data integrity is maintained and that there is no glitch when it comes to accessing the details of any employee.
- Reducing the redundancy of data – Integrated systems are used as a part of HR and payroll solution. This assures that no duplicate records exist in the system. Also the information of the employee is safe and secure across all the systems and that there is no discrepancy. In multiple scenarios there are employees with same name or same date of birth. The HR and Payroll solution makes sure that the data of such staff members do not get mixed up or lost.
- Simplifying on-boarding and stepping off process – A series of on-the-go tutorial steps reduces the amount of effort employee and HR makes to complete the process on time. An effective HR & Payroll solution will make sure that the interaction between HR and the employee is minimal and that the employee is self-dependent when it comes to uploading certain documents, applying leave, raising travel requests, downloading treeware like Form 16, salary slips, invest proof declarations, annual salary certificate, hike letters.
- Customizing employee salary –All the employees, new or over the hill, have different takeaways in terms of payment. There are several components in salary like Basic, HRA, LTA, Medical, Dearness allowance, Conveyance allowance, EPF, Professional tax, Child Education allowance. The monetary value of all these components differs for each and every staff member. Manually assessment of these pieces is sure to cause problems and miscalculations. Also organization can delight the employees by customizing the salary structure to best fit the employee requirements and not abide by standard set components. HR & Payroll solution is hence foremost need of any organization.
- Data Security – Access to employee’s personal data is a very responsible job. Any misuse of such sensitive information may harm the worker as well the company and its reputation in the market. HR & Payroll solutions have tools to govern the access rights to authorised persons only. This prevents theft of information and enhances data security.
Having an integrated Solution – Apart from salary processing and HR management system, the added advantage of HRMS is it includes Employee Self Service (ESS – This system provides employees access to their salary slips, payment history, hike letters, income tax calculations, investment declarations), Statutory Compliance (PF, ESI, IT (TDS) and others), Employee Asset Management (To keep track of assets like laptop, cell phone, head phones, RSA token, WIFI stick which are allotted to the employee) and Reports & Analytics. Integrated systems ensure the data is secure and in sync across all the databases.
Cost Evaluation of HR and Payroll Software
Basically there are three pricing models for HR and Payroll Software. The formats can be used as is or can be mixed together to form a hybrid new format.
- Pay per Employee per month — The price range for this model lies between $1-$10 per employee per month.
- Pay per User per month — The cost for this model varies between $5-$20 per user per month.
- One time payment — The payment can be done in one go and the price range for this model is usually between $500-$10,000.
There are few software which do not charge anything for using their services and products. But such free software are generally low on features and may later charge fee for upgrading the services.
Other Evaluation Parameters
Think before you act, or evaluate before you implement when it comes to applying apropos HR and Payroll solutions for your firm. There are numerous and varied requirements of different firms, companies, organizations and hence there are multiple solutions. Evaluation is thus important when choosing the right solution from all the variety present out in the market. Given the very dynamic, ever evolving and fast changing business environment, the industry has witnessed many new age solutions which appear to be promising and disruptive in nature.
The HR and payroll processing needs of different types of enterprises are different. Also many companies currently use excel and other tools for tracking employee’s record and managing the pay structure of the staff members. These firms should consider moving to more mature solutions for trouble-free employee management. All organizations have disparate number of staff members, incentives, different salary structures, varied on-boarding procedures and different off-centre policies. Therefore businesses must hunt for best-fit solutions to pacify their divergent needs. Here we give you top 10 evaluation parameters to consider that will assist you to decide on select a solution that you believe is best fit for HR and Payroll processing at your organization.
- Compliance – For a company to start using a solution, compliance should be one of the major factors in consideration. Compliance typically pertains to following:-
- Legal Compliance – This mainly focuses on abiding by fair employment practices; no discrimination on the basis of race, sex, religion, or national origin, meeting wage standards, preparing and maintaining records of serious occupational injuries and illnesses in compliance with OSHA, Verify filing of Department of Labour (DOL) forms and ensuring lawful termination of employees.
- Tax Compliance – These primarily focus on filing all federal and state taxes, including employment, sales, privilege, excise, and franchise taxes, retaining complete and accurate financial records, including records of income and expenses.
- Compliance to company policies – Companies have their policies and all the employees regardless of their position are bound to follow the policies.
- Miscellaneous Compliances – These include ensuring that the company is properly registered in all states the company operates in, having a written agreement that is fair, legal, and in writing for all business and business relationships and having policies and procedures that ensure all data, including client data, remains protected and private.
If a firm starts afresh, then it must ensure that the solution that they are planning to use is compliant with the standards of their organization and the state/country they operate in. The selection must be based upon the number of employees in the company that are to be managed. Questions like – how the product will support new policies in organization, how it will scale/upgrade with respect to number of employees changing, will the product be sustainable for years to come, will it be compatible in scenarios of merger or acquisitions, should be pondered upon before the final decision.
- Technology – A company will not want to increase their expense by collaborating with a vendor who uses bulky and expensive technology as a solution. Cloud/SaaS based solutions are widely preferred by large number of SMEs. Following are the benefits of using Cloud technology:-
- Faster implementation
- Minimal hardware support required by the company
- Downtime risk is minimized
- Data-control is still under company’s supervision
- Accurate and real time implementations
- Lower upfront costs
- Implementation – Companies in general plan out the changes in payroll processing in the beginning of the year or beginning of the financial year. To meet these time lines, companies should be aware of the delivery time of the HRMS solution. The product delivered should be compatible with organization’s needs and on time. It should be defect-free and ready-to-use right after the installation.
- Security – Data breach is most critical loss for any firm, be it employee’s personal/professional or company related. Any misuse of such sensitive information may harm the worker as well the company and its reputation in the market. The HRMS solution should provide accurate measures to ensure the data security. HR & Payroll Solution should provide controls to prevent theft of information. This is the most important parameter to be considered during evaluation phase.
- Customization –Different organizations have different salary structures, overtime payments, holiday bonus and performance incentives for employees working on higher and lower job levels. The solution implemented must fulfil all such variations and allow the company to customize the product according to present and future needs. Also companies should be able to add their logos on checks and reports. Tax calculations and updates should be part of the HRMS solution. Firms should also be in a position to decide if they can download the documents or share the same by email. These are few customization options, but the options may be more and variable for companies.
- Coherent HR and Payroll Solutions – Single solution for multiple problems is the new way to achieve more. Integrated solution which supports HR systems and Salary processing is very cardinal. Firms should consider this aspect carefully in the evaluation process. In addition to combining HR and payroll systems, a good product should also be able to integrate time management, leave calculation, attendance management, General ledger reports and employee document and letter management systems. Integrated systems ensure the data is secure and in sync across all the databases.
- Traits – Companies have varied needs and thus require best-fit solutions suitable to their necessity. Apart from the parameters discussed above following are the additional features to look for during evaluation:-
- Product stability
- Less paperwork
- Exhaustive reporting
- Employee asset management
- Leave and attendance management
- Employee Self-service (ESS)
- Local support
- Cost-effectiveness – Organizations are always in search of methods to reduce their costs. They are ever readily hunting for cost-cutting solutions to optimize their revenue. Businesses should look for vendors who offer light-weight solutions with inexpensive bill. Freeware is a boon but with employee data at cost, the price of the software should be reasonable. Companies must evaluate ROI and aligning of business goals to solution offerings while considering the solution pricing.
- Customer Support –High quality support from the dealer is highly appreciated. With sensitive data in hand and the pay check processing, vendor should make deliberate efforts to provide online and on-call support. Following questions are must to be included in the evaluation phase:-
- How stable is the product?
- Is customer care service available 24*7?
- What is the response and resolution time of the customer support executive?
- Does the vendor take into consideration the upgrade required in the next versions if the problem is generic?
- How many technical support representatives are employed?
- Is live chat or video an option for communication with the support team?
- How and where the complaints are lodged?
- Vendor Credibility –Be sure to check the track record of the vendor. A good consultant can go a long way in helping evaluate, performing reference checks and select right solution for your organization. Do not forget that company’s and employee’s information is at stake. When evaluating the reputation of a potential vendor, make sure to note how long the company has been in business. Also consider the types of industries the dealer distributes its product.
Consult stakeholders from all departments to understand their aspirations to take the appropriate decision. Ponder upon the above discussed points and do not let any loose thread hang before the final selection.
Latest Trends in HR and Payroll Software
Every piece in a puzzle is necessary to complete it. Same is applicable to the companies with multiple teams to manage myriad tasks. HR and finance team is the central part of the puzzle called business. The top brass of a company have to ensure that the HR and payroll team is equipped with latest tools and software to operate smoothly.
A swarm of software are available in the market using offbeat technologies and supporting umpteen features for HR and payroll solutions. The trends in the market vary with time and changing technology. The companies need customization options in order to optimize the operation of HR and Payroll system. Following are some latest trends that define the HR and Payroll Software.
Integrated HR operations
HR is not the only department which needs employee details. Payroll, recruitment team and project team also needs access to some data. There is a serious possibility that this leads to data duplicacy and data inconsistency. Thus arises the need for an integrated solution. Moreover integrated approach allows organizations to focus on team instead of individuals. Team management eventually leads to discrete employee governance.
Company policies and the federal laws govern the operations of HR department. The variations in these factors compel businesses to have customization options in the HR and Payroll Software. There are various formats of recruitment like full time, part time and casual employees. These formats require different payscale and salary structure. Thus customization is a major trend in the software sector.
Mobile Driven Technological software
Many companies are taking help of android and IOS apps to entitle their employees to file expense reports and track their personal information like employee payroll, hours, tax and other particulars via online portals. Smart phones are no more luxury, they are available in market with wide range of price and features. Employees with any smart phone and an internet connection can benefit with mobile driven technological software.
Cloud based Software
Enhanced user accessibility, increase in staff productivity, no expensive upgrades and installation costs and no infrastructure fee maked cloud technology very appealing. Also maintenance is trouble-free and does not need expert guidance. Thus it becomes very cost-effective for companies to implement cloud based solution.
Artificial Intelligence based software
AI driven software saves a lot of time as the queries are resolved in exact manner. Human interaction is reduced to a great extent and thus results obtained are accurate and precise. Many companies are thus opting for AI driven software for HR and Payroll activities as well.
- How HR and Payroll Solution reaped benefits for School in West YorkShire
- How HRIS brought all the HR functions under one umbrella for an American telecommunication company
- Human Resource Management Software (HRMS)
- Recruitment Software