Metric of the Month Talent Management: Do Your Payroll Resources Support Your Vision?

Do you know what activities your payroll resources are focused on? Further, do you have the right resources in place to support the vision of a top performing payroll organization? Our 2010 Global Payroll Performance Study shows 42% of their time is spent on transactional activities such as employee data maintenance and 14% of their time is spent on technical activities such as running the general ledger interface and producing management reports. To support these activities, 52% of their resources are clerical.

Over the next two years as top performers continue to implement process improvements that leverage technology in the areas of automation and employee self service, the transactional focus is expected to decrease to 39% and the technical focus will decrease to 11% allowing them to focus more on analytical and process improvement type activities. While we don't see any changes in the number of managerial resources; projected payroll resource workforce adjustments include reducing clerical resources and increasing professional resources to support the changes we are seeing in payroll organizations.

Although specific improvements will vary by company, some may include implementing more employee and manager self service functionality and working with Human Resources to develop a culture that holds employees and managers accountable. Manager self service can also be used to generate and distribute reports, freeing payroll resources to work on more value added activities that are more analytical and process improvement in nature.

Last Month Exception Processes: Salary Overpayments, Are You Managing Yours?

As companies continue to focus on controlling and reducing labor costs, concern for salary overpayments is moving closer to the front of the line. Data from our 2010 Global Payroll Performance Study shows hundreds of thousands of dollars in overpayments are being made on an annual basis and the collection rate is not as high as we would expect. In fact, for Top Performers, the annual amount of overpayments is $375,968 and the collection rate is only 68% or $255,658. In the Americas Region, the number is even higher at $979,883, with a slightly higher collection rate of 71%. What's more interesting, is many companies do not track salary overpayments as a normal part of their payroll process. They should definitely be viewed as a symptom of the overall quality of the end to end payroll process. Further they can have a direct impact on the corporate balance sheet and cash flow.

In many instances, salary overpayments are collected without incident and/or consequences. However, there are many jurisdictions that have legislative requirements around how and when an employer can collect salary overpayments from future earning. For example, the law is very specific in New York and does not allow the employer to collect salary overpayments from employees wages in most circumstances. In Canada and the UK, employers can recover the overpaid salary amount through future earnings as long as certain requirements are met. Simply stated, in order to minimize the risk of non compliance, it's much easier to build end to end system and business processes with the appropriate audit checks to proactively prevent salary overpayments. Tracking salary overpayments and performing a root cause analysis to determine why they are happening will help create a proactive avoidance plan and collection policy. For example, our data shows 71% of overpayments are the result of employee terminations and another 50% are caused by leave of absence activities. Do you know what the root cause of salary overpayments are at your organization? As a strategic payroll leader have you worked with Human Resources to create a comprehensive Salary Overpayment Policy that is conducive to Top Performance in payroll?

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