Today's post is submitted by Joyce Maroney, Executive Director of the Workforce Institute. Here we reveal a new survey in which we collaborated with The American Payroll Association to ask 651 payroll professionals from North America about the state of payroll in 2019.

In this research, we find that payroll pros are frustrated by the gap between their perception of the importance of the payroll function and the perception of their leaders. Fully 78% of payroll professionals see what they do as strategically important, but only 22% believe that C-level executives feel the same.

One of those executives who do share that view is Workforce Institute board member and payroll expert Martin Armstrong. In response to the survey results, Martin said,

"The payroll function is primed for disruption. With modern solutions now automating many of the previously manual, time-consuming elements of each pay cycle, payroll professionals have an opportunity to transform into data analysts, strategic consultants, and even educators. Organizations that empower their payroll teams empower their entire organization.” - Martin Armstrong, CPP, DBA, and Vice President of Payroll Shared Services at Charter Communication

Among our respondents, though, nearly 45% say their payroll solution is at least 6 years old and 27% indicate it is more than 10 years old. Processing payroll takes more than an entire day at three-quarters (72%) of organizations, while half (50%) of payroll professionals say they still do not track key performance indicators, virtually unchanged since last year’s study.

These folks see the value in higher powered payroll tech. Top asks include security access options based on user role (94%); on-demand reporting (89%); frequent compliance and regulatory updates (85%); real-time reporting and analytics (84%); and employee self-service (82%).To improve data quality, eliminate duplicate data-entry, and achieve real-time visibility, nearly two-thirds (60%) prefer a payroll solution unified with time and labor management and/or human resources.   

Are you reading this and asking yourself if things can really be so tough in payroll? Research we did in 2017 indicated that more than half the US workforce had experienced a problem with their paycheck during their career. Fifty-six percent reported paying a bill late because of a paycheck error. Fifty-eight percent reported living paycheck to paycheck - and having no patience for employers who couldn't pay them accurately and on time. In fact, 24% said they'd look for a new job after experiencing a single paycheck error while 25% said they'd be on the job search after two errors.

In a climate of super low unemployment, every little bit of retention strategy matters. Maybe it's time to take a closer look at whether your payroll processes and tools are giving them pause to think about greener pastures.

Today's post comes to us from board member Bob Clements. One of our predictions this year was that organizations will be putting more emphasis on disaster preparedness as part of a holistic human capital management strategy. Here Bob relates how Hurricane Sandy impacted one of his clients. Can you run payroll in the eye of a hurricane?

Lower Manhattan was plunged into darkness at about 9:00 PM on October 29, 2012. Hurricane Sandy was at its peak, and the superstorm was hammering New York City and the northeastern seaboard with torrential winds and driving rains. A power substation on the Lower East Side exploded due to flooding and the subsequent power outage would last for days. Data centers throughout the city went down, and for those that had power, voice and data communication was spotty at best.

One of my clients at the time was a not-for-profit, home-healthcare provider based in New York City. This client’s employees included nurses, therapists and social workers that would spend their days in the community, visiting patients and providing treatment in their homes throughout the five boroughs.

As Sandy headed towards the coast, New York declared a state of emergency, shutting down most transportation, evacuating coastal residents and deploying the National Guard. Like most businesses and agencies in the city, my client closed their offices, ensuring patients were as well off as they could be, and asking their employees to stay home through the storm. 

Once the storm passed, these healthcare workers would need to get back into the community, navigate the flooding and damage left behind by the hurricane, and provide much-needed care to their patients that may not have had a visit for several days. To do all of this, their employees would need money. Like many people, many of these employees lived paycheck-to-paycheck, and payday was only a couple of days away when the storm hit. My client knew that, in order for its employees to be ready to git the ground running, payroll had to be run on-time despite the superstorm.

From a technology perspective, this organization had moved its workforce management and payroll systems out of New York and into to the cloud a few years before. So, there was no risk of downtime. The challenge became communications.  How do you run payroll when your payroll administrators do not have power or access to the internet?

Desperate, the client’s payroll manager called our support desk. After what seemed like a hundred attempts to get a line out of New York, he was finally able to get through to our support manager. Our support manager then contacted one of our consultants in Toronto that had regularly worked with this client over the last few years and was familiar with the client’s policies, processes and systems. Over the next couple of hours, our consultant was able to access the client’s servers and run payroll, ensuring funds would be available on time, giving our client’s employees both peace of mind during a natural disaster and the ability to take care of their patients in the days that followed.

There are two important take-ways to this story. First, it is critical that an organization take care of its workforce, even if they are not at work when disaster strikes. Not only is this the right thing to do, it will allow for faster recovery once the critical hour passes. Second, ensure disaster recovery plans include a business continuity element. Having backups and even keeping systems online does no good if no one can access them. Nobody wants to think about a tragedy affecting them, but organizations that plan with these two things in mind will be better prepared should disaster strike.

Can your workers depend on you to pay them during emergencies?

Today's blog post comes from Workforce Institute board member Simon Porter, NGA Human Resources

I’ve worked for years and it wasn’t until I started working for a payroll services company that I ever considered how my salary arrives at my bank account each month. I just assumed that my correct wage, with all additions and deductions made correctly, would be in my account, ready to spend as the clock struck payday. Had it not been, this might have been the only time I ever questioned the process.

For most of us, the only reason we work is to be paid. Before we accept a job, we negotiate our total rewards and payroll benefits. We discuss bonus programmes and the parameters to pay-out. However, once we’re onboard, few of us ever consider the people and processes that sit behind the transfer of funds from our employer to our banks. Even fewer of us ever think to recognize the complexity of the processes.

You will rarely, if ever, hear a payroll administrator say is; “Oh it was great to receive so many recognitions of thanks this month from the 1,000s of colleagues I paid accurately and on time, as I always do.”  In this blog, I set out to provide a snapshot of the role of payroll department.

Processing payroll is a complex process

Payroll is not just a case of calculating numbers. It is a legislative minefield. Each country, and in some countries, each region, have their payroll nuances. These all need to be addressed and factored into each payroll run. And, you can’t assume that there haven’t been changes made. Some countries, especially in emerging economies, adjust their income tax rates almost monthly.

There is no margin for error. And. If you thought GDPR was going to simplify the HR data challenge in Europe, this is not so. Most countries still have layers of PII legislation on top of this. Challenging enough? It keeps getting more so. Still the majority of multinational organizations use legacy processes or a chaotic set-up, the result of years of M&A activity to process payroll.

This means that each country has its own way of “doing payroll”. Dozens of local payroll providers, different systems, workflows, data storage, etc. Such a decentralized payroll model is not sustainable long-term. It can’t grow with the business; there is no room for innovation; there is zero transparency; it can’t provide single-source data, essential for business planning; it can’t be centrally managed and, it’s an expensive, high-risk approach to payroll.

Only by taking a unified approach to global payroll can organizations ever deliver the effectiveness and economics needed for the payroll function.

It’s for this reason that so many of the world’s major brands have their payroll services managed by or even outsourced in its entirety to NGA HR. We remove the risk and ensure payroll is compliant, data-safe, on-time and correct -every run.

This is far from a simple process in one country. The more countries there are employees, the greater the payroll challenge becomes and the higher the personal risk that we might not get paid!  This said, there are many more organisations that for now, press on with managing their own payroll, to varying degrees of success.

Global Payroll Complexity Index addresses payroll processing challenge

Many of these organizations use the biennial Global Payroll Complexity Index (GPCI) to decide which of the countries they will continue to manage in-house and which they will outsource. This is also a well-used tool for business transformation teams who are mapping the full challenge of expansion into a new territory.

We’re at the research stage of the 2019 GPCI report. This will be published in late May. To be highly accurate, it requires the input of international payroll professionals. Already, 1,000s have shared their experiences, from every corner of the world.

We’d love to add your payroll team’s experiences to this. They can take the GPCI survey here and feel proud that they’re providing the intelligence needed to ensure we all continue to get paid on time every payroll run, in whichever country we work. In return, you will receive a complimentary copy of the report.

What happened in the payroll department?

So far in this blog, I have outlined payroll and I expect for many this has presented a very different view to that most of us have about the payroll process. We’ve moved so far on from cash in a brown envelope.

Payroll is now data driven. In most organizations, the payroll department is a highly secure environment. The payroll teams work in very controlled conditions to ensure our personal identifiable information is kept confidential.

Inside, the payroll team calculates employee compensation in return for hours worked and ensure the payments are made. There are many steps and processes to be followed, but in summary, it takes 15 steps to ensure we are all paid on time, accurately and knowing that all the right deductions have been made for us, each payroll run. This is a huge burden they carry for us. I think we should all take a moment to spare a gracious thought to the teams of people who ensure our salaries make it to the bank.

The 15 steps to payroll success…. and this is not all

1. Creates and maintain payroll policies, procedures and best practices for the organization.
2. Maintain payroll information through data collection, calculation and entry.
3. Keep employee records up-to-date for benefits eligibility, insurance coverage, exemptions, changes in role/department, job changes, savings deductions, etc.
4. Process new employees and temporary workers for financial or tax purposes during onboarding.
5. Calculate taxes (federal and state income tax and social security taxes)
6. Report on taxes, social security, deductions, leave, disability, non-taxable wages, etc.
7. Keep educated on changes to laws and company policies.
8. Update the business on these changes.
9. Issues pay checks to employees according to the payment structure of the business.
10. Provides payroll information to employees and resolve any issues.
11. Keep up to date with cyclical dates and deadlines.
12. Calculates payments for employer’s social security, unemployment, worker’s compensation, and benefits coverage.
13. Prepare management reports on a monthly, quarterly, and year-end basis.
14. File appropriate tax forms.
15. Communicates regularly with HR and finance.

The following post is courtesy of our board member Natalie Bickford,  Group HR Director at Merlin Entertainments PLC.

In 2018, UK legislation came into force, requiring companies with more than 250 employees to publish gender pay information, publicly on their websites. Over the last decade, the government has encouraged companies to do more to develop and retain their female employees, but now they are getting tougher on getting businesses to drive change.

The reporting of the mean and median gender pay gap by all British companies over the last few months has been great fodder for the media. Headlines highlight that (gasp…) “78% of companies pay men more than women”, and “men make up the majority of higher paid jobs”. Particular publicly listed companies have been hauled over the coals, especially those in industries with the biggest pay gap, including the financial and insurance sectors, with a pay gap of 35.6%, and the airline industry, with EasyJet, for example, highlighted with a gender pay gap of 52%.

Not really much of a surprise, when we know that significantly more women than men in the UK undertake lower paid and more part time work across the economy. And that at senior levels of publicly listed companies, the large majority of CEOs and Executive Board members are men. In actual fact, there are still more CEOs called John, than there are female CEOs in the UK FTSE 100.

And unlike equal pay, the gender pay gap has no quick fix. To really start to close the gap organizations need to develop and grow their female employees into more senior and better paid jobs. If the airline industry wants to reduce pay differentials, they need to hire and train more female pilots and less female cabin-crew. Banks will have to find ways to bring women who have left the sector to raise families back into the business, and entice them with flexible work practices and female focused development programs. All companies must take a look at their hiring and promotion practices, consider the impact of unconscious bias on their decision making, and quite frankly, rethink the traditional approach to career progression.

Government also has an ongoing role to play, in creating legislation, but also in finding ways to subsidize high quality childcare to give parents genuine choices around balancing family with work. This has been the significant underpin to the success of Nordic countries in driving gender diversity into their boardrooms, and as a result reaping the ensuing economic rewards.

So, for all that the gender pay gap disclosure is another piece of red-tape for UK businesses to report on, I for one, think that it will be a catalyst that will eventually lead us to start changing the way we do things around here.

You've probably heard and maybe used the expression "you can't manage what you can't measure".  Leaders pay a lot of attention to staff expenses, but may not pay as much attention to the payroll function until there is a problem.  And the costs associated with not getting payroll right can be significant.  The Wage and Hour Division of the United States Department of Labor reported that in fiscal 2017 they recovered more than $270 million in back wages from employers who weren't compliant with wage and hour laws.

Yet, research we did earlier this year focused on labor law compliance revealed that 66 percent of payroll professionals and 51 percent of HR practitioners say their organization occasionally cuts corners that may jeopardize compliance.  This is true for more than two-thirds (69 percent) of all respondents whose systems are more than five years old.  Beyond the costs associated with labor law violations, there is an adverse impact on employee experience and loyalty when paycheck errors occur.  Research we did in 2017 indicated that more than half of American workers had experienced a payroll error during their careers. Thirty-seven percent indicated that they'd had to make a late payment on a bill due to a payroll error by their employer.

Despite these well known costs of insufficient payroll practices, in newly published research that Kronos Incorporated conducted with the American Payroll Association, nearly half (49 percent) of all organizations surveyed admitted to not tracking key performance indicators (KPIs) in their payroll department.  This study polled nearly 1,000 payroll professionals from small, mid, and enterprise-size organizations across all industries.

For nearly a third (29 percent) of survey respondents, their payroll solution is 10 or more years old.  The findings suggest outdated, manual processes and legacy payroll solutions limit a payroll department’s ability to track and report KPIs.  Approximately half (49 percent) of respondents admitted that their payroll team does not regularly track and report on KPIs, a possible side effect of using older solutions.

For those who do track KPIs (51 percent), the most common metrics added over the last decade include measuring the impact of manual/voided/stopped payments (31 percent), payment errors as a percent of total payroll payments (23 percent), and total processing time per pay cycle (18 percent) – all of which are direct indicators of payroll performance and accuracy.  Progressive payroll departments are also focusing on their impact on the employee experience: about one-fifth (19 percent) now measure the average time to service employee requests per day, week, and month. This is significant because a slow response to payroll requests has a direct, negative impact on engagement.

Payroll professionals know they need better tools to manage and measure KPI's.  This newest research reveals a wish list of capabilities that our respondents would like to have in order to address both compliance and employee satisfaction:

• To make their own role more effective, payroll professionals want their next solution to have on-demand reporting and analytics (87 percent), seamless integration with time and labor management to improve data quality (81 percent), and the comprehensive ability to track multiple worker classifications (76 percent), such as seasonal and temporary employees in addition to full- and part-time.
• With an eye on the employee experience, an intuitive user experience (80 percent) and employee self-service (77 percent) scored highly as “must-have” features.
• Almost all survey respondents (90 percent) say a solution that grants security-access levels based on position is critical. This would empower others within the organization – such as finance, operations, or executive leadership – to incorporate payroll data into their own reports for a more complete look at performance without exposing sensitive employee personnel information.

How confident are you in your organization's capabilities when it comes to managing the payroll function?

Thank you to everyone who joined our tweet chat last week! This time, our chat was regarding our most recent surveys on payroll, and how payroll issues can undermine employee experience. Part one of this survey was released back in March, and part two was just released last week - so we, along with several members of The Workforce Institute Advisory Board and other industry influencers - had a lot to talk about!

Missed the chat? You can view the entire transcript below (as well as here), or search via #KronosChat on Twitter. We’d love to hear what you think about this topic – tweet us using #KronosChat, or comment below to share your thoughts.