Richard McKenna

Monday, 22 September 2003 12:10

Ties that bind

How much money could your business save by processing its own payroll? How much does it cost to recruit and hire one employee? Do you know how much turnover costs your business each year?

Many organizations are asking these questions and turning to technology for answers.

As businesses seek new ways to save money and reduce costs, they are looking at human resources management and payroll processing as two areas that can contribute significant cost savings. Here are some ways an integrated technology solution can help reduce costs in your business.

Start with your human resources department, which probably generates an inordinate amount of time-consuming paperwork. Human resources management has traditionally been very paper-intensive. Resumes, interview documentation, evaluations, letters, references, training records and a host of other HR documents are typically stored separately.

Highly paid HR professionals are spending increasing amounts of time completing perfunctory paperwork rather than analyzing and managing the human resources of the business.

Changes in human resources information are usually recorded manually on paper and oftentimes are entered into two or three systems in the HR department. Even worse, much of the HR/benefits information is entered again in the payroll department. This process is fraught with redundancy and rework.

All of this manual work keeps the HR professional from focusing on the important issues facing the organization -- turnover, benefits, training and recruiting -- and leaves no time for serious analysis of HR information.

If you need to reduce the cost of your HR management systems, consider a technology solution. Several new software products that allow you to streamline recruiting, hiring, training and benefits information processing.

These solutions permit employee information to be entered once and accessed across the organization. Changes in payroll can automatically be made to HR records and vice versa. Timekeeping can be electronically collected and automatically forwarded to payroll and human resources, which eliminates the need to re-enter information.

Now look at your payroll department. Aside from the traditional disconnect between payroll and human resources, there are significant costs associated with outsourcing payroll. Many payroll processing providers charge extra fees for management reporting/analysis and tax filing services.

Several of the larger payroll processing companies hold your data and charge you to access it for reporting purposes. More than likely, you are doing most of the payroll processing now, and just forward files to the third-party processor. If you are already doing 80 percent of this work, you can save significantly by returning the entire process in-house.

New software products allow employers to collect employee time, process payroll, transfer funds and submit tax filings electronically. Many third-party payroll processing companies are simply filing your taxes instead of processing the entire payroll. Several software providers can also transmit your tax filings electronically, eliminating the need for a third-party payroll processing provider.

These software applications allow human resources to automatically update changes in payroll information, such as pay changes, name changes and changes in deductions, and share this information throughout the entire system. Richard X. McKenna is a Schneider Downs consulting advisors manager. He is responsible for identifying and implementing process improvements and developing the requirements for the implementation of software products. Reach him at (412) 261-3644 or rmckenna@sdcpa.com.