Companies that computerize and integrate their payroll, benefits and HR administration are happier places than those that are still paper-reliant, acording to a study by The Guardian Life Insurance Company of America.
But getting firms to commit the time and capital – and to work past the initial intricacies – can be a challenge, according to some experts. Still, they said, the long-term rewards are worth it.
A fast-growing Central New Jersey-based information technology consulting shop with about 250 employees used a “major” payroll provider and an employee benefits broker, said George LaRocque, founder and principal analyst of HRWins, an HR technology consulting firm. “But their systems were not integrated, and they tried to link everything together through spreadsheets and an accounting system,” he noted. “They also used an ad hoc collection of app-based programs to survey employees about their satisfaction. This is a very common approach, although it’s also not very efficient.”
HRWins set the company up on a “core HR system that embedded the payroll function and automated and integrated tasks like benefits enrollment and management,” he added. “This gave management much more insight into operations, along with improved control over them.”
LaRocque didn’t try to minimize the scope of such an undertaking, but did note that companies can take some steps to head off any hiccups along the way.
“First, management has to study and understand the basics,” he suggested. “Start with core functions like getting payroll and benefits into an integrated platform, then work on issues like recruiting. Don’t get too far ahead of yourself by chasing shiny objects like artificial intelligence or machine learning in the beginning.”
Many companies have employee data, payroll and benefits on a variety of platforms that may not communicate well with each other, he added. “That’s why you have to proceed slowly. If you introduce too many new solutions at once, things can get unnecessarily complicated.”
The good news is that “more companies are moving to integrated systems,” LaRocque said, adding that part of the reason is simple demographics. “We’re seeing a shift in the workforce, where more millennials are leading businesses or starting ones up themselves, and they’re ‘digitally native,’ having grown up with online solutions.”
There are other factors to weigh. “When companies consider ways to integrate their systems, they should think about scalability,” noted Michael Timmes, a senior human resource specialist in the New Jersey office of Insperity, which provides human resources and business performance solutions. “The platforms you’re utilizing may be sufficient for your organization now, but as you grow will they be able to accommodate your needs three or five years down the road?”
A business that does decide to integrate its payroll and other systems should also be willing to commit the necessary time, he said. “You’ll have to devote resources to the initial setup, but the benefits of linking and automating your systems will be significant.”
When companies consider ways to integrate their systems, they should think about scalability. The platforms you’re utilizing may be sufficient for your organization now, but as you grow will they be able to accommodate your needs three or five years down the road?
– Michael Timmes
Timmes suggested working closely with a software vendor to determine what kinds of data are needed, and “what kind of employee information you may need to collect. You may be transmitting sensitive data, like social security and other personally identifiable information, so ensure beforehand that it’s being encrypted and transmitted securely. In some cases, handwritten records may need to be keystroked, so take the necessary time to be sure that it’s being transcribed accurately.”
Hours cut to minutes
The biggest challenge, he noted, “is getting clients to look at the whole process and investing the initial time to get it done properly. But any short-term inconvenience will be offset by by the long-term benefits. Formerly cumbersome tasks like helping employees through an open enrollment period, or onboarding new hires will be a lot smoother.”
When employees make healthcare coverage choices, he noted, “they don’t have to do it in the office when they may feel like they’re under a time constraint. Instead they can log in from the comfort of their home, after work, when they can take their time and examine their options. If a client has questions, our own professionals will go in to help them on a hands-on basis.”
Companies also benefit since issues like IRS reporting and filing can be done efficiently and more accurately, Timmes added.
“We were retained by a telecommunications company with New Jersey operations,” said Timmes. “The firm wanted to integrate its benefits, and time and attendance systems. So we integrated the onboarding, time and attendance, and benefits systems with payroll, and it made their recordkeeping, withholding and filing a lot easier. Some tasks that formerly took hours were slashed to 20 minutes or less. “
Recently enacted measures like the New Jersey Earned Sick Leave Law – which allows employees to accrue one hour of earned sick leave for every 30 hours worked, up to 40 hours each year – has made recordkeeping even more important now, he added. “It’s vital to track hours, so when payroll and other systems are integrated, you can submit hours, get an accurate count and then accrue the paid leave and reflect it on a payroll stub so employees can easily track their hours, too. This kind of integration is particularly important to employers with multi-state operations, who may have to track and comply with a variety of standards.”
It can also be crucial if company has to reduce its employee count. “Integrated systems make it easier for a business to consider the makeup of workforce and whether protected categories will be impacted,” said Timmes. “Easily accessing and analyzing this kind of information can help management determine whether there’s a justifiable business case to move forward.”
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