Effort to Improve Pay System Easy to Obtain, Survey Says

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Payroll departments can implement process improvements fairly readily by applying more employee self-service, electronic pay and electronic Forms W-2s, said Felicia Cheek, director of the global time-to-pay advisory program at the consulting firm Hackett Group.

Cheek, who spoke Sept. 25 at a general session of the American Payroll Association's Fall Forum in Las Vegas, said results from Hackett Group's 2014 “Enterprise-Wide Payroll Performance Study” of 84 companies that paid to participate in the study showed that process-efficiency goals are easily obtained.

Many employers could implement more automation for transactional activities without much effort, she said. Time spent manually addressing transactions still dominates the task list of many of those surveyed, she said.

Time and attendance policies were the biggest obstacle to payroll process improvement, the survey said. Key information submitted late in the payroll process and inaccurate source data also are obstacles, Cheek said.

Organization and Costs

Payroll departments in the U.S. are aligned with either the human resources or the finance and accounting departments almost equally, the study said. Fifteen percent of the firms surveyed included payroll in a shared-services type of organization, although more than half of those groups considered by Hackett as top performers had payroll aligned with shared services, Cheek said.

For comparison purposes, surveyed high performers spend an average of $2.65 per pay slip and $70.78 a year to pay each employee, Cheek said, noting that the totals are lower than the average costs to process pay across the globe. For example, the annual cost to pay an employee in the Europe and the Middle East peer group was $384.30; the U.S. peer group cost was $99.13.

When payroll-processing costs rise, employers should identify the reasons for the increase, said John Raguz, CPP, payroll manager at the insurance provider Progressive Corp.

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