If companies are to leverage payroll best practices to the greatest possible extent, some things may need to change internally. For example, for many companies, the ultimate payroll best practice is moving toward 100 percent electronic payment. How close companies get to that goal depends on a number of factors—some internal, some external.
“The U.S. is one of the few countries that does not have 100 percent electronic pay distribution and electronic distribution of pay statements and pay information,” says Felicia Cheek, director of the global payroll advisory program with The Hackett Group in Atlanta. One of the key reasons is myriad state laws and regulations make that goal difficult. “However, it is still a possible goal,” says Cheek.
Company culture can also get in the way. Not all companies are comfortable imposing mandates on employees, particularly when those mandates involve employee pay. However, companies need to rethink their assumptions about what is possible. For example, Cheek notes when companies began moving toward direct deposit, many companies focused those efforts primarily on salaried employees. The assumption was that hourly employees were unlikely to meet the banking requirements for direct deposit and less likely to qualify for a bank account. “This assumes that the hourly employee, who tend to earn less money than salaried employees, may have some financial issues that limit their ability to obtain a regular bank account,” says Cheek. “However, I do not believe that employers should look at it that way. It may be harder to implement a best practice in certain industries or with certain employee types, but that does not mean that you can’t do it.”
As companies try to move some aspects of payroll and time keeping toward self service through online portals or kiosks, assumptions about employee capabilities and willingness to participate are also unproductive. “You cannot assume that an employee does not know how to use a computer because they are hourly or because they are in the housekeeping department,” says Cheek. “We live in an electronic society.”
In many companies, implementing payroll best practices are as much about change management as they are about changing processes. Payroll in general has traditionally been considered a highly transactional back-office process and not always a high value one at that. If a company is planning on a merger or acquisition, chances are good that payroll will not be the first to be informed of the implications of the transaction even if there is likely to be a significant impact on payroll.
That is changing, however. As payroll transforms itself through best practices, its leaders will have more opportunities to add value to the organization. “As payroll becomes more globalized and companies leverage technology and strategic outsourcing in payroll, the payroll function is focusing more on being a strategic internal business partner,” says Cheek. This transformation of the overall payroll function itself is critical. If payroll leaders are to implement and leverage best practices, even during transitions brought on by events like a merger or acquisition, they need to be involved in these events from the start.Read the other articles in our payroll series "What's at Stake with Payroll Best Practices" and "The Nuts and Bolts of Payroll Best Practices".