Payroll and HR may seem like a relatively simple and straightforward part of doing business, but there is actually a lot of work involved in doing things the right way. From making sure payroll is correct and on time to administrating benefits, there are a lot of moving parts that require attention. There is also a lot to know and keep up with, including regulations to follow and new legislation.
Often times, however, companies allow payroll and HR to take a backseat to other areas of business. This is especially true for older companies and companies with small payroll and HR departments. Over time, this can lead to outdated processes that drag down efficiency and inhibits growth. It can even take a bite of your profitability and reduce your ability to compete.
Here are a few of the ways outdated payroll and HR processes can cost you, along with some tips on how you can get your company back on track.
Increased risk
Running a business comes with some legal liabilities that you have to stay in front of, but this can be a real challenge. Keeping up with current tax tables, pay equity laws and hitting all reporting requirements can keep your payroll team busy. HR compliance issues, such as tracking certifications for licensed employees and handling workers’ compensation claims incorrectly can quickly create legal problems.
The fix
If your company doesn’t regularly revisit payroll and HR processes, focusing on compliance issues, you may be facing more risk than you realize. To solve this, you may want to audit your department’s policies every quarter. You can use this as an opportunity to talk about new legislation and make sure everyone is up to date. Focusing on continuing education is also a good idea. Depending on your team size, you could appoint someone to oversee training and meet monthly to touch base and share knowledge.
Costs related to errors
Outdated systems, like paper time cards and spreadsheets for time tracking, or paper-based benefits enrollment, involve a lot of manual steps. Any time you have manual steps, you increase the opportunity for error. While some mistakes are simple to solve, others create risk and cost your team lots of time to track down and solve. This means that even a relatively small problem has the ability to cost your company real dollars. There are also plenty of mistakes that come with legal liabilities which can lead to even larger costs down the road.
The Fix
Limiting errors often starts with reducing the manual work involved in payroll and HR processes. Software is an easy fix for this because the right system will reduce manual entry and check calculations. It may also flag potential errors, helping you find mistakes that may otherwise be missed. This can help your team find and resolve issues before they create compliance problems. Software can also make tasks far quicker, reducing the administrative cost involved in payroll and HR.
Costs related to inefficiency
There was once a time when businesses relied largely on manual processes. This essentially meant that there was a lot of paperwork and files being passed around. It was fairly easy for information to get lost, miscommunicated, miscopied and misplaced. The time employees spent handling data and tracking down problems left teams with two options; add more people or get less done. Both of these options come with costs, in hours paid out or opportunities lost.
The Fix
Companies that don’t work to streamline operations are still losing out due to inefficient processes. This can make it hard to compete and cost your business real dollars in lost efficiency. One of the easiest ways to solve this is to use technology to simplify areas like payroll, human resource management and project management. Once implemented, technology can reduce the administrative burden, stress and inefficiencies caused by outdated procedures.
Reduced ability to grow and compete
Is your administrative team buried under mundane tasks, unable to concentrate on more proactive and beneficial work? Do you struggle to recruit and onboard new talent? Do people say they need more training in order to succeed? If the answer to any of these is “yes,” your teams are likely stretched and stressed by outdated processes. This has many negative implications, from preventing growth and hurting your company’s culture to making you less competitive.
The Fix
Growth and the ability to compete relies on the success of every department, so you’ll need to involve everyone to identify your pain points. A company-wide survey can kick start the process. Look for issues related to payroll, HR, training and overall company culture. Ask for input on problems as well as ideas for solving them. Once you identify problems, you’ll be able to find solutions. For instance, if lack of training is called out, you’ll want to revisit your training procedures.
While it’s easy to leave payroll and HR behind to focus on other areas of your business, it’s important to include them in your overall company vision. These vital functions serve as the backbone of your company, impacting everything from the efficiency of your teams to your ability to edge out the competition. Fortunately, it’s not difficult to update and streamline these areas by being flexible, focusing on continued education and turning to technology when possible.
The material presented here is educational in nature and is not intended to be, nor should be relied upon, as legal or financial advice. Please consult with an attorney or financial professional for advice.
