Is compliance a major stress-point for the HR and payroll? Do they often cut corners to make ends meet? Workforce Institute at Kronos gives some insights in its survey.
Does the word compliance instill a sense of stress like no other? Do you think you are understaffed and do not have enough resources to ensure compliance related regulation and policies are implemented evenly in your organization? Have you ever taken a shortcut, or glossed over the details, to make sure you are on the right side of the law? If you answer to any of above questions is yes, you are not alone. A recent survey by The Workforce Institute at Kronos says that compliance is a major stress-point for the HR and payroll, and often, corners are cut to make ends meet.
What is the survey?
‘The Risky Business Survey’ was conducted by Morar Consulting on behalf of The Workforce Institute at Kronos Incorporated with 812 HR and payroll leaders in the USA during July 10-14, 2017. The study was conducted with leaders from different sectors and working in organisation of varying sizes. The purpose of the survey was to understand how a lack of time and resources creates challenges regarding compliance.
What did the survey find?
The survey found that a majority of the HR and payroll professionals have witnessed compliance activities by their colleagues that created unnecessary risk. The following are some of the prominent findings of the survey:
Risk is present in all organizations of all sizes
- 66% of payroll professionals and 51% of HR practitioners stated that their organization occasionally cuts corners that jeopardize compliance.
- While larger organizations (between 2,500-9,999 employees) have the most instances of compromising on compliance, even the smaller ones are not far behind.
- 68% of organizations with 2,500-9,999 employees, 58% of organizations with 1,000-2,499 employees, 56% of organizations with 500-999 employees and 50% of those with less than 500 employees admitted to using shortcuts.
- Nearly 69% of all respondents said that their compliance systems are more than five years old.
HR and Payroll is pressed for time and resources
- On an average, 36 hours a week are spent on compliance-related activities, which range from tracking regulatory proposals to creating and communicating new policies.
- The number varies with the size of the organization: Less than 500 employees: 23 hours per week, 500-999 employees: 31 hours per week and 1,000-2,499 employees: 36 hours.
- Organisations using newer and more efficient technology-based compliance solutions spend nearly ten hours lesser on compliance-related activities.
- Those with systems more than five years old spend up to 43 hours, as compared to 34 hours of those organization that has newer systems.
Compliance is time-consuming and costly
- 47% of all the respondents said that maintaining multiple, duplicate employee records increases compliance risk.
- On an average, five separate records per employee are maintained in an organization, and nearly 32 hours per week are allocated on manual and duplicate data entry for the same.
- 74% of all the participants agree that cloud solutions are best suited to support today’s constantly changing compliance landscape.
- If lesser time and money is being spent on compliance, HR and payroll professionals would tackle the following issues: improving overall payroll efficiency (22%), increasing manager effectiveness (13%), more employee/internal communications (11%), organisational strategy (10%) and better performance management (9%).
- A single major regulatory change can cost an organization between $40,000 and $100,000.
If lesser time and money are spent on compliance, HR and payroll professionals would tackle the following issues: improving overall payroll efficiency (22%), increasing manager effectiveness (13%), more employee/internal communications (11%), organisational strategy (10%) and better performance management (9%).
What do the results show?
Regulations are formulated to serve a purpose; if monitoring or implementing them becomes a challenge, something is amiss. While regulations and compliance systems serve an important purpose and keep a check on vested interests, they need to be made more efficient and robust in order to be fully effective. The fact that a majority of respondents admitted to cutting corners because they were pressed for time or resources indicates that compliance systems, the way they exist, are missing the point.
“HR and payroll professionals are among the most thoughtful, passionate and meticulous professionals within any organization. They don’t cut corners because they’re careless: usually, it’s because they’re overburdened, understaffed, or lack the proper resources required to handle anything above and beyond the day-to-day activities required to run the department. Organizations that ensure their HR and payroll teams have access to modern solutions will be able to strike a better balance between time-consuming compliance requirements and the strategic activities needed to build a highly engaged workforce.” says Joyce Maroney, Executive Director, The Workforce Institute at Kronos
Compliance related policies and regulations, when reduced to a checklist defeat the very purpose with which they have been established in the first place. In a country like India, one might assume that the challenge is even more complex; with a bigger workforce working in the informal sector and absence of effective checks and monitoring systems. That being said, there are instances wherein the implementation of some well-intentioned policies also proves to be rather cumbersome.
In such a context, the personnel responsible for ensuring compliance are likely to take shortcuts. Thus, globally, as well as in India, there is a need to strengthen monitoring and evaluation systems and also provide employers with the flexibility to follow them in spirit. Finally, employers need to adopt newer automated technology based processes which reduce the manual burden on the already-pressed-for-time HR. As long as the word compliance evokes dread and frustration among employers and HR, policies meant to safeguard unique employee interests will continue to operate at sub-optimal levels.