Businesses are becoming increasingly cost-conscious and financially prudent, owing to the macroeconomic pressures in today’s TUNA (turbulent-uncertain-novel-ambiguous) environment.
In a digital knowledge economy, where people are the primary revenue-generating assets, people costs directly impact the bottom line. Hence, managing and optimising people costs is a basic hygiene factor for business sustenance. One such critical cost is the employee wage cost, which is directly controlled by the payroll management process that needs to be streamlined for process efficiency and workforce satisfaction.
The importance of seamless payroll management
Payroll management systems are not new. But with today’s complex and diverse workforce along with myriad work formats, HRMS payroll systems are facing new challenges.
Integrating multiple components such as time and attendance tracking, leave management, full-time and part-time workers, gig workers, bonus and reimbursement payments, overtime and arrears calculations, tax declarations, benefits administration, deductions, etc., can get challenging. The repercussions of payroll lapses are long-standing - from regulatory and compliance cases to financial leakages and employee dissatisfaction.
According to Maslow’s hierarchy of needs, pay is a basic hygiene factor for humans, and any mismatch in salary disbursement is bound to create ample disengagement and therein, productivity loss. As a result, inadequate payroll management practices can directly lead to an organisational loss in terms of revenue and brand name.
Workforce Institute’s research attested to this, with 49% of employees surveyed believing that paycheck errors reflect negatively on the organisation’s ability to manage key business functions.
How to streamline your Payroll Management Process?
To support you in refining your payroll process and ultimately boost your employee experience and culture, here are some steps that will prove invaluable:
Integrate payroll with employee database
Because payroll systems rope in several data sources, you will benefit from centralising employee data with the right HR software for your business. Integrate payroll with employee database. This can be done by integrating your HRMS and ERP systems. For example, Keka automatically keeps track of new joining and exiting employees and salary revisions for the month so you can review and settle payments.
Ensure a unified HR view of processes
Ensure you align your payroll software with other HR and organisational tools.This includes systems for time and attendance tracking, rewards and recognition programs, and performance management.
By synchronising these platforms, you facilitate seamless data flow and ensure information accuracy with minimal manual effort. This integration enhances operational efficiency, reduces errors, and provides a comprehensive overview of employee data, empowering HR teams to make informed decisions and streamline workflows effectively.
Configure for simplicity and holistic-view
Make your payroll management system methodical with preconfigured rules for specific populations. For example, for expense management, set rate limits for various bands of employees upfront and embed them in the system. Configure policies as per geographies, departments, employee bands, working ways, etc.
Design for compliance
You must ensure statutory compliance through the system by designing it as per compliance mandates. For example, ensuring correct PF calculations with automatic electronic filing inputs, configuring ESI applicability and computation rules by employee type, and computing professional tax or labour welfare fund contributions as per state-specific rules. Income tax compliance is another important area and is best automated with one-click Form 24Q generation with automatic FVU validation. This ensures timely tax deductions, adjustments and compliances despite changes in salaries, bonus payments, leave encashments, or loss of pay.
Enable seamless payroll communication
Your employees should have anytime-anywhere access to their payroll information. Enable two-way information flow by allowing employees to raise queries, be it their income tax calculations or providing a view of their past salary revisions. Also, use smart features, for example, Keka’s ‘The Inbox’ gets all employees and managers to keep track of pending expense requests in one place.
Enable employee self-service through automation
Modern-day payroll should empower employees to carry out payroll-related tasks independently. For instance, investing in an intuitive and easy-to-use interface for tax declarations and for uploading documents proofs, or a portal for people to scan and upload their receipts using their mobile apps to claim expenses.
Another way to ease employees’ efforts is to automatically track mileage using the attendance punches made by your field staff so they do not have to explicitly log their miles.
Go paperless with multi-device operations
No one wants to go through tedious paperwork to manage their payroll. You can bring comfort and convenience to your employees as well as to your payroll staff by enabling functionalities such as tracking, expenses, income tax calculation, tax declarations and uploads, pay slips viewing, etc. through mobile and tablets. For instance, employees can simply take a mobile shot of their expense receipt, upload it on their payroll portal, and the system processes it. Building the system to enable the release of cash advances to improve tracking increases operational efficiency.
Boost experience by integrating expense management into payroll
A good payroll management system is highly integrated with all functions and stakeholders. You must tightly integrate employee expense management with the payroll engine software to be able to release all your employee expense reimbursements alongside salary disbursements.
Instate adequate checks and balances
Efficiency and effectiveness are critical to payroll success. Hence, make sure to conduct periodic reviews of the systems and processes for accuracy of payroll administration to ensure up-to-date workings. Regular reconciliation of payroll reports with financial records will help course-correct promptly. Meanwhile, have embedded checks and balances in the system, for example, auto-approvals should have pre-allocated spending limits to reign in expenses.
Manage payroll throughout the month
With advanced payroll software, you can automatically keep track of new joining and exiting employees for the month and make adjustments throughout the month. You should continuously review and finalise all monetary impacts such as unpaid leaves and attendance deductions, pending bonus payments, on-hold payments, arrears, and pending dues, and make adjustments in real time, as needed.
Efficient Payroll Systems is a critical priority
Aptitude’s Payroll Index Report shows that there are twice as many payroll mistakes in homegrown payroll solutions, with an average rate of 11.4% as compared to third-party payroll solutions which is around 6.1%.
While organisations might believe that payroll is often not a ‘strategic value-add’, the truth is that a well-designed payroll management system can help boost company profitability and foster great employee engagement. Similarly, errors can mar the experience at all ends. It impacts productivity, well-being and overall employee morale. At the end of the day, it’s your people that are the backbone of your organisation.
Hence, you must invest in a holistic payroll management system, which is integrated with compliance, expense management, compensation and benefits systems, accounting tools, employee finances, and HRIS. Keka’s payroll software brings together the above and much more to provide a simple and smooth payroll management and payroll administration experience.
Find out more about how organisations can simply use payroll processes to boost employee experience and overall productivity. This article is part of a series on HR technology in emerging businesses in partnership with Keka; find more articles here.