Feb 15, 2008
Quality techniques such as continuous improvement (CI), Total Quality Management and Six Sigma are designed to ensure consistent quality, reduce waste, make production lines run more efficiently, and speed up manufacturing to achieve and maintain competitiveness. Often overlooked in the manufacturing industry are developments in the back office, which can make the shop floor more productive. Human resources and payroll may not immediately spring to mind when considering which departmental improvements could offer company-wide benefit. But along with time and attendance, investment in new technology in these areas could have a dramatic effect.
In the manufacturing field today, advanced software can be used to measure time and attendance effectively and leading systems will even link this automatically to payroll and HR information. The time and attendance figures feed into productivity or efficiency measures, which allow managers to measure how effectively they are deploying their staff. Reports on areas such as output per head, cost per unit manufactured and cost efficiency of shift patterns allow managers to take a strategic view of resource allocation. Managers can also run projections – for example when deciding whether it’s better to move operations to a country where labour is cheaper, or to re-organise so that operations remain in situ but people are deployed more effectively. Such reports can be run by production line, department or other measures; allowing for improved forecasting and helping to identify where there are recurring production line errors, and whether current processes carried out semi-manually should be automated.
In the manufacturing business generally sales prices are fairly static whilst costs continually rise, forcing organisations to do more with less to maintain or improve their profit margins. Identifying which employees are less effective flags up training needs or can help to identify where processes need to be streamlined.
Currently many organisations are unsure exactly how many staff are available to them, let alone how many man hours and which job function are on offer. Many HR departments manually gather time and attendance information via timesheets and clock in /clock out systems. They have separate HR and payroll systems, resulting in heavy administrative and accountancy burdens, keying-in errors and problems reconciling the various systems. Surveys have found that HR and payroll administration typically accounts for around 20 per cent of the HR department’s time. Moving to a system which incorporates HR, payroll and time and attendance information, or one which seamlessly integrates with another company’s time and attendance modules eliminates the need to carry out reconciliation of time and attendance against payroll. Information gathered on attendance can also be used to carry out more effective appraisals, plus being paid accurately is a sure way to boost staff morale. HR staff and managers can better identify which staff are most efficient and flag them up as mentors, to receive additional merit pay or when considering promotions. Absences cost the UK £13.4bn in 2006 (CBI/AXA survey) and time and attendance modules can also highlight patterns of absence such as ‘sickies’ over long weekends.
Choosing a new system for HR or payroll can seem daunting. Major outsourcers will provide a very effective service when tasked with outsourcing a company’s total business operations, but they are unable to provide specialist software for one area of the business, such as payroll or HR. This is where niche software suppliers and outsourcers come into their own - offering best of breed software covering services including payroll, HR, benefits, managed job boards and third party recruitment.
Organisations also seek specialist HR or payroll software to improve the accountability of these departments; for greater scalability of the HR and payroll functions, to take advantage of software available ‘for lease’ or via ASP-based models, to improve visibility of costs and to seek greater operating efficiencies. Many companies wish they could use specialist software for their HR or payroll but have bought into an ERP system such as SAP. However, certain leading software will ‘sit above’ their existing ERP system and integrate with it; meaning that they can gain new functionality quickly without discarding their existing IT investment. Being midway through a Transformation and HR delivery model is also not a barrier. With care it is possible to exploit the more flexible software packages, including Patersons’, at any stage in the transformation life cycle with great results.
What to look for from your payroll specialist:
- One global contract (not country by country)
- Consistent service delivery across the world
- Web-based technology for fast, cost-effective implementation and upgrades
- A variety of payroll partners in countries to ensure that the client’s needs can be matched to the specialist best suited to them, whether it’s a chartered accountant or a large bureau service
- Multilingual, multicurrency system
- Pulls data in from existing solutions such as SAP or Peoplesoft
- Integrated workflow process to guarantee compliance with regulations such as Sarbanes-Oxley
- Flexible system to allow it to incorporate best practice and process improvements on a country-by-country basis
Regulations such as the Sarbanes-Oxley Act, which focuses on the accuracy and reliability of corporate information, encourage companies to choose new software to help them manage their HR and payroll operations. A solution that allows flexibility over business processes through flexible workflow, will enable the company to continue to use and develop its own best business practice. Workflow in web-based global HR software can also help to reduce admin-heavy paper-based tasks while employees can update their own details online via 'self-service'. It also reduces photocopying/printing spend which can be considerable. Offices around the world can access HR data from one central point and information becomes much more transparent for managers at both country and global level. This saves time for HR staff who no longer need to rekey information into different systems, and also reduces employee time completing forms when information such as change of address and other personal details can be completed online. More sophisticated systems also allow staff to view and flex their benefits and complete absence and holiday forms online - leading to improved response times and better planning across departments or business units. Employers can set access levels for staff to ensuring that they are able to access and edit what is suitable for their job function. It also reduces the need for IT capability in each country. The web-based software is updated and administered centrally, ensuring there is no disruption to the working year.
An increasingly global workforce also means that some companies need to consider expatriate staff. Handling expatriates and their expenses efficiently is essential, particularly post merger or acquisition, when staff are more sensitive to change. Mergers and acquisitions may also lead to assignments being cut short or extended, to changes in employment status or a change of role for large numbers of employees. Particular sensitivity to the expat staff should be shown as they may feel isolated from the rest of the company, leading to insecurity, a reduction in job efficiency, and possibly resignation. To help overcome this it is essential to capture information on expats' skills and experience. During M+A activities there is a time when HR policies are subject to change; they may merge to provide best practice and equalisation of benefits and contracts can be difficult. Dealing with foreign labour laws is complex and local knowledge is vital. Ideally what’s needed is a global expatriate management system that can handle all this data integrated into one system, which will also manage the payrolls and the costings. This platform can also help ensure compliance with local tax and social security legislation. Similarly international assignments can be complex and time-consuming for HR staff to manage. Global HR systems can manage compensation and benefits, assignment allowances, relocation, multi-country/lingual administration etc. effectively.
Global recruitment and selection for both internal and external applicants can also benefit from advances in technology. The forerunners in web-based systems allow companies to take applications online via a website or intranet, to track applicants including keeping records of CVs, assessment tests, offer letters, reject letters and contracts. HR departments can create requests for hire, job descriptions and person specifications to upload onto a secure web server to share with colleagues around the world. They can automatically create rejection, short list, interview letters, offers of employment and contracts at the press of a button. Constant updates means the information is always available in real-time, reducing the need for constant internal reporting on progress. Applicant searches become easier via a search of the entire company’s database, including criteria such as education, skills, country applied for, job applied for. Having prospective staff in a database helps to ensure that prospects who submit their applications speculatively are included in the search, potentially saving both time and recruitment fees.
Taking action to modernise and streamline HR and payroll systems doesn’t just make those departments more efficient, but it benefits the whole company from shop floor to Director level. With support and training the HR team should be wholly willing and able to exploit the new opportunities and to work at a more strategic level.
By Martin Stockton, Vice President Global Business Development, Patersons international HR and payroll
Patersons is an international HR and payroll software and services expert providing services to clients in over 160 countries in over 30 languages. The main technology solution, CloudPayglobal solutions, provides consolidated global management information in real-time on payroll and HR. Clients vary from small international companies to those employing thousands - but all appreciate the multilingual system and return on investment from day one of going live.
Article published in Manufacturing Today, Issue 1, 2008.