The first step for your task force is to conduct a comprehensive review of your current time and attendance processes. This is often called a situation analysis. There are three basic goals for a situation analysis:
- Learn exactly how the Time and Attendance system works now
- Pinpoint problem areas that automation can correct
- Identify opportunities for direct time- and cost- savings benefits.
When you examine the processes, you’re looking for indications of:
- Redundant data entry
- Employee and/or manager dissatisfaction with the processes
- Unacceptable error rates in payroll
- Rising administrative costs
When you research the current manual processes, be sure that you capture the entire picture. Don’t forget remote operations and individual work environments. Do you have on-site and off-site workers? The best way to conduct this research is to interview department heads and payroll staff.
Then create a detailed written document or flow chart detailing your current time and attendance process and specific problem areas. Next, the task force should talk with hourly employees to gain an understanding of the problems they are experiencing under the manual system. How time consuming is the process of recording hours? How often are paychecks late or incorrect? Ask for suggestions about features they think should be included in the new automated system. For example, they might want visibility of accrued vacation time. This employee feedback serves two worthwhile purposes:
- It provides practical frontline information that can help you assess the potential for cost savings and improved employee satisfaction.
- It creates a sense of real participation in the selection process, which can foster acceptance of the solution after it is implemented
By asking the right questions, the task force will come away with important information about the current manual system and suggestions for an automated system — information you’ll refer to often throughout the vendor selection process.
Determining payroll policies
The next step is to examine timekeeping and payroll policies. A complete set of defined and approved pay policies is needed for system installation. If you do this research now, you will have better-informed discussions with potential vendors. Attracting and retaining qualified, highly skilled employees is difficult for any business. As a result, many companies have introduced a wide range of special incentive pay policies and rates to attract and keep quality people. These incentive programs (majority time, differential rules, travel time, etc.) have dramatically complicated the manual payroll preparation process as well as the tracking of labor hours.
The complexity of these incentive pay structures increases the opportunity for inconsistent payroll policy application. Many companies we surveyed noted that once they automated their time and attendance processes, they were able to clearly see where their old manual systems had masked payroll inconsistencies from department to department and from pay class to pay class. These were problems that had gone undetected for months and sometimes even years. Pay policy inconsistencies can result in costly payroll errors, noncompliance with wage and hour regulations, and inefficient use of administrative time.
Companies that successfully implement automated systems tell us that achieving consensus on a common set of payroll policies for all employees is critical. Consensus must be achieved before you proceed with automation. When all departmental inconsistencies are uncovered and resolved, a smooth transition from a manual system to an automated system can begin.
Identifying pay policy inconsistencies
Create a table to identify pay policy inconsistencies. There might be inconsistencies between the ways on-site and off-site employees are treated, or perhaps managers in different departments have interpreted the rules differently. Interview managers and ask, “How do you actually manage your full-time and part-time employees with regard to overtime, leave, etc.?” Experience tells us that you will see many discrepancies in the ways policies are being interpreted.