Optimising your time & attendance system to reduce payroll errors Optimising your time & attendance system to reduce payroll errors

Optimising your time & attendance system to reduce payroll errors
21 Sep 2017

Many organisations have either implemented standalone, best-of-breed time and attendance applications or introduced them as part of their wider HR or financial system – and doing so is definitely a step in the right direction in terms of improving payroll performance.

But our 2016 Workforce Management

Performance Study indicates that this is not the only approach that top performers have taken. They have also taken a giant leap forward in further optimising their system for success by: 

• Fully automating their time collection and calculation processes 
• Deploying self-service functionality to ensure that planned and unplanned time off is captured 
• Introducing workflows and online reporting to supply managers with the necessary tools to review and approve timecards, the aim being to provide accurate time-related data to payroll.

 

What is the best way to do it?

In an effort to improve the quality of time-related data and reduce payroll errors, the following activities should be undertaken to ensure your system is optimised: 

1. Use time collection devices: Capture actual working time in real-time by having employees use automated time collection devices, which should be integrated with your time and attendance applications. Whether you hang a time clock on a wall, set up a kiosk for staff to enter their working time online, or provide mobile options, ensure actual start and stop times are being captured by hourly employees and those who are eligible for overtime in order to reduce inaccuracies. 

2. Automate pay policies: Reduce manual errors by automating the process by which company and legislative pay policies are calculated. These policies include regular hours, overtime, premium time, holidays and any other worked or non-worked paid hours. If they are not automated, there is a risk that timekeepers may miscalculate a given employee’s pay, especially if a number of different policies are in place. 
3. Introduce employee self-service: Various self-service features can be deployed to assist in capturing employees’ non-worked time such as: 
a. Planned time off requests: Ask staff to submit requests for planned time off such as holidays and leave of absence. If automated workflow processes are in place, these requests can automatically be included in each individual’s schedule and timecard once approved. This process will ensure there are no reporting delays. Keeping track of entitlement hours is important for all employees, whether they are positive pay or salaried workers. It is also important for the organisation as entitlement hours can have a material impact on financial accruals and may ultimately cost money if inaccurate year-end balances are paid out.
b. Unplanned time off acknowledgements: Ensure personnel directly update their timecards or submit an electronic absence form to signal missing or non-worked scheduled hours such as sick time. Again with the proper workflow in place, these acknowledgements can be reviewed, edited and approved by managers quickly and effortlessly.

4. Ensure security is effective: Security procedures should be introduced to ensure that employees and managers only have access to those time codes they are entitled to use. Effective security will reduce the number of incorrect time codes that are submitted to payroll. Incorrect time codes can delay payroll processing if they cause the interface between the time and attendance system and payroll to fail. They may also result in labour costs being recorded in the wrong financial accounts, leading to a need for prior period adjustments and/or manual journal entries. 

5. Provide managers with proper tools: Arm managers with the tools they need to ensure staff working hours are recorded accurately. Set up workflows to enable the approval of planned and unplanned absences and make it easier to review and approve timecards. Create automatic notifications or alerts if timecards include exceptions that need to be reviewed. Make online reports easily accessible for managers, and ensure they highlight timecard exceptions such as missing punches or non-work time codes for a scheduled day. 

If one of your objectives is to decrease time-related payroll errors, it may be useful to include the areas listed above in your future payroll or workforce management strategy. Also, undertake a full system review to ensure your time and attendance applications are optimised for success.

“Effective security will reduce the number of incorrect time codes that are submitted to payroll.”

Areas for optimisation

  • About 50% of participants in our survey felt managers were not doing a good job of reviewing and editing timecards, which resulted in payroll adjustments and off-cycle payments 
  • Fewer than 50% received automatic notifications or alerts if timecards had exceptions that required review 
  • Fewer than 25% used online dashboards to review employee activities and exceptions 
  • Just over 50% introduce self-service systems for employees to submit time off requests.

By Debra Levine, senior director, The Hackett Group.

Many organisations have either implemented standalone, best-of-breed time and attendance applications or introduced them as part of their wider HR or financial system – and doing so is definitely a step in the right direction in terms of improving payroll performance.

But our 2016 Workforce Management

Performance Study indicates that this is not the only approach that top performers have taken. They have also taken a giant leap forward in further optimising their system for success by: 

• Fully automating their time collection and calculation processes 
• Deploying self-service functionality to ensure that planned and unplanned time off is captured 
• Introducing workflows and online reporting to supply managers with the necessary tools to review and approve timecards, the aim being to provide accurate time-related data to payroll.

 

What is the best way to do it?

In an effort to improve the quality of time-related data and reduce payroll errors, the following activities should be undertaken to ensure your system is optimised: 

1. Use time collection devices: Capture actual working time in real-time by having employees use automated time collection devices, which should be integrated with your time and attendance applications. Whether you hang a time clock on a wall, set up a kiosk for staff to enter their working time online, or provide mobile options, ensure actual start and stop times are being captured by hourly employees and those who are eligible for overtime in order to reduce inaccuracies. 

2. Automate pay policies: Reduce manual errors by automating the process by which company and legislative pay policies are calculated. These policies include regular hours, overtime, premium time, holidays and any other worked or non-worked paid hours. If they are not automated, there is a risk that timekeepers may miscalculate a given employee’s pay, especially if a number of different policies are in place. 
3. Introduce employee self-service: Various self-service features can be deployed to assist in capturing employees’ non-worked time such as: 
a. Planned time off requests: Ask staff to submit requests for planned time off such as holidays and leave of absence. If automated workflow processes are in place, these requests can automatically be included in each individual’s schedule and timecard once approved. This process will ensure there are no reporting delays. Keeping track of entitlement hours is important for all employees, whether they are positive pay or salaried workers. It is also important for the organisation as entitlement hours can have a material impact on financial accruals and may ultimately cost money if inaccurate year-end balances are paid out.
b. Unplanned time off acknowledgements: Ensure personnel directly update their timecards or submit an electronic absence form to signal missing or non-worked scheduled hours such as sick time. Again with the proper workflow in place, these acknowledgements can be reviewed, edited and approved by managers quickly and effortlessly.

4. Ensure security is effective: Security procedures should be introduced to ensure that employees and managers only have access to those time codes they are entitled to use. Effective security will reduce the number of incorrect time codes that are submitted to payroll. Incorrect time codes can delay payroll processing if they cause the interface between the time and attendance system and payroll to fail. They may also result in labour costs being recorded in the wrong financial accounts, leading to a need for prior period adjustments and/or manual journal entries. 

5. Provide managers with proper tools: Arm managers with the tools they need to ensure staff working hours are recorded accurately. Set up workflows to enable the approval of planned and unplanned absences and make it easier to review and approve timecards. Create automatic notifications or alerts if timecards include exceptions that need to be reviewed. Make online reports easily accessible for managers, and ensure they highlight timecard exceptions such as missing punches or non-work time codes for a scheduled day. 

If one of your objectives is to decrease time-related payroll errors, it may be useful to include the areas listed above in your future payroll or workforce management strategy. Also, undertake a full system review to ensure your time and attendance applications are optimised for success.

“Effective security will reduce the number of incorrect time codes that are submitted to payroll.”

Areas for optimisation

  • About 50% of participants in our survey felt managers were not doing a good job of reviewing and editing timecards, which resulted in payroll adjustments and off-cycle payments 
  • Fewer than 50% received automatic notifications or alerts if timecards had exceptions that required review 
  • Fewer than 25% used online dashboards to review employee activities and exceptions 
  • Just over 50% introduce self-service systems for employees to submit time off requests.

By Debra Levine, senior director, The Hackett Group.

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