The job of a payroll department is an important, difficult job with vast responsibilities. We have seen how complicated it is, how many elements are involved in working it out, how varied it is, and how much information is generated and retained within a payroll department. It would be tempting to ask at this stage why anyone would want to do such a job, given that the potential for negative feedback and the high volume of work are both so high. The truth is that there are ways to make the job a bit easier, while not making it easy per se.
The main way that a payroll department can ease its human workload is to invest in a quality software package. Payroll software exists for small and large businesses, and being hooked up with the right one can be a matter of trial and error. However, small or large, a payroll software package that is within your budget should make the work of a payroll department a lot easier and more efficient. It will not do all the work for you; for one thing, the software houses are yet to invent a package that can deal with angry staff members yelling because their pension contribution has been calculated incorrectly. However, software can perform a lot of the bulk work in terms of calculating.
A software package is only as immediately useful as the professionals operating it. For example, it cannot generate the raw data itself; this will need to be provided by human minds. It will run checks on its calculation results, in the sense that computer programs run checks on everything that they generate, but as the old saying goes: "To err is human, but to really mess things up takes a computer." This is broadly unfair; with the right software you will have few issues, if any. However, error prevention requires some careful looking over the details, as some things are only distinguishable to the human eye.
The larger a business, the more variables it will have. This has to do with the fact that in a large company there will be more departments, more employees, and often a larger benefits package. As well, there will be many workers who do a job that offer commissions related to their performance. The software packages that enable a company to calculate salaries from this greater range of factors will cost more and be a bit more complicated to run. If your one priority is getting things right, though, you may find it worth investing in one of the more expensive and complex systems on the market; but it would probably be overkill to purchase one if you are calculating wages for 20 part-time employees in a small office.
In the case of a small workforce with not many variables to calculate, you may find that the best way of calculating wages is a perfectly simple software program that came with the computer when you bought it. Microsoft Excel, part of the MS Office package that many companies stipulate familiarity with as a requirement for employment, is as simple a spreadsheet program as there is available on the market today. If you know how to use MS Excel, then you should be able to program a spreadsheet that will calculate gross pay, deductions, and adjustments as a matter of course, negating the need for expensive software. As a rule of thumb, though, the more employees you are dealing with, the more complicated the software package you will need.
There have been developments upon developments in recent years regarding payroll software, with the latest innovations automating even the process of transferring payment. Although this has led to a much greater level of convenience in terms of making payments to employees, it has increased the level of checking and security that is required because without the human input of transferring cash directly, there is an element of verification that gets lost in the convenience.
As we have seen during the preceding lessons, there is really no way that payroll work can be left to just anybody. It is not only difficult, but also vitally important. There is pressure on payroll workers in terms of time limits, intricacy and volume of work, and outside expectations. We have seen that mistakes can be hugely costly. We have seen that the work comes with a huge number of variables, all of which need to be checked and checked again; and we have seen that, even with the help of a good software package, the grind of payroll work can be tougher than any other office work you care to mention.
The recurring theme of all of this has been that payroll needs to be doneperfectly the first time around if at all possible; but if mistakes are made, they need to be attended to without delay and fixed satisfactorily. This is not just any job, and it is not one that just anyone can be trained to do. It requires a near-forensic level of attention to detail, a lot of hard work, and a thick skin. The galling thing for a lot of payroll professionals is that, as long as they do everything right, no one outside the department will notice they have done anything. However, people still choose to go into payroll, and the person employing them knows one thing above all: If someone has chosen this as his or her role, the likelihood is that the person will do it well.
There are, in the main, two distinct approaches to employing people to take care of your payroll needs. It can be done in-house, within a payroll department directly employed by your business, or by outside payroll contractors. Which of these choices an employer makes is entirely up to the employer, and both have their advantages and drawbacks, so there is no definitive right answer as to what works best. It will really come down to the employer's personal preference. Either way, the payroll specialists will have to be paid, so it is the employer's choice as to what he or she values most highly from a payroll service.
Why would an employer choose to employ an outside payroll service? Well, the word "outside" at least hints at some of the reasons. Having the payroll department under the same roof, metaphorically or literally, as the rest of the business may not seem germane to some. We have already hinted that there is almost a sense among some that the money is magically deposited in their account by fairies at the end of each month. To see the actual people who do this work, living and breathing, reminds others that they are perfectly human, potentially prone to mistakes, and at times are just as harassed and confused as anyone else in the office.
Often, payroll workers in a business have a number of other duties pertaining to human resources and record-keeping. Outsourcing the payroll side of things and putting it in the hands of specialists allow the people responsible for human resources to concentrate on human resources. It keeps things neat, tidy, and clean. Plus, the guys outside do nothing but payroll all month, so you are paying for expertise. They know the correct rules, procedures, and pitfalls; they have the software at hand; and they have done it before. They did it yesterday, and they will be doing it tomorrow, too. It can make for real peace of mind that they know what they are doing.
On the other hand, if you have people within the business who are entirely capable of doing the work of a payroll service, then is it not a little bit wasteful to pay someone else to do the work? What you gain in convenience, you pay for in cash. By employing an in-house payroll department, you can be certain that you have payroll specialists right there without needing to add another name to the column of outside services you are employing.
Some people say they prefer not to employ outside contractors because keeping it in house means they know whom to blame when things go wrong. Although this is a cynical way of looking at it, there is a grain of truth there. A more reasonable way of putting it would perhaps be that if things go wrong, the people who can fix them are available immediately. An outside payroll service can make mistakes as well, but when it does, the people responsible are somewhere else and may not always be easy to contact.
In addition, in any given business you may have a worker with special circumstances regarding her or his paycheck. If your payroll section is in-house, this person's circumstances will become well-known to your payroll department. Any changes in circumstance will be quickly and easily added to the records, and reaction time to questions and problems will be sped up immensely.
- Basic Parts of a Pay Stub
- Payroll Management: How to Deal With Outside Contractors
- Payroll Management: Understanding the Process of Paying State and Federal Taxes
- The Essentials of Payroll
- Understanding How Pensions Work for Payroll Management
- Delegating Decision Making in the Workplace
- The Importance of Mastering the Management of Quality
- How to Conduct a Non-Traditional Work Performance Appraisal - An Employer's Guide
- The Accounting Cycle: From Source Documents and Journalizing to the Final Audit
- Human Resources: Handling Layoffs and Employee Cuts
- The Usage of Operations Management
- Ensuring Recruitment Outcomes for Your Business
- Analyzing Financial Data with Ratios in Accounting
- Human Resources: Compensation and Benefits
- The Balance Sheet, Debits and Credits, and Double-Entry Accounting: Practice Problems