Research Paper: Payroll, Productivity and Information Technology: An Analysis

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Payroll, Productivity and Information Technology: An Analysis

One of the largest drains on a businesses' bottom line revenue comes in the form of payroll, otherwise known as labor costs. It should then come as no surprise that when a company is faced with a severe budgetary crises or dealing with an external economic environment that closely resembles a combination between a Category 5 hurricane and an F-5 tornado, the first place CFO's look to retain costs is in their labor force. The advent of layoffs concomitantly rises with the decrease in economic activity-either within a specific market sector or in overall economy as a whole, take the current status of the U.S. economy; private sector jobs have been few and far between and as a direct result, unemployment has remained stagnate at 9.7%.

In tight business environments, companies take a good, hard look at what can be neutralized to reduce costs and maintain a steady flow of revenue. Examining various aspects of the business can assist management in locating those "x" factors that can minimize costs while maximizing revenue. Integrating an efficient and effective payroll software can greatly assist companies in their ability to create a paradigm that maximizes revenue while maintaining costs. There are numerous payroll software platforms that can be implemented into a business' overall software architecture in order to streamline the payroll processing and increase business' overall productivity.

The premise of this essay is to examine the role of it software and infrastructure as it relates to payroll and enhancing productivity. This essay will examine the factors that can go into evaluating software platforms that can increase payroll efficiency, streamline the process and integrate more automation within payroll. Furthermore, this essay will examine how the concept of "workplace management" can lend itself to enhancing payroll productivity and how various software platforms can assist in increasing this management. Finally this essay will engage in an overall review of the core principles necessary to increase payroll productivity, how this productivity can reduce costs and how Information Technology can assist in this process.

Discussion

Business today has taken on a more global position. The advent of modern technology, telecommunications, email, virtual teams and departments have reduced the barriers to largely irrelevant status and have allowed business both large and small to compete on the global stage. Technology and Information Systems allow business to conduct commerce in every corner of the globe. Given the rapid increase in the globalization and the converse decline in market geography; it is increasingly imperative that specific goals be implemented in order to ensure the proper information Technology platforms are integrated into the overall organization. Failing to create, maintain and adhere to these goals will ultimately result in a it platform that is irrelevant, ineffectual and cost ineffective. Currently, there are six, well established, principles that drive the creation of an adequate Information Technology platform within payroll departments of large, medium and small sized businesses (Greengard 51).

Main Goals for Determining Appropriate Payrolls

The first goal or principle is to determine which payroll method works best for the business as a whole (Greengard 51). This principle is critical given that increasing globalization demands that business adhere to just more than a ROI analysis or vendor sales-pitch (Greenard 51). It requires the business review its global strategy, its geographic presence along with the rules, laws and regulations regarding international trade and commerce within certain international jurisdictions (Greengard 51). As a result, certain payroll platforms and software architectures may not be suitable for some businesses operating within these specific circumstances. This principle does not only apply to large, multinational business, it also applies to the medium and small business. Reviewing the payroll structure currently in place and implementing an innovative it platform that incorporates the most effective attributes of the current system will ensure that any business will have adopted a new software system that can maximize payroll efficiency.

The second principle involves procuring the most up-to-date information regarding policies related to taxes, withholding and benefit contributions. The most common mistakes within any payroll and benefits department deals with errors akin to payroll taxation. If a business is engaged in interstate commerce this difference can result in the payroll of certain employees being withheld while the mistake is rectified. Furthermore, these mistakes can cause the CFO to miss vital government reporting dates regarding employee income. Additionally, another situation could present itself in that employee retirement accounts could be inaccurately funded, either to little or to much (Greengard 51). The inevitable conclusion of this situation is three fold, angry employees, angry government officials and significant inaccuracies within a companies budgetary figures.

In order to prevent this scenario from occurring, it is vital that businesses maintain the most current database on tax policy, benefit contributions and other governmental information that can impact a company's payroll productivity. Delays within the payroll process can increase costs to the business by involving more labor hours incurred by the payroll staff-increases and additional expenses that the CFO was not accounting for. Having a quality, Information Technology platform that can instantaneously update this critical information formulates the life blood of a well integrated it program that can increase payroll productivity.

Cultural Diversity

Recognizing diverse cultural backgrounds and environments is another critical aspect of a proper evaluation of a payroll platform (Greengard 51). When a business has employees spread across many different countries, integrating this factor into the payroll scheme will allow a company to make great strides in increasing its efficiency. A company that is based in the United States, paying employees in France and managing pensions of a German subsidiary must integrate all of these cultural aspects into its payroll architecture if there is to be streamlined efficiency.

Technology might not be Omniscient

Another critical principle is to recognize that technology may not provide all of the answers (Greengard 51). Technology, although a vital component, does not address the specific needs of every individual client or customer. The specific payroll issues relevant to business "A" are not necessarily relevant to business "B"; therefore the payroll platform that each of these organizations is implementing may address some of the concerns but not all. Oracle and SAP each have human resource platforms that business in most countries and across boundaries have integrated into their software architecture at one point or another. Although each of these platforms offer in-depth customizable solutions they do not come close to entertaining all possible issues related to the specific payroll concerns of all businesses. Therefore, it officers within upper management should focus on a more "hybrid" or "bifurcated" approach to modernizing and improving payroll.

In relation to the cultural factors that must be accounted for when developing an adequate payroll processing department, the various geographical difference as well as language barriers must be considered as well (Greengard 51). For businesses with a global presence, all the employees may necessarily not speak English. As a result, it is plausible for those business to develop a shared processing facility with individuals who represent the major geographic areas and can communicate with employees from these areas to address their payroll concerns (Greengard 51). Furthermore, geographic and time zone differences must also be considered. Even for medium and small sized businesses that have offices or facilities in different time zones, an effective payroll processing platform or it infrastructure will address this issue and integrate it into the overall software so that all employees can have their issues addressed in a timely, effective manner.

Maintenance

The final principle involves routine audits and examinations of the newly created payroll processing and it platform (Greengard 51). As business and technology change and constantly adapt to innovative solutions, it is imperative that business and CIO's maintain a critical examination of the newest trends and evolutions within payroll platforms and software architecture in order to ensure that the newest and most effective it and payroll solutions are integrated within the whole organization.

Workplace Management

In addition to these six broad principles, the concept of it assisting in increasing payroll productivity can be examined in a more specific light. The concept of "Workplace Management" or WPM directly links the efficiency of payroll processing with Information Technology and the overall productivity of an organization. Increasing WPM can lead to a direct correlative relationship with increasing productivity, reigning in costs and improving bottom line revenue.

In 2009, an exhaustive and comprehensive study including 100 large, medium and small sized business both domestic and international were studied to evaluate the various components of a highly productive, cost effective and efficient payroll processing department. This study integrated Workplace Management for the first time (Cheek 20). This study focused on several different sub-topics including schedule creation, work exchange, absent and leave management and time to gross pay and labor reporting (Cheek, 20). Each of these factors weigh heavily in evaluating the current payroll software and it platforms currently in place within an organization. If any of these components create a drag on payroll processing they will… [END OF PREVIEW]

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