National Pay Week presents an opportunity for businesses to evaluate how they pay employees and strive for a process that works well for both sides.
It's National Payroll Week. Do you know how your employees want to get paid? Having correct payroll procedures and the proper technology to process employee compensation is a top priority for any organization. Organizations have to get payroll right every time because the compliance risks can be signficant. Payroll also matters to employees. Payroll mistakes can cause big problems for employees and their families. So making sure your payroll is correct and easy to manage is essential.
With National Payroll Week, the American Payroll Association (APA) annually celebrates the relationship between workers, businesses and payroll professionals. Paying workers is a big deal: Through the payroll withholding system, employees, employers and payroll services contribute, collect, report and deposit about $2.2 trillion, or 67 percent, of the annual revenue of the U.S. Treasury, according to the APA.
To observe this special week, we're reviewing four ADP Spark and Boost articles that cover different aspects of payroll — managed payroll, unbanked payroll, mobile payments and paycards — to help your organization find a compensation method that will please employees and make an often challenging process easier on your end.
Managed payroll refers to either a vendor that handles employee pay — known as business process outsourcing (BPO) — or a payroll management system. Not all payroll management systems allow the outsourcing of business processes, a reminder that because of the many ways HCM vendors use the term "managed," it's best to know what kind of process a vendor's technology handles.
Nonetheless, managed payroll minimizes the errors that lead to unpaid wages and other fiscal risks. With the right technology, errors are few because an organization can keep a close eye on payroll through comprehensive reporting and analytics. Some HCM suites don't require a complete technology overhaul, and some will automate the compliance process.
Believe it or not, many people still don't use a bank to handle their finances, while many others keep only a basic account and still depend on check cashing to access funds. As employees, these "unbanked" workers can pose a challenge to organizations that use direct deposit.
A disconnect between employer and employee can force organizations to establish an alternate means of payment for the unbanked, but this could backfire by posing logistical issues. Being unbanked can also stress employees' financial well-being, so knowing how to effectively service these employees is critical.
The flip side of an unbanked employee is one who is all mobile. Many employees prefer using mobile applications on their devices to handle banking transactions. The mobile movement isn't fading anytime soon, so businesses need to consider shifting elements of their payroll processes to accommodate employees' mobile routines.
And it's not just about money. ADP Research Institute® found that mobile HR apps have a 60 percent higher rate of use than stationary apps, and many people also use their devices to check out their 401(k) plans and manage their other employer-sponsored benefits.
Many businesses still issue paper paychecks. They've prepared, printed and distributed checks with few problems for years, and they don't see any reason why they should tinker with success. But employers can save a lot more money than they probably think by embracing a digital transition.
Electronic doesn't necessarily mean mobile payments, either. Employers can transfer an employee's wage onto a payroll card, enabling a worker to use the card much as they would a debit card or credit card. The downside to this option is card-related fees, but there are still many advantages to paycards, including giving unbanked employees an easier way to spend their money.
National Payroll Week should be a time of reflection and strategic thinking for HR leaders, so let the articles highlighted above help you review how your organization gives employees access to their hard-earned pay.