Flexible working prompts payroll investment

Posted on 6 May 2009 by The Manufacturer

The trend towards flexible working practices has meant that more manufacturers have to adapt their IT to cope with complex demands on resource planning and staff rostering. Matt Wheeler at Stanley Security Solutions explains why access to accurate human capital information has never been more important.

Adherence to employment legislation, particularly with such a wide range of flexible working patterns now in place, is just one area at risk of being increasingly compromised by the tough economy.

The traditional workplace of the UK has undergone radical change in recent years with the “9 to 5” culture of most offices and factories long gone. On April 6 the government extended the right to request flexible working hours to every employee with a child under the age of 16 (before this it was six or under). This decision will affect another 4.5 million employees in this country and mean there are now over 10 million people that have the right to request flexible working.

There is evidence to suggest that introducing flexible working can be a highly effective way of responding to the pressures of modern business and that its benefits considerably outweigh the negatives. Flexible working can provide a genuine competitive advantage to any business, by reducing employee stress and enabling employees to become more motivated, happy and productive.

There is also evidence that people cite the option of flexible working as key to their decision-making when job hunting and there’s evidence that it actually widens the labour pool. Offering flexible options makes an employer a more attractive proposition to a broader range of candidates, for example older, part-time workers or mothers wishing to continue their career but with less intensity than in their previous working life.

A management tool
But with the trend towards flexible working practices comes the growing need for businesses to manage and report on it more accurately and to adopt an efficient workforce management system. Manufacturers need tools to keep track of all shift patterns as well as the day to day jobs of juggling production schedules and planning.

With the economy so volatile, advance forecasting, scheduling and staffing become very inexact sciences: the key to improved business performance lies in more accurate workforce data and detailed analytics. Modern time and attendance systems are no longer just about tracking basic data such as clock-on/clockoff times and employee hours worked.

Manufacturers contemplating investing in a workforce management system need to think about what specific capabilities they require, so their expectations of what the investment might ultimately deliver are realistic. Some of the immediate return on investment examples might include:

Improved labour management
Analytical reports allow managers to spend less time and money creating reports manually. Once they have real-time access to information about employees they are better equipped to proactively control and manage workforce attendance, absenteeism and productivity.

Improved labour management is the first step towards delivering big cost reductions and improved efficiencies. Today’s sophisticated management tools are designed to cope with the increasingly complex demands on resource planning and staff rostering and to analyse business critical information such as the productivity of specific departments within a factory or cost centres within a business. This can then improve workforce planning so that resources are more accurately matched to customer demand and deadlines.

Reducing or eliminating payroll errors
Payroll errors including overpayments are for the most part attributed to human error in data entry and can therefore be nearly eliminated using automation. As a manufacturer’s annual wage bill is probably a large proportion of its total costs, even reducing a payroll error by 2% can have a big effect on a company’s profit and loss and deliver immediate return on workforce management investment.

Reducing pre-payroll process time
Because the manual data entry process is eliminated, automation streamlines the entire process so it takes less time for employees to fill out timecards, for supervisors to review and approve them and for payroll to enter them. This frees up people in the finance and payroll department to be re-assigned to more value added tasks, for example credit control which can have a positive impact on a company’s cash flow.

As desirable as the integration of time and attendance systems with payroll might be, historically it has not been as easy to implement as companies might think. What on the surface might appear to be the simple conversion of hours worked into wages owed is complicated by myriad different payroll systems being used, all using different formats and rate codes. Some payroll systems, for example, rely as much on data about hours not worked, through unscheduled absenteeism or sickness, as they do on hours worked. Others calculate pay based on the total sum of hours worked rather than using a breakdown of different rates such as basic, overtime or time and a half, so the transfer of compatible information becomes increasingly complex.

Fortunately, some manufacturers of workforce management and time and attendance systems, such as Stanley Security Solutions, are now developing much closer relationships with payroll software developers and suppliers to ensure a tighter integration of systems. Any reputable time and attendance system supplier will take the time to understand the payroll requirement and should have encountered, and overcome, the complexities of integration many times before.