Presented Wednesday, December 9, 2015...©The Payroll Advisor, 2015 8 Seeking out superior performance through the systematic search for and use of best practices including innovative

1 ©The Payroll Advisor, 2015

Presented Wednesday, December 9, 2015

2 ©2015 The Payroll Advisor

Housekeeping

©2015 The Payroll Advisor

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Credit Questions Today’s

topic Speaker

To earn RCH credit you must


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Stay on the webinar, online for the full 60 minutes

Be watching using your unique URL

Certificates delivered by email, to registered email,

by January 11th

What We Will Cover…

©The Payroll Advisor, 2015

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What is benchmarking

How does it apply to payroll

Why it should apply to payroll

How to establish a benchmarking program for your payroll department

Common benchmarking mistakes

Myths about benchmarking

How to incorporate your findings to make it all worthwhile

About the Speaker


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Vicki M. Lambert, CPP, is President and Academic Director of

The Payroll Advisor™, a firm specializing in payroll education

and training. The company’s website

www.thepayrolladvisor.com offers a subscription payroll

news service which keeps payroll professionals up-to-date on

the latest rules and regulations.

As an adjunct faculty member at Brandman University, Ms.

Lambert is the creator of and instructor for the Practical

Payroll Online payroll training program, which is approved by

the APA for recertification credits.

http://www.thepayrolladvisor.com/

What is Benchmarking


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Definitions:

The process of identifying, understanding, and adapting outstanding practices and processes from organizations anywhere in the world to help your organization improve its performance—American Productivity & Quality Center

What is Benchmarking


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Seeking out superior performance through the systematic search for and use of best practices including innovative ideas, effective operating procedures, and successful strategies—Bogan and English Benchmarking for Best Practices

Or…


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A process for identifying and importing best practices to improve performance—A best practice is “anything better than your current practice”

Literal Definition…


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The American Heritage Dictionary of the English Language defines a benchmark as “a standard by which something can be measured or judged”. As a verb, to benchmark means “to measure (a rival’s product) according to specified standards in order to compare it with and improve one’s own product”.

Benchmarking…


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Actually term is borrowed from surveyors

If a surveyor can mark a known position then that position serves as a reference point for other measurements and other points

The goal of using a benchmark is to drive improvements by assessing performance against other who have similar products, traits, organizations etc.

Powerful Tool


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Powerful management tool because it overcomes what is known as paradigm blindness…in payroll this is the old axiom: “The way we do it is the best because that is the way be have always done it”.

Any business process can be benchmarked

“Alone, I am satisfied with myself. With others, I am beset by troubling comparisons—Mason Cooley

What Benchmarking is Not


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It is not a simple comparative study, copying practices from other organizations, performance assessment or a comparative analysis—it is not a college research paper or an article for a monthly newsletter

You are not looking for the best performance but the best practice

How Does it Apply to Payroll


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Once again—any business process can be benchmarked even payroll

Payroll is subject to cost controls and seeks ways to improve performance to cut costs

Best practices cut costs and maintain compliance

Why Should it Apply to Payroll?


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In this day and age everyone needs to be the best and work with less especially payroll

Benchmarking takes the best practices from other payroll departments and improves yours

No competition in our case just improvement of the profession

Have You Ever Asked?


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Do all payroll departments report to finance or should we report to HR?

How many employees do other companies have on direct deposit?

Are we cutting too many manual checks or are we doing the best we can?

How does our budget compare to other payroll departments?

Do You Know


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Cost per payroll payment

Error rates

Number of manual checks cut

Days to process new hires

Cost per payroll inquiry

Days to resolve payroll inquiries

To Clarify


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Benchmarks tell they company where they want to be

Representation of the ideal

Sets the goal

For example:

the number of late approvals on timecards is currently 47.

The benchmark is 10

Types of Benchmarking


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Benchmarking types vary and have numerous names

But the one that focuses on processes or procedures is designed for payroll departments

Process Benchmarking


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Focuses on specific work processes

Identifies the best operating practices

Uncovers how well other companies perform in comparison to you and how they achieve that performance

Example


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How many employees do you have on direct deposit? How many do they have?

What did they do, what method did they use or what procedure do they have in place that gets more employees to use direct deposit than you do?

How can we incorporate that procedure to improve our numbers?

Before Establishing a Benchmark Program…


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Before beginning a benchmark program you need to focus on 4 things:

First you need to recognize that benchmarking takes a new mentality—I am probably not the best in everything and probably not perfect in everything I do--Somebody does it better

Second you must be eager to learn from others

Third you must remember that it is adapt rather than adopt—learn about it and adapt it to your payroll

Before Establishing a Benchmark Program…


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And finally-fourth…

Must also remember that one process may be further from the goal than another process but doesn’t affect the bottom line as much

Process improvement is about priority as much as overall efficiency

Where will I make the greatest difference to the bottom line is where I start first

How to Establish a Benchmarking Program


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The benchmarking process consists of five phases:

Planning


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The essential steps are those of any plan development: what, who and how

What is to be benchmarked? Every function of payroll has a product or an output. So benchmarking is appropriate for any payroll function

Payroll Labor Distribution 26

8%

28%

4% 10%

27%

16%

7%

Payroll Processing Labor Distribution

Payroll Processing

Input Processing

Data Maintenance

Tax Filing

Customer Service

Controls and Reconciliation

Time Card Processing

Planning…


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To whom or what will we compare? Benchmarking must be conducted against the best companies and business functions regardless of where they exist.

How will the data be collected? There is no one definitive way to collect the data and it depends on time and budget available

Data Sources…


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Accounting and Finance Benchmarking Consortium http://afbc.org/home

American Payroll Association www.americanpayroll.org

Bureau of Labor Statistics—lots of data! www.bls.gov

Books or publications such as BNA Bloomberg’s Payroll Department Bench and Analysis 2013-2014

http://afbc.org/home

http://www.americanpayroll.org/

http://www.bls.gov/

Analysis…


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Study the process in your own organization

Careful understanding of your current processes and practices must be achieved before benchmarking can begin.

You have to understand how you do it so you can compare to how they do it

Establish your metrics and Analytics

Determine your current performance “gap”

Project future performance levels

Let’s Talk About Metrics


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Metrics have a duality

It is both a process and a numeric result

For example: a company wants to determine the number of timecards approved by supervisors after the due date Metric is the tool used to find out

But commonly the resulting number is also called a metric

A metric measures and is also a measurement of where a business is

Metrics Tell Us…


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Where we were

Where we are

Where we are going

You can’t apply a best practice unless you know where you were, are and want to go…

Example: how many employees are on direct deposit is a metric

Analytics


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The science of logical analysis-Dictionary.com

Refers to the combination of skills, technologies, applications and processes used by organizations to gain insight in to their business.

The process of obtaining an optimal and realistic decision based on existing data

The discovery and communication of meaningful patterns in data

Examples of Areas to Determine Metrics

Average number of payroll payments per employee

Percentage of employees on direct deposit

Percentage of employees receiving checks

Percentage of employee receiving both check and direct deposit

Number of W-2s vs. number of active employees

Number of FEINs and tax jurisdictions per enterprise

Number of state and local jurisdictions per FEIN

Percentage of penalties/interest paid on total taxes

Payees processed per FTE in payroll

Percentage of errors by type

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Direct Deposit Example


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Let’s say you are a company of 1500 employees and you have 61% of your employees on direct deposit

According to one latest benchmark metric companies with 1,000 to 2,000 employees have 75.9% of employees on direct deposit

Back to Our Benchmarking Process…Integration


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Communicate the benchmark finding

Acceptance by management is key—mention cost savings and have the data to back you up

Direct deposit cost vs. paper check costs as example for your company

Establish functional goals to implement the findings—goal of 70% direct deposit

Action…


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Develop action plans to implement the findings of the benchmark study—in our example bring up your direct deposit percentage—how did they get that high?

Advertising campaign--New hire orientation

Implement the specific actions and monitor the progress

Recalibrate the benchmarks as needed

Barriers to Action


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Need to determine the barriers that can prevent the action

Example:

Cultural

Practical

Financial

Must be prepared to present a variety of ideas about how to implement change—flexibility increases odds of adoption or action

Maturity…


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Leadership position is obtained

Practices are fully integrated into the process

Example: you now have a 81% direct deposit rate

Avoid Common Benchmarking Mistakes…


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Confusing benchmarking with taking a survey

Benchmarking is finding out what’s behind the numbers

Accepting pre-existing benchmarks

Example: You heard that it is “normal” for payroll to have… Use benchmarks that apply to your payroll size, company type etc.

Common Mistakes Continued…


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Forgetting about compliance

Yes that company has 100% of employees on direct deposit—maybe they are in a state that permits that or maybe they don’t care

Common Mistakes


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The process is too large and complex

• Avoid benchmarking the entire payroll department at one time

• Take one or two tasks or processes at a time and then move on to the next--

Common Mistakes…


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Misaligning your benchmarking topic with the overall strategy of the company

Example: You are working on customer service the company wants cost reduction

Vs.

Common Mistakes


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Picking a topic that is too intangible and difficult to measure

Example: Customer satisfaction in the payroll department

Mistakes…


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Not establishing the baseline to begin with

Don’t go out and begin benchmarking other companies until you have analyzed your own processes thoroughly

Not researching the benchmarking partners or data thoroughly

Must have the right match

Benchmarking Myths


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It is too expensive

It can be but use of published material and electronic surveys can keep costs down

Vs.

Myths

Management doesn’t understand or support benchmarking for payroll

Payroll is a cost center not a profit center so anything that cuts costs will be understood by management if presented that way


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Myths…


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You can benchmark only with the best companies and only use that as your goal

Improvement is the goal not competition

Even if you are small you can do better

Myths


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No one is like me so I can’t get the data to benchmark

Example: The Jet Propulsion Laboratory in Pasadena CA is a unique entity but there are other payrolls who do time and attendance based on projects, who have a large employee populations on visas etc. Every payroll department can find like payrolls

Myths…


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Benchmarking is only for BIG companies

Everyone can benefit from improvement

Small companies like to compare to other small companies as well

How to Incorporate Your Findings To Set Your 2015 Goals


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The value of benchmarking comes from the process of implementing the changes to improve performance against a chosen standard not from the measurement itself—must be included in goals

How it will be implemented should be included in the planning stages to get management to buy into any changes that will result from benchmarking

Once you find where your performance “gaps” are these should be the goals for the upcoming year

Setting Goals…


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Let’s go back to direct deposit…

You found you were well under the performance level for having employees on direct deposit

Your 2015 goal is to meet a % of employees—say 70% by the end of 2015

You would use the methods adapted to your company to accomplish this goal

Setting Goals…


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Let’s now say you were on par with or exceeded another benchmark area. This time you would set a goal of maintaining that benchmark for 2015 or if possible increasing it.

Resources


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Ammons, David, A Proper Mentality for Benchmarking

Van Wart, Montgomery, The First Step in the Reinvention Process: Assessment

Camp, Robert C, Benchmarking: The Search for Industry Best Practices That Lead to Superior Performance

Wikipedia

Trimble, Dave, Benchmarking-Uncovering Best Practices and Learning From Others

Benchmarking PLUS 1999, Avoid These Ten Benchmarking Mistakes

Gooden, Susan Tinsley; McCreary, Samuel, Review: That Old Time Religion: Efficiency, Benchmarking and Productivity

Benchmarking Part 1, Quality America Inc.

Anne Feltus, Exploding the Myths about Benchmarking

Are There Any Questions?


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How Can Ascentis Help Me?

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Process payroll

• Real time flexible processing

• 100% accuracy

• Reduce processing time by up to 30%

Employee portal

• Paycheck data

• Paystubs

• Tax forms

• Paycheck simulation tools

To earn RCH credit you must


56

Stay on the webinar, online for the full 60 minutes

Be watching using your unique URL

Certificates delivered by email, to registered email,

by January 11th

On-Demand Webinars

Watch from anywhere, at anytime, at no cost to you!

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Contact Us

[email protected]

www.ascentis.com

800.229.2713

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Presented Wednesday, December 9, 2015...©The Payroll Advisor, 2015 8 Seeking out superior performance through the systematic search for and use of best practices including innovative