Wednesday, April 25, 2012

Payroll Processing - HR or Finance Function

Payroll function is very important for both the employees and the employer. For the employee, it is a mark of the value that the organization assigns to him, while for the organization, it is the reward given to the employee for his competence and loyalty. Organizations have their own reasons for assigning this critical function to either their HR department or to their Finance department. In this article, we shall explore some of the merits and demerits of both, and assess if one function is better suited to handle payroll than the other.

Payroll processing is a complex computational process that involves using Salary, Statutory, Income Tax and Legal implications to organize a set of pay related information in such a manner as to arrive at the amount to be paid to each employee as the reflection of his/her worth in the organization.

When organizations are confronted with the decision of assigning payroll to HR or Finance, usually availability of expertise is a key factor in determining the outcome.  However, when the expertise is available in both the functions, then the question is whether the organization identifies payroll more as a motivator or as a routine mechanism.

One of the primary responsibilities of HR is to maintain employee confidentiality and it is the better custodian of confidential data in the organization. And salary data of employees is one of the most confidential data, as it is a measure of the employees’ worth in the organization. Payroll is also closely related to employees’ satisfaction or grievance, and HR, by the nature of its duties, is better equipped to handle the queries with empathy and understanding.

HR also plays a critical role in fixing salaries of employees while joining and at the time of revision. The holistic understanding of the complex interface of grades, levels, work experience and performance in deciding an employee’s salary is better understood by HR. And the input for all this is provided by the Payroll software or application. Likewise computing of performance related pay, bonus or revisions would also require the backing of the existing payroll and making permutations and combinations to decide the perfect mix. The other area of expertise is the compliance under Labour laws and Statutory laws.

However, a critical area of compliance where Finance might have a better understanding is tax computation. Tax planning support, computation, deduction advice and issuing of certificates is a domain of Finance function. In addition, Finance also manages loans and advances.

Beyond these tasks, Finance has better control in ensuring the accuracy of payroll data, as well as a better idea of cash to cash cycles in managing payouts and disbursal. Finance function is also known traditionally to possess more efficiency when it comes to managing complex sets of data.

From the management’s perspective, better financial perspective can be provided by Finance in the management of payroll data, while HR can use the same data for planning for resources as well as clarifying doubts of employees. Considering all this, a partnership in payroll processing would greatly benefit the organization. While HR can take on the role of an input provider and an output checker, Finance needs to take responsibility for payroll processing and disbursal. Thus the errors relating to input data, as well as those of process inefficiency can be avoided.

Wednesday, April 18, 2012

Getting HR Technologies to SMEs

Research has shown that companies with less than 500 employees do not feel the need to invest in a Human Resource Management System (HRMS). Depending on the industry, an employee count of 500 could be small, closer to mid cap and sometimes enterprise – small if you are in a workforce intensive services company, mid-cap if you are in a business that involves higher degree of automation and closer to enterprise if you are into design or consulting – but generally, the verdict is has been that small and medium enterprises haven’t realized the need to invest in an HRMS.

It seems ironic and against the core character of SMEs that they would not want to automate repetitive parts of their people management functions. HRMS is a compelling proposition for  SMEs, given these core traits:
  • The environment of change and the pace of change
  • The need to specialize: often a David vs. Goliath situation, where David (the smaller, smarter challenger) needs to muscle up every ounce of available resources to reach the end goal (and bring down the established, larger competitor)
  • Small and medium enterprises are also the platforms for optimization, heightened utilization and hybrid roles
A 250 – 500 headcount services company could have human resources team of around 10. The functions of this team would include multi-channel talent sourcing, recruitment design, evaluation and actual hiring, induction and training, attendance and leave management, resource allocation, grievances, reporting, policy and much more.

Burdening this team with employee record management, manual leave balance tracking or payroll generation defies logic. Shouldn’t the Human Resource function of such a dexterous set up focus on better quality of resources, motivation, greater throughput and other qualitative aspects? Or should this chunk of valuable management time be invested in manually collating, verifying and proofing reports and data? This is the choice facing small and medium enterprises. And, the answer is obvious.

Is it under estimation of the costs - opportunity cost and effort consumed by the manual route? Is it an unfounded assumption that HRMS is somehow associated with ERP and stamped as the big boys’ game? Or is it genuine concerns about software – hardware management overheads?

TenXLabs Minerva HRMS changes the game by:
  • Providing a genuine automation option, where the system configures to your workflow
  • It is truth economy – fair priced and its returns justify the investments in weeks or months, not years
  • It is available on a Software as a Service (SaaS) model from a cloud – meaning: you pay by use and do not worry about support, hardware, admin or other overheads traditionally impacting software use
What is Cloud Computing
Cloud computing is the delivery of computing solutions and software as a service rather than a product, whereby shared resources are made available to customers over the internet, on demand. As defined by IBM, Cloud is a computing model providing web-based software, middleware and computing resources on demand. By deploying technology as a service, you give users access only to the resources they need for a particular task. This prevents you from paying for idle computing resources.

What is Minerva HRMS
Human Resource Management, traditionally considered a key spoke of enterprise resource planning has now evolved into its own life and automates key Human Resource functions. Minerva HR Suite from TenXLabs is designed to house all information pertaining to every employee in an organization from Recruitment to Retirement. Minerva is cloud based, can be configured (without need customizations) to implement existing workflow AS-IS, integrates with other software systems openly, is available as a life time license without user – usage restrictions and includes a query builder for custom reporting.

About TenXLabs
We take deep interest to assist your company’s most important assets – human assets. HR automation is a critical process for boosting productivity within the organization. HRMS tools give management the ability to recruit right talent, improve employee morale and retain talent among other benefits. A system that automates these, if implemented correctly, will pay for itself and save the company much pain.

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Monday, April 2, 2012

HR and the Social Media

HR was often the last to catch up with technological advances in the industry. However, when it came to social media, HR has been at the forefront. HR professionals across the world are successfully using the social networking sites to connect with their stakeholders and building networks.

In this article, we will see how HR professionals can use social media effectively to UP THE ANTE and does it make sense for them to play the role of gatekeepers when it comes to employees using these forums.

Social media has provided us with a reach like never before to interact, engage and collaborate. And HR people have been gung-ho to embrace social media. Being a part of the social network keeps them abreast of the latest developments in both technology and people practices. It keeps the company in the news and helps disseminate the right information at right place at the right time.

Social media can act as a very powerful platform for recruiting. However, the buck does not stop there. It opens up a wide plethora of opportunities like networking, knowledge sharing, precipitating the corporate culture, positioning the company as a thought leader, raising awareness about the company, increasing employee engagement or simply having an ear to the ground and all this helps identifying and attracting the potential talent.

Talent Pipeline: Social media allows HR professionals to stay connected with a large audience who can prove to be potential hires at a later stage. This serves to keep the Brand alive and helps in sourcing at the right time. Staying connected with former employees also helps to arrest information loss and paves the way for rehiring.

Creating a network for knowledge sharing is also done admirably through social networks. Positioning the company, sharing the company’s vision, culture and best practices not just helps building the Brand, but also attracts the right type of people to it.

The challenge that HR people face is in the amount of regulation they need to deploy in allowing access to social networking sites for the employees in the organization. Unrestricted access is not going to help HR measure the impact of social media. Indiscriminate usage will also result in employees losing focus and time. There are industries-specific and topic-specific sites. Some even focus on networking within regions and nations. The trick is to identify which tools and applications provide the most value, as an engagement and collaboration platform and then establishing appropriate metrics to measure the results.

According to a TNN report, Gartner, said that fewer than 30% of large organizations would block social media in 2014. The agency said that in 2010, almost 50% organizations blocked social media websites in the office. The report carries the words of Andrew Walls, research vice president at Gartner saying that "Even in those organizations that (nowadays) block all access to social media, blocks tend not to be complete,certain departments and processes, such as marketing, require access to external social media, and employees can circumvent blocks by using personal devices such as Smartphones."

Constantly evaluating the impact of social media tools by asking employees for their feedback on the areas impacted by their interactions on social networks might help get a pulse of the usage and types of media. Another approach to evaluating the use of social media is to carry out polls and researches on those networks to check how much it impacts the organization positively.