Businesses have been hard pressed in the past few years to find ways to improve operations, increase profits, and streamline processes. Companies spend vast amounts of time coming up with plans and roadmaps that will help them to achieve these goals, yet many fail because they simply don’t appreciate how significantly workforce management influences their performance.
That’s one of the reasons why it’s time for SMEs to change their thinking about human resource management. According to Grant Lloyd, MD of Softline Pastel Payroll, many business owners believe that implementing an HR software solution is too costly, and that a stretagic focus on HR management will introduce too much red tape into the business.
“It’s a fallacy that HR software costs an unjustifiable amount to buy, and implement,” Lloyd says. “While the market is hardly flooded with cost-effective entry-level HR software, there are vendors who have successfully extended payroll functionality into the realm of HR, providing a simple, easy, and logical starting point.”
Make payroll a priority
No matter what type of business you’re running, payroll is an essential monthly activity involving complex calculations, deductions and statutory regulations. Sandra Swanepoel, sales director, Softline VIP, says that while buying good payroll software to manage this in-house saves a lot of money, even more important is the legislative knowledge a small business will receive from a reputable payroll provider.
“Payroll administration is much more than just knowing your software product. In any industry, experts in their field are hired to lessen the risk of non-compliance to the business and the same should apply in the payroll industry,” she says. “Employ a payroll administrator who knows the legislation, who knows payroll best practice and who is able to apply this to the company’s specific payroll requirements.”
Lloyd concurs. “Labour legislation, competitive markets worldwide, increased competition for skilled human resources and generation gaps mean that sound HR strategies, coupled with flexible, easy-to-use and extendable software that supports all related functions, are no longer discretionary – they are essential.”
The solution a company chooses should be able to handle all the aspects of payroll reporting. The software must be able to integrate into the accounting system, and it’s important to look for a payroll product that will serve your business’s needs for the long term.
“Choosing the right payroll solution doesn’t have to be a daunting task,” Swanepoel says. “What is important is to match the product’s functionality with business needs, and this means looking beyond all the bells and whistles vendors often put on the table.”
Training is vital
To operate effectively and get the most from software products, companies should not only invest in a good solution, but also implement best practice procedures as part of that solution. “Often companies do not use the software to its full capacity, resulting in a poor return on their investment,” Swanepoel points out.
“Training employees to use your payroll and HR software is one of the most cost-effective decisions you can make. If everyone knows how to optimally use these solutions, you can save time and money while increasing skills. By investing in software that will last the company a long time you not only make sure that the return on your investment is great, but payroll administrators will feel that they are equipped to do their jobs if they have been well trained. Having your payroll expertly administered builds trust among employees – everyone appreciates being paid correctly and on time,” she says.
It’s good for business
Training, education, salary, benefits, incentives, career-path and performance criteria are important to just about everyone. “Implementing HR and payroll software demonstrates the employer’s equally serious commitment to these aspects of the employer-employee relationship,” says Lloyd. “A sound HR base encourages excellence in products and customer service.”
Interestingly, until a few years ago, formal payroll qualifications were lacking in South Africa, something Swanepoel believes “old school” work processes had a lot to do with. Payroll administration was always seen as a back-office job which required little expertise – an “add-on” to someone else’s job, where the tricks of the trade were learnt through trial and error. However, over the past ten years changes in payroll legislation have greatly affected the way the job is done today and, more importantly, by whom it’s done.
“The new legislation introduced skills levies and brought significant changes to tax and labour laws, as well as UIF reporting. Companies were suddenly faced with the realisation that in order to avoid penalties for non-compliance, they had to bring payroll administration out of the attic and into the boardroom. Payroll is now a priority business process in which no risks could be taken.”
Related: Dealing with Poor Performance