ROI of HCM Automation with ONEMINT
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Slide deck of information detailing how and why HCM automation is so valuable to your organization both culturally and financially.
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ROI of HCM Automation with ONEMINT
- 1. The ROI of Automating Your Human Capital Management © ONEMINT™ 2016
- 2. Overview Human Capital Management (HCM) is the set of processes related to your organization’s payroll, HR, time & labor, scheduling, and other administrative needs. Through automating HCM functions, organizations can see significant savings in the form of time, money, litigation exposure, and overall aggravation. Specific areas of savings include: • Payroll Processing • Payroll Inflation • Employee Absenteeism • Unnecessary Overtime • FMLA and Leave Time • Wage and Hour Compliance Exposure • Employee Self Service • HR Productivity • Employee Engagement and Satisfaction HCM in the Cloud
- 4. Manual adjustments Manual tax, compensation and deduction adjustments Manual calculations of retroactive payments Multiple sources of information Manual Manual process that take hours/days to perform Manual off cycle checks Payroll Hours Spent Processing
- 5. Streamline Payroll Processing Too many hours are spent each payroll period on collection of accurate time worked, approving employee time, and applying pay rules accurately. Payroll processing challenges include: correcting payroll errors, not having a single source of data, and lack of visibility and access to accurate real time payroll data. Did you know: • 35% of the average HR department’s time is spent on payroll alone (Sage) • 10.5% of payroll processing time is consumed in error correction, even though the average error rate is only 3% (APA & KPMG) • It takes 5 to 6 minutes to total and audit each manual time card (APA) This is costing you… • For every 25 full time employees (FTE’s), you are likely expending 100 wasted person hours per year on manual payroll processing and exception handling. This totals to an annual expense of over $3,250 per 25 FTE’s.
- 6. Streamline Payroll Processing PAID TOO MUCHPAID TOO LITTLE Sources • Paper based timecards • Manual calculations • Manual keying of data • Complex pay rules
- 7. Streamline Payroll Processing How Automation Can Help: • Integrate your HR, timekeeping, and payroll systems into one database to reduce data entry and errors • Implement and manage a configurable workflow ensuring that schedules are effectively approved and posted with easy employee access • Scheduled alerts to pick up errors • Eliminate duplicate data entry • Add complimentary apps
- 8. Reduce Payroll Inflation 6 Minutes Paid, Not Worked5:09 PUNCH PUNCH ROUNDED TO 5:15 GAMING THE CLOCK Time Paid, Not Worked ONE EMPLOYEE PUNCHES FOR TWO EMPLOYEES BUDDY PUNCHING 20 Minutes Paid, Not Worked RECORDED 5:00 HONOR SYSTEM ACTUAL 4:40 FALSIFYING TIMECARDS
- 9. Reduce Payroll Inflation Honest time reporting errors, incorrect pay rates, missed punches, and meal breaks aren’t always captured correctly when manually entered. Relying on manual processes to round employee time to the next hour costs businesses money and increases compliance risk. Did you know: • A 1% to 8% clerical error rate is realized when organizations manage/track total hours manually (APA) • Employee reporting issues cost $1085 on average per employee per year (APA) • The average time employees incorrectly reported is 4.5 hours/week – the equivalent of 6 weeks of vacation (Robert Half and Associates) This is costing you… • Applying the average 2.0% error rate for manual processes, you are likely overpaying by almost $10,000 each year for every 25 FTE’s with a total annual hourly payroll of $500,000. Total Annual Hourly Payroll Manual Calculation & Input Error Percent Calculated Value $500,000 2.0% $10,000
- 10. Reduce Payroll Inflation How Automation Can Help: • Real time visibility to manage exceptions and trends • Auto alerts • Accurately and effectively collect time data • Pre-established rounding rules • Automatic transfer of correct time calculations to payroll
- 12. Manage Absenteeism Surveys Says: Employee Absence Affects Productivity ADDS TO WORKLOAD DISRUPTS THE WORK OF OTHERS INCREASES STRESS HURTS MORALE REDUCES QUALITY OF WORK OUTPUT ADDS MANDATORY OVERTIME REFLECTS BADLY ON ALL IN UNIT Survey on The Total Financial Impact of Employee Absences by Mercer, 2010 90% 85% 82% 69% 64% 52% 36%
- 13. Manage Absenteeism Employee absences and leave, whether planned, incidental, or extended, carries costs, risks, and productivity hits to your organization. It also negatively impacts morale and employee engagement. Did you know: • Employees with supervisory responsibility spent an average of 3.3 hours per week dealing with absences (SHRM) • The average productivity loss associated with an unplanned absence was 31.6% (SHRM) • The total cost of absenteeism as a percentage of payroll was between 36.3% and 38.3% (SHRM) This is costing you… • Absenteeism on the business can cost a typical organization 165 person hours ($5,270) per manager/supervisor each year, and total over $29,400 annually for every 25 FTE’s.
- 14. Manage Absenteeism How Automation Can Help: • See who is available in real time to fill absences • Set workflows to automatically record employee absences • Automatically notify managers when employees exceed established point thresholds • Easily confirm each employee’s eligibility for paid/unpaid leave based on user-defined criteria
- 15. Reduce Unnecessary Overtime Without the proper visibility to accurate employee time and attendance data and schedules, companies tend to overcompensate, overstaff, and overpay. As a result, they pay more in overtime than they need to. Did you know: • Overtime accounts for 6.3% of a typical payroll (SHRM) • One of the largest contributing factors to increased labor costs is overtime accrual (Bureau of Labor Statistics) • Top performers have <4% of overtime costs unplanned or unbudgeted compared to the average (Aberdeen) This is costing you… • For every 25 FTE’s, the average company pays over $77,500 in annual overtime.
- 16. Reduce Unnecessary Overtime How Automation Can Help: • Real-time visibility into employees’ hours • Building of accurate schedules • Automated alerts to notify you when schedules exceed budget limits
- 17. Manage FMLA/Leave Employers who do not fully understand and manage complex notice and leave requirements of the Family Medical Leave Act (FMLA) risk potential exposure to litigation and penalties. This is made more difficult as you need to track rules for eligibility and assure full understanding of the rules by managers Did you know: • 13% of all employees took leave for a qualifying FMLA reason (ABT Associates) • It takes employers an average of 2.5 hours to manage a single FMLA case (SHRM) This is costing you… • According to the Society for Human Resource Management, the average cost to defend a FMLA lawsuit is $78,000, regardless of outcome (U.S. Department of Labor Wage and Human Resource Division 2006) • Employees who successfully sued for wrongful termination based on FMLA absence received on average between $87,500 - $450,000 in damages (EEOC)
- 18. Leave Inflation Anytime PTO isn't properly deducted Extra 10 Hours PTO a Year HOURLY EMPLOYEES PAPER REQUESTS NOT MAKING IT TO PAYROLL Extra 10 Hours PTO a Year SALARIED EMPLOYEES SELF REPORTING HONOR SYSTEM
- 19. Manage FMLA/Leave How Automation Can Help: • Automate and enforce: – Time off and accruals rules – Federal, state, and company leave requirements – Organizational attendance policies • Automate eligibility determination such as vacation, sick time, and FMLA • Receive automatic alerts to flag action items
- 20. Reduce Wage and Hour Compliance Exposure Investigations, litigations, and wage recovery focused on wage and hour violations are at an all-time high and showing no signs of decreasing. Proposed changes to overtime regulations and the Affordable Care Act (ACA) have added new layers of complexity. It’s imperative that organizations take, proactive steps to develop compliance strategies to protect themselves. Did you know: • Since the beginning of 2009, the Department of Labor (DOL) Wage and Hour Division has aided 1.5 million workers, with $1.3 billion in back wages (DOL) • Since 2004, federal FLSA cases have more than doubled from 3,426 cases to 8,066 cases (Seyfarth Shaw LLP) • Smaller to medium businesses are 72% more likely than enterprise businesses to indicate that maintaining compliance is a key driver in their workforce management efforts (Aberdeen) This is costing you… • According to DOL statistics, the average issue can cost a typical organization $30,000 in back wages, but easily cost three times this amount in internal handling/mitigation costs, legal fees, and additional damages (DOL)
- 21. Reduce Wage and Hour Compliance Exposure How Automation Can Help: • Track part-time vs. full-time hours • Minimize overtime • Proactively plan schedules • Streamline benefits enrollment • Centralizes wage and hour policy administration • Establishes local policy enforcement • Creates detailed audit records
- 22. HR Automation
- 23. Employee Self Service Handling employee questions about HR and payroll can be time consuming and costly. When it comes to handling employee questions and issues such as updating employee information, withholdings, overtime, time off balances, benefits, shift swapping, and discrepancies with paychecks, it can create major frustrations and time lost. Did you know: • The average cost of resolving any kind of payroll inquiry is $19.67 per inquiry (The Bureau of National Affairs (BNA)) • On average, over 50% of an HR department’s time is spent processing employee information and answering questions (Center of Effective Organizations) This is costing you… • A typical HR or payroll team spends almost 400 hours a year handling employee questions regarding HR and payroll. This wastes over $12,000 per team member each year, and an average of over $5,750 for every 25 FTE’s.
- 24. Employee Self Service HR 3 months of paystubs 2 years of W2s Change of marital status New dependent
- 25. Employee Self Service How Automation Can Help: • Request time off • View schedules, timecards, and accrued time off balances • Review, approve, annotate, and submit timesheets • Access profiles, schedules, pay statements, time off balances, and more • Approve time worked and time off requests • Open Enrollment
- 26. Enhance HR Productivity It is critical for HR departments to improve the employee experience by streamlining processes from onboarding to off boarding. It is costly enough to hire and train new employees, let alone using manual processes. Did you know: • Smaller organizations reported cost-per-hire of $3,078 (SHRM) • Direct replacement costs of an employee can reach as high as 50% - 60% of their annual salary, and total costs associated with turnover ranging from 90% - 200% of their annual salary (SHRM) • The average voluntary turnover rate is 15%, but can be much higher in certain industries like food and beverage, retail, agriculture, transportation, and warehousing (SHRM) This is costing you… • For every 25 FTE’s it’s not uncommon to lose over $96,875 each year on turnover.
- 27. Enhance HR Productivity Day to Day Tasks Terminations, Rate Changes, Job Changes, Onboarding, etc.
- 28. Enhance HR Productivity How Automation Can Help: • Centralize all employee information • Streamline recruiting, hiring, and onboarding • Simplify benefit plan setup • Automate administrative tasks • Deliver real-time data access • Manage compensation
- 29. Improve Employee Engagement and Satisfaction Engagement and well-being are keys to employee performance. Employee engagement is critical to managing labor costs and improving productivity as well as meeting your business objectives. Today’s employee engagement challenge is complicated by the fact that there are five generations coexisting in the workforce Did you know that: • 51% of U.S. employees are watching the job market or actively looking for a job (Gallup) • An actively disengaged employee (40-49 years of age) costs $236.20 due to unhealthy days (2.17 days per month) – an 85% increase compared to an engaged worker (Gallup) • Turnover costs are often estimated to be 100% - 300% of the replaced employee’s base salary (SHRM) This is costing you… • Recruiting and training costs • Increased staffing • Loss of sales • Replacement workers
- 30. Improve Employee Engagement and Satisfaction How Automation Can Help: • Eliminating manual tasks, allowing leaders time to coach their team • Standardizing and centralizing policies • Providing a clear career path • Creating freedom with self-service • Putting employees in a position to win while ensuring fairness
- 31. Sources Reduce Payroll Inflation • APA – http://www.thewfcgroup.com/2014/01/06/buddy-punching-costs/ • Robert Half and Associates – http://www.deputy.com/blog/time-theft/ Manage Absenteeism • The Total Financial Impact of Employee Absences in Europe (SHRM 2014) Streamline Payroll Processing • Take Control of Your Payroll Process – APA Trendline Survey, December 2014 • Sage – HR Technology Tools: What You May Be Missing Employees Self Service • The Bureau of National Affairs, Inc.; Payroll Benchmark Report, Payroll Benchmarks and Analysis 2011 • Lawler, E. & Noudreau, J. (2010) Center for Effective Organizations at the University of Southern California. Retrieved from: http://ceo.usc.edu/news/ Manage FMLA/Leave • Family and Medical Leave in 2012: Executive Summary – ABT Associates – http://www.dol.gov/asp/evaluation/fmla/FMLA-2012-Executive-Summary.pdf • SHRM – https://www.shrm.org/Research/SurveyFindings/Documents/FMLA%20And%20Its%20Impact%20On%20Organiz ations%20Survey%20Report.pdf • HRI World – http://www.hriworld.com/FMLA.aspx
- 32. Sources Improve HR Productivity • Retaining Talent – A Guide to Analyzing and Managing Employee Turnover – SHRM – http://www.shrm.org/about/foundation/research/documents/retaining%20talent-%20final.pdf • Annual Voluntary Turnover Rate – SHRM – http://www.shrm.org/research/articles/pages/metricofthemonthannualvoluntaryturnoverrate.aspx Reduce Unnecessary Overtime • Productivity: Managing and Measuring a Workforce – Aberdeen Group, Jan 2015 • The Total Financial Impact of Employee Absences in Europe – SHRM, 2014 • Are Your Labor Costs Out of Control? When I Work, March 2013 Improve Employee Engagement and Satisfaction • Gallup Workforce Study on employees looking for new work - http://www.gallup.com/businessjournal/186602/job- hopping-employees-looking.aspx?g_source=EMPLOYEE_ENGAGEMENT&g_medium=topic&g_campaign=tiles • Gallup study on engagement costs - http://www.gallup.com/poll/187865/engaged-employees-less-likely-health- problems.aspx?g_source=EMPLOYEE_ENGAGEMENT&g_medium=topic&g_campaign=tiles • Measuring and Mitigating the Cost of Employee Turnover – SHRM – https://www.shrm.org/multimedia/webcasts/Documents/12ruyle_2.pdf Reduce Wage and Hour Compliance Exposure • DOL, Working for a Fair Day’s Pay, found at http://www.dol.gov/whd/statistics/. • Seyfarth Shaw LLP, FLSA Cases in Federal Court (2013), http://www.wagehourlitigation.com/files/2013/07/FLSA- Cases-Filed-2013.pdf.
- 33. Sources • Seyfarth Shaw LLP, 11th Annual Workplace Class Action Litigation Report: 2015 Edition, at 6. • Complex Labor Regulations Raise the Stakes for Organizations – FLSA cases on the rise; focus on risk management; strategic action required
Hinweis der Redaktion
- Processing payroll can have a wide margin of cost per payment due to error correction, manual off-cycle tax calculations, and data validation issues. A 2008 APA* benchmark survey showed that top performers process payroll at a 46% lower cost per employee and a 32% lower cost per payment than other employers. Having timekeeping in a separate system to payroll, encourages payroll corrections being performed during in the payroll batch, which breaks the reconciliation link between what was paid and what was worked. This causes undue delays in investigation due to employee payment complaints. Mid-pay period changes usually require manual calculations which increase the opportunity for error.
- Calculation/Input Errors– where employees are paid too little or too much in a pay period. That magnitude of these errors typically fall on a curve. (click) There are more smaller errors ($20-$100), either in favor of the company or employee, and fewer bigger errors (a whole paycheck for example) Large overpayments are typically caught by accounting (click) Any underpayment, large or small is almost always caught by the employee (click) . This leaves small overpayments– the employee either chooses not to report the overpayment or overlooks it (click) . This is where payroll error costs you money – lots of small overpayments that are never caught. Calculation/Input error has many sources. Any time there are paper timecards, there can be handwriting issues (thinking a 3 is an 8) input errors (typing a 0 instead of a 9) and calculation errors (adding incorrectly) Ideally a picture of their messiest timecard can be put in this slide to illustrate how hard it is to interpret handwriting
- Calculation/Input Errors– where employees are paid too little or too much in a pay period. That magnitude of these errors typically fall on a curve. (click) There are more smaller errors ($20-$100), either in favor of the company or employee, and fewer bigger errors (a whole paycheck for example) Large overpayments are typically caught by accounting (click) Any underpayment, large or small is almost always caught by the employee (click) . This leaves small overpayments– the employee either chooses not to report the overpayment or overlooks it (click) . This is where payroll error costs you money – lots of small overpayments that are never caught. Calculation/Input error has many sources. Any time there are paper timecards, there can be handwriting issues (thinking a 3 is an 8) input errors (typing a 0 instead of a 9) and calculation errors (adding incorrectly) Ideally a picture of their messiest timecard can be put in this slide to illustrate how hard it is to interpret handwriting
- What is payroll inflation? Anytime anyone is gaming or cheating the system, ie time paid, not worked. Gaming the clock with rounding rules, buddy punching and falsifying written time cards are the most common. <more than likely a company wont have all three of these gaming issues, delete/modify the one(s) not relevant, but keep biometrics to show what can happen if they buy Intouches without biometrics> Small amounts of creep lead to significant amount of dollars
- In addition to the significant expense associated with employee absence, your organizations take a major productivity hit when employees don’t come to work. Your managers productivity is impacted as well as the productivity of your front-line staff. Unplanned absences results in the highest loss of productivity, averaging 20% per day, according the to 2010 Mercer survey. The pain of absence is significant and extends to others in the organizations…How else? In what other ways do absences hurt a company? consider these impacts, when employees don’t come to work: Adds to workload of others Disrupts the work of others Increases stress Hurts morale Reduces quality of work output Adds mandatory overtime Reflects badly on all in the work unit Preventing these additional impacts is just one more reason why your need to effectively manage absence effectively
- Employee-requested data updates (such as address changes, direct deposit changes, etc.) can be a largely inefficient process for most employers. Verbal requests can be misinterpreted and paper forms can get lost/misplaced by management and HR. Also, even when requests are correctly routed, without visibility to what is currently on file, the employees may not know that an update is needed. Many employee requests are also informational only, and may not require HR involvement. HR and Payroll departments can spend hours, responding to information queries, such as PTO Balances, requesting copies of checks, insurance inquiries, etc. Manager-requested changes (such as Personnel Action Forms) and paper file reporting requests (performance goals, forms, emergency contacts, etc.) waste hours of time across an organization. And, like employee requests, paper forms may not make it to their required destination, leaving employee files incomplete. HR professionals spent an average of 12 minutes per request, providing or updating information to employees. On average an employee has 4.8 requests per year.
- Most standard HR transactions need various points of entry, as the data can be held in many different software packages, databases, or even on manual forms. Even when systems and processes are in place, the need for several levels of approval and the proper routing of information can lead to many areas of inefficiency. Double-entry, unnecessary verification, and manual form signatures are the most common areas of lost time. Without Manager Self Service, HR departments are reliant on paper, or email forms, the storage of which can add up over the years. Paper storage, or even electronic document storage (if in separate systems) prevents quick access to data and therefore, never provides a complete repository of employee information.