Originally appeared January 8, 2018 on HRtechnologist.com, Malysa O’Connor talks about the impact that payroll problems and confusion can have on the workforce.
The tax reform overhaul that was recently passed presents significant challenges for businesses that still rely on outdated, paper-based, or home-grown processes for payroll or human resources (HR) functions. A recent article published by Politico outlined the last minute scramble that organizations large and small are currently engaged in to make sure they are able to accurately pay their employees under the new guidelines.
Increased complexity for payroll and employees.
Managing payroll is a challenge under normal circumstances. The uncertainty that the new plan creates around withholdings is about to amplify that difficulty, especially in the early part of the new year. Changes of this magnitude could take three to six months to implement. Depending on the timing and length of the preparation window that organizations receive, those that rely on manual processes will struggle to quickly adapt. This complexity has the potential to lead to non-compliance and monetary fines, as well as costly payroll errors that threaten to disengage employees who often already struggle to understand the impact that deductions and withholdings have on their net earnings.
A 2017 Workforce Institute at Kronos survey on payroll problems found that 64 million Americans currently find their paystub difficult to read and understand, while 54 percent of American workers have experienced a problem with their paycheck . Organizations should take extra care to communicate to their employees how they’re getting ready for the changes and what they may mean for their net earnings. This will mitigate some of the confusion that is bound to surface, and ensure companies maintain a quality employee experience. As the survey found, just two payroll errors will prompt more than half of all workers to seek out new employment options.
New rules mean added costs.
Another issue organizations should be thinking about: new rules mean new, added costs for most organizations. A separate 2017 survey conducted by The Workforce Institute at Kronos on compliance change found it can cost organizations between $40,000 and $100,000 to prepare for regulatory changes involving labor and pay rules. This figure accounts for hard and soft expenses, and may include, but not be limited to, consulting with legal teams, updating internal processes, required payroll/HR team trainings, and communicating the expected changes to employees.
Time to modernize technology.
The new tax code findings are poised to have a significant impact on core human resources organizations as well, with changes to paid leave, benefits, and other key areas. Modern payroll and HR technology can serve as an important ally when navigating the complex and continually-changing regulatory landscape. Organizations with digital tools can quickly and accurately obtain updated forms from employees and process those changes within the system with minimal administrative work or errors.
Configurable payroll workflows and checklists reduce processing time, keep teams on track during every step, and provide a repeatable framework for consistency. This makes it easier for payroll managers to adapt to new changes, whether they stem from a new local ordinance or a significant overhaul to the federal tax code.
By providing the modern tools needed to properly handle payroll, organizations can quickly and confidently manage changes without losing focus on the more strategic activities that are required to recruit, retain, and develop the most engaged workforce possible.