3 Payroll Practices to Build A Strong HR Foundation

When Namely’s Payroll Operations Manager, Jim Kohl, started working in payroll in 2005, HR directors would physically call him to report and input employee’s hours. The phone call was replaced by fax and then eventually email. Today, payroll tends to be virtually paperless and driven by cloud-based applications.

“The payroll industry is a living organism,” Kohl said. “It’s constantly changing.” Kohl would know. He has supported the implementation and ongoing relationship with more than 100 clients on Namely Payroll and brings over ten years of payroll expertise to Namely.

A consistent payroll practice means paying employees on time and correctly—that base will never change. “The pitch for human resources is keeping people happy in their current jobs,” Kohl said. “One of the biggest reasons people are at their companies is to be paid, so payroll is necessary to keep people engaged.”

Although payroll technology has changed drastically, the importance of compliance and accuracy remains a critical need. That’s why Kohl sticks to his three best practices for building a great payroll process—with employees being the core focus.

Check Your Checks

When payday rolls around, the average employee rushes to their bank account to see their newest account total. Then, he might daydream about his newest purchase or the credit card bill he can finally pay off. But in between the payday notification and daydreaming, Kohl says every employee misses a very important step.

Most of the payroll headaches we experience have to do with mistakes in how an employee is paid. However, that can all be fixed by encouraging employees to review the details on their paystubs, says Kohl. “If every employee looked at their first check and verified the information, it could prevent at least 80% of the issues.” No one knows an employee’s deductions and benefits selections, for example, better than the employee himself.

Here’s a payroll professional’s nightmare. An employee goes to get a mortgage six months into his new job. While reviewing his paycheck, he realizes that his 401k deductions have been 20% of his paycheck, when they should have only been 10%. This could have all been avoided months before if the employee checked his paystub.

Payroll professionals are the authorized source of payroll practices, so make reviewing paychecks a norm at your company—and spread the practice to your employees. If every employee in the workplace reviewed their first check, a lot of payroll problems could be solved right or even before they happen.

Do Your Due Diligence

Employees shouldn’t be the only individuals double checking paystubs and payroll deductions. Yes, once you have salaried employees who you know you’ve been paying correctly for months, it’s an easy review and click of a button. Inputting new employees initially takes time and care, then the technology kicks in and supports you the rest of the way.

When Kohl processed payroll over the phone, his clients would always end the call wishing, “I’d love to see a report of what I just gave you.” Today, it’s possible. With the current Namely Payroll platform, you can enter payroll, make changes, and pull instant reports that contain all the relevant information. Then, you can review and fix issues that arise.  “You could make it perfect every single time,” Kohl said. “But I feel like people just hit approve and they’re onto the next task.”

That’s one of the reasons Namely Payroll works so well. Besides the easy-to-use software, there’s the feature that compiles reports for users to review before approving the session. “And the system itself is simple,” Kohl said. You have all the tools to run an error-proof payroll cycle.

Just because a process is made simple by software, doesn’t mean you shouldn’t conduct your usual due diligence. While it should be easy to use, intuitive, and timely, says Kohl, that doesn’t mean you can let go of the wheel. Future mistakes can be avoided with the right guidelines and a bit of thoroughness each step of the way.

Keep Learning

While being thorough ensures each piece of the paycheck is correct, double and triple checking will do nothing if you’re not staying up-to-date with the latest payroll legislation. That’s where Kohl’s last practice comes in: keep learning.

Always changing payroll practices, laws, and legislation means constant compliance updates keep you on your toes. But first, you need the basics. Kohl suggests the Fundamentals of Payroll Certification (FPC) to get a general understand of the process. “It takes you through how it all comes together,” Kohl said. From there, learning continues on a personal level, although sometimes you have no choice but to dive right in. 

For Kohl, there was the new MTA tax, the Affordable Care Act, and Social Security Takes a Holiday in 2010. Social Security Takes a Holiday was an initiative to revamp the economy. For a year, employees paid 4.2% of taxes from each paycheck to social security instead of 6.2%. “For payroll people, that’s a big change,” he said. “All of our forms are based on 6.2%, and many of the calculations in the system are based on that, so it’s a lot of cleanup and requires you to constantly be aware.”

Having a solid team of payroll professionals to back you up doesn’t hurt either. That’s what Kohl finds most helpful about Namely. “Most important is my team,” he said. “It’s a group of phenomenal subject matter experts dedicated to not only giving the client a good experience, but also making corrections as needed and making Namely better as a whole.” So when new taxes like the new transit policy are implemented, they’ve got it covered.  

The key to building a successful payroll practice is a strong understanding of payroll, continuous learning and, of course, a great payroll platform like Namely doesn’t hurt! It’s no wonder this week is designated as a time to celebrate the payroll professionals who do so much to make sure each employee is paid on time and paid right. “Payroll is necessary to keep employees happy,” Kohl said. And with all the work that goes into that, maybe payroll week should last an entire month, or even year. 

Looking for more on payroll? Click here to read our payroll guide that covers everything from pay cycles to federal and state taxes.    

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