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The Secrets of Payroll/HRIS Systems

It’s 2016, and the industry of Payroll/HRIS systems is exploding. New systems are constantly being introduced, and each one is claiming to be the one and only “expert” in the HR field. With all of this going on, the question arises:

How exactly do you make sure that you are using the best system that’s available?
With the ever-flowing current of new systems and information coming your way, numerous businesses are finding the value in a third party administrator who has experience and comfort with a given system to assist with administration and payroll entry. Today’s payroll specialist requires knowledge in employment law, tax, compensation, benefits, HRIS, and general HR subfields. Yes – it’s getting more and more complicated out there, just as the rest of the HR world is.
We at HRS have been assisting our clients with payroll design and operations for years. While we’re seeing more and more companies looking to outsource this process, payroll is still a function that a number of individuals prefer to keep in-house. So, let’s ask the question: How exactly do you make sure that you are using the best system that’s available?

The first thing you need to know about the HRIS industry is that no system is perfect.
This is critical. Each system has its pros, cons, and inconsistencies, and we have yet to find a provider that truly excels at customer service – an ever-elusive tool in the technology-driven business world. In general, what you want to look for in a system is a provider which positions itself as “HRIS-first”, not “expert-status-first”. Why? It’s all because of a key instrument you need as an HR professional: data. Data is the buzzword of choice for our business society, and CEOs are going into 2016 looking for data and data-driven recommendations out of HR. Because of that, you really should be looking for a system which provides you with the data you need first and foremost. You can always analyze the data yourself, or find another third party who can help you analyze the data and provide you with recommendations. If your Payroll/HRIS system does not do an excellent job at providing you with the data you need, even if they do a good job at being “experts”, then you’re genuinely going to find yourself behind. It’s going to be hard and time consuming for you to come up with the information you need without a proper electronic aid.

The second reason not to put too much focus on a payroll system provider’s HR knowledge base is that most of these providers truly fall short of “expert” status. 
Payroll providers don’t always give the right recommendations and, furthermore, most of them are not court-recognized experts. Consider this: should you be given bad advice from a payroll company, you really can’t point the finger back at them. All of the legal blame would rest with you. Additionally, quality service personnel across the industry are very elusive and are not something that can truly be counted on (no offense to any individuals personally). We’ll take a deeper dive into service quality later in the article, but the point remains that this is another reason to focus on system and data quality first.

So, now that we’ve identified the main criteria, let’s ask the question again: How exactly do you make sure that you are using the best system that’s available? It might actually be the system you already have. Since no system is perfect, you may have already found a system with which you are comfortable and gives you enough efficiency. After all, risking change and taking the time to learn a new system always offers the risk of lost efficiency. However, I will tell you that it is highly probable that there is a system out there which can be more efficient and affordable than the system you already have, and the transition does not have to be painful. Think of it this way: if you think you’re paying too much for a service or spending too much time performing certain tasks, trust your instincts and know that you’re probably right.

Here are the top four features you want to look for in a Payroll/HRIS system:
1. Grid system for payroll entry: Let’s start with an easy one. If your system doesn’t have this for payroll entry, then you’re really missing out on efficiency. The Grid in any payroll system allows for quick and easy entry of similar line items amongst candidates. Certain systems only offer you the ability to enter pay items on a per-employee basis, and there’s going to be at least some times when that’s not the most efficient means. In fact, the ideal system offers you both Grid and per-employee detail system views. Both methods have their place, and both systems should be in your arsenal. If your provider only gives you one – trust us, you can do better.

2. Reporting Functions: If you feel that your reporting system is too complicated, cumbersome, or takes too long to get you the data you need, then it’s probably exactly that. In today’s high-tech world, there is no reason your system shouldn’t give you push-button feedback. There are systems out there which give you quick and accurate information, and I’ll present one to you at the bottom of this article. Look for a system where you know exactly where, and how, to get the information you’re looking for. You’re busy, and your time should be spent analyzing data rather than searching for it.

3. ACA: Similarly, you will want a system which focuses on high quality features that run accurate and timely ACA reports. This is nothing to take for granted – we’re in 2016, and we’re seeing a number of systems fall short in this capacity. What’s important is that you find a system which generates all of the information you need for ACA reporting and asks very little of you. We’ve seen some systems which take your money and still have you complete a substantial portion of the data entry yourself. That’s pointless. If all they’re doing is filing for you – please know that is the easy part. If needed, you can always find an ACA expert out there. Make sure that your technology is working for you and giving you the information you need.

4. Individual Reps: This one should be self-explanatory. There are enough providers out there that assign dedicated CSRs to your company; you don’t need to settle for less. The important thing to look for with your reps is that they are knowledgeable in their own system – they know how to fix the system’s problems and provide you with information on the best way to accomplish a certain task. This can’t be taken for granted, as individual reps within a provider will often disagree on the best methods for handling issues. As a further example, their legal compliance knowledge (if they have it) won’t seem quite as helpful if they’re setting up your earnings and deductions codes in the wrong way. Again – no one is perfect here, but there are some that are better than others. 

There are other features which will be more or less beneficial on an individual basis, but these are the four that everyone needs to look at.

Now that we’ve done that, here is a comparative analysis of the three most popular systems we see our clients using (in alphabetical order):
1. ADP: My least favorite, in all honesty. A lot of people have used ADP, and a lot of people are starting to jump ship. In fact, it’s so much that ADP has hired Boston Consulting Group to conduct a study to figure out how to prevent the loss of clientele and improve their system. ADP offers all the basics, but their customer service model is ancient. Most of the other systems give you a dedicated rep, and don’t cost any more money…so why exactly would you put up with their outdated call center model? Outside of that, ADP offers most of the essentials that you’d look for. However, it can be slow and clunky at times and really doesn’t offer anything that sets it apart, other than being a big company, and, frankly, that means nothing in today’s world. Modern business has been preaching for years already that adaptability and quality outweigh, and reversely correlate to, size. Lastly, ADP only provides you with live check preview as an add-on service, which is a very helpful feature and comes standard in most other systems.

2. Paychex: This may be surprising because most industry professionals I’ve talked to have proclaimed Paychex as “the aging dinosaur” you need to move away from. Truth be told, ADP fits this description far more than Paychex does. In fact, Paychex is still a fairly reliable system, and you can do much, much worse. Paychex does offer you a dedicated rep, but they have also silo’ed their company into numerous divisions that can make customer service frustrating at times. Sometimes, you’ll get the “I’m sorry, you’ll need to talk to so-and-so to fix that problem, call them” and you’ll be stuck calling 3 different individuals. Although, in their defense, they are actual dedicated reps so you’re not stuck calling hotlines most of the time. Paychex customer service is a wild card – some of the best reps we’ve ever worked with have come from Paychex, and they will truly do everything that they can to be helpful and be very knowledgeable in fixing seemingly any problem. These individuals, however, don’t always stick around and are typically targeted for promotion sooner rather than later – leaving you with a new rep who might be just as good, completely unhelpful, or anywhere in between. Looking at operations, Paychex’s actual payroll software is easy to use and reliable, but we’ve seen some monstrous errors happen once you start to venture into some of the benefits and ACA services – be forewarned.

3. Paylocity: The up-and-comer in the industry. Paylocity has shot out of a cannon and is growing at about 30-40% per year – an astronomical number. Such growth, as with any company, can lead to quality control problems, and sometimes their customer service training can lag behind their growth rate. Our experience with Paylocity customer service has been similar to that of most other systems, including Paychex – it can be good, bad, or anywhere in between. The system itself, however, really is unsurpassed. A lot of industry professionals criticize Paylocity of two things: 1. Their “low-ball” approach to win customers and 2. Their “Frankenstein” approach. Firstly – the “low-ball” approach in pricing. In this particular instance, that doesn’t affect you as a consumer. Here’s why: given that no perfect system exists, why should you pay more for a system that merely pledges it’s better than any other? The added value likely won’t be there. Secondly - the “Frankenstein” approach comes down to how Paylocity outsources their HR expertise, benefits consulting, and other services of the like to true experts in those fields. It may be convenient to have a company like ADP or Paychex that can provide you any form of HR consulting known to man, but what often happens is that these companies succumb to a “jack of all trades, master of none” phenomenon, and you’re much better off finding a dedicated HR consultant who delivers good information and can work alongside your HRIS system. It may appear to be less convenient, but will almost always get you better assistance and is, at least, no more expensive of an option (and, believe it or not, can be cheaper). Paylocity understands what their role is in HRIS, and they have it where it counts. In particular, their reporting format is one of my favorite features of any system out there. You can run any form of report, and even run report-like searches from the standard search bar, and it comes to you instantaneously. We have seen one client who had issues with reporting; however, it went more to a service/set-up issue as opposed to a system issue. Paylocity might very well offer the best technology at getting you the data you need as an HR professional, which is ultimately what we’re looking for under this thesis.

Do you agree? Is there a system that you’d like to know my thoughts on that I didn’t address here? Do you have a system that you swear by that you feel I’ve discounted? Contact me and let me know! I’d be happy to talk.

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Matthew Bare - Tuesday, February 09, 2016