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Micah Fairchild Improving Your Payroll Software by Keeping the Data in Mind

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 By Micah Fairchild

Ensuring Accuracy, Reliability, Security and Trust in Your Payroll Data

Quite simply, payroll software effectiveness depends on data quality. In fact, it’s fair to say that no matter how sophisticated payroll software becomes (and regardless of the impact of cloud computing, open-source applications, social media, or other disruptive technologies), this key point remains: the effectiveness of any payroll software system and the degree to which it is trusted by employees is underpinned by the integrity and security of the personal data that it contains. Furthermore, this issue is ongoing and is a fundamental concern during the lifespan of the software. Indeed, as any payroll system is updated and expanded, realizing additional benefits requires an active awareness of data quality and management issues. Here's our list of the top 4 issues organizations should keep in mind in order to operate an accurate, reliable, and trusted system—thereby maximizing your payroll software ROI.

Payroll Data Issue #1: Integration

Payroll software solutions are often either linked to or form an integral part of other HR and business systems. Whether those other offerings are best-of-breed point solutions or off-the-shelf modules that plug in to a single workforce management system (including time and attendance, leave management and scheduling), payroll functionality and accuracy largely depend on the seamlessness of the data transfer between these points. As a 2011 report from Sage notes, “For progressive organizations, the strategic alignment of payroll and human resource departments is no longer a ‘nice-to-have’ but rather a ‘must-have’…HR, Payroll, and Benefit functions have tremendous overlap, and sharing the data ensures that all systems are in sync and using the most recent and accurate data.” This is what SHRM (the Society for Human Resource Management) calls "the democratization of HR data" as access broadens and the data stored in the systems becomes less exclusive (but no less sensitive). Data-sharing is at the heart of integration benefits and as such, each new connection between systems raises specific issues of security and quality maintenance.

Payroll Data Issue #2: Access

For payroll data in particular, security is vital due to the nature of the information being stored (e.g. social security numbers, salary information, benefits records, etc.). As a 2011 Grant Thornton risk report states, “Every company should know exactly what data it creates, stores, and transmits”. Further, organizations should know not only what data their transaction partners create, store, and transmit, but also how those process are accomplished. And according to Grant Thornton research, “Companies should audit controls such as data segregation”. In large part this is because the ever-increasing usage of outsourcing and mobile computing means that payroll data is often available externally as well as internally—thus making it harder to keep track of access. However, while access control is certainly a security fundamental, it must also be balanced with users' information needs. Data security safeguards such as Access Control Lists, encrypted PII (personally identifiable information), and vulnerability assessments must be coordinated with legitimate access requirements. Such is the case for integrated systems; where layered security measures can coexist with a degree of simplicity for users by applying common security rules and access levels, single logins, etc.

Payroll Data Issue #3: Deployment

Of course a growing concern and increasingly major factor in the decision to implement on-premises or SaaS (software-as-a-service) payroll is data security—a fact that should not be taken lightly when perusing potential deployment models. Indeed, as Towers Watson reported on user issues, “Respondents [who] have not used SaaS (and don't plan to) list the inability to customize, lack of data ownership, and data security as their perceived concerns". While data ownership may not be a true issue (given the fact that software vendors explicitly state that the data is always owned by the client organization); the fact remains that when payroll information is kept offsite it is in the care of the software supplier or outsourcer—a verity that raises a distinct set of issues. In such circumstances, the client organization should explore the maturity, stability, and security arrangements of the payroll software supplier. As early as the pre-selection process, the potential buyer should be looking for such proofs as ISO/IEC 27001:2005 certification, SAS 70 Type II (now SSAE 16) audits, and potentially even Safe Harbor Compliance. However, these certifications have expiry dates and part of monitoring and improving a payroll software system is a regular check that the supplier continues to meet such standards without interruption.

Payroll Data Issue #4: Integrity

In terms of payroll, any wrong or out-of-date detail puts a paycheck at risk; and having begun at the implementation stage by ensuring the accuracy of the initial payroll data, it is important not to allow its quality to be eroded over time. As Grant Thornton highlights, "Maintaining data integrity through careful reporting is an essential aspect of managing the risk of data complexity. Reporting tools can be developed in-house on the client or provider side, they can be canned (as in an off-the-shelf application), or they can be a hybrid of the above. In order to verify that data is being manipulated consistently, organizations should create baseline client-side and provider-side reports early in the relationship and provide periodic updates throughout the engagement." Additional methods can include:

  • Comparison and reconciliation reports for multiple databases;
  • Random spot-checking;
  • Manual data-cleansing exercises, checking back with individual employees; and
  • Dummy walkthroughs of specific processes, followed by a check that the new data is appropriately present via access points such as a management dashboard

Still, another equally acceptable (and successful) line of defense against data degradation is employee (and manager) self-service. As Charles Jones (Chairman and CEO of Peopleclick Authoria) says, “…the system of record is fast-becoming the individual” and by giving individual employees a level of control over their own data, the entire workforce becomes engaged in maintaining data integrity.

The Bottom Line for Payroll Data

The quality, security, and integrity of the data in any payroll system will effectively determine the utility of its features; and most importantly the accuracy of its output. After all, good payroll data equals correct pay. Moreover, the broader advantages of automating payroll rely on the capability to use employee data in a more innovative manner—from pay for performance (P4P) to budgetary interfaces to contributing to complex predictive analytics. As such, keeping that data both safe and accurate is of paramount importance and a precursor to all other downstream objectives.End

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In terms of payroll, any wrong or out-of-date detail puts a paycheck at risk; and having begun at the implementation stage by ensuring the accuracy of the initial payroll data, it is important not to allow its quality to be eroded over time. "



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