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Dave Foxall 3 Payroll Issues for the Retail Industry

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 By Dave Foxall

Sector-Specific Factors in Retail Payroll Operations

The average large organization in the retail industry manages a wide variety of working hours and contract types; utilizes a large proportion of contingent and repeat seasonal labor; experiences a high turnover of personnel; and has a workforce scattered across multiple store locations with a mobile management layer. Many of these characteristics are shared individually with other industries, but taken together as a whole; they make up the unique nature of the retail sector and reflect the challenge of managing industry-specific payroll issues. Whether that payroll is administered in-house or by an outsourced service provider, rates of payroll automation within the retail world are high. In fact, according to the 2011-12 CedarCrestone HR Systems Survey, the adoption of payroll technologies (and other administrative HR functions) in the retail industry currently sits at a whopping 94%. As always though, for the employer looking to introduce or upgrade their payroll software and/or service, due diligence in the payroll provider selection process is critical. As such, the following key issues apply:

Retail Industry Payroll Issue #1: Reconciliation with Time and Attendance

Payroll accuracy comes from seamless and timely integration with the data from whatever system is used to track time and attendance. For in-store retail scenarios, the time-keeping system is often an integral part of the point of sale (POS) software in operation. By ensuring a tie-in to the POS, payroll can connect to both time and sales data (particularly important for reconciliation purposes when there is a commission element to remuneration). Such a link can enable cross-checking of both systems’ functioning, eliminate data errors, and reduce payroll fraud.

Retail Industry Payroll Issue #2: SaaS Deployment

The multi-store set up of the retail industry inevitably means a scattered and fragmented workforce. In turn, this situation demands an agile and far-reaching workforce management solution. Indeed, given that efficient scheduling is one of the key challenges that the retail industry faces, an increasing number of organizations are deploying flexible access, mobile applications to store managers—enabling them to manage their teams without losing undue amounts of “shop floor” time. As 2011 research from IDC Retail Insights (Improving Productivity in Retail with Workforce Cloud Services) notes, “Retail is increasingly deploying workforce management applications in non-traditional ways such as SaaS and cloud-based Web services. With the advent of an increasingly mobile workforce and economic and consumer pressures on technology performance, many retailers are turning to cloud services to ensure effective and efficient operations of their workforce management applications.” Indeed, thanks to its multi-tenancy service model, quicker implementation times and reduced time to value, SaaS (software-as-a-service) has a reputation for cost-effective flexibility which is increasingly popular in the retail sector. As well, where possible, organizations are integrating payroll systems with these flexible workforce management solutions—granting (as an additional side benefit) mobile access to manager self-service (MSS) inputs such as payroll records and incentive pay planning. Interestingly though, as an indication of how this trend might go, the IDC paper also predicts, “that retailers will reduce IT spend by another 30% this decade. This time they will do so by outsourcing more, leveraging cloud services, and continuing to virtualize desktops, applications, and services.”

Retail Industry Payroll Issue #3: Access to Employee Self-Service

Similar to other hourly-worker heavy industries, the majority of workers in the retail sector tend to be mobile, customer-facing, and not at all deskbound. While certainly advantageous for their roles, this employee positioning can create access difficulties when employee self-service (ESS) functions are rolled out. Specifically, if employees don’t have easy access to such basic tools as a web-browser, then even the simplest options such as online pay-slips tend to suffer from low adoption rates within the organization. Although some reliance can be placed on the likelihood that workers will have home internet access, one proven method of driving up use is to incentivize. For example, recent research from the HR Outsourcing Association (Optimizing HR Delivery Channels) highlights a benefits case study in which: “A large retailer had 67% web usage for annual enrollment… [the following year], this retailer initiated a campaign to encourage employees to use the web for enrollment. The campaign included a drawing for a free year of benefits; all employees who enrolled on the web were entered… usage increased to 85%”. As can be seen, sometimes the same techniques used in the retail industry to encourage sales can be used to improve the efficiency of the payroll and benefits management.

Retail Industry Payroll – Final Thoughts on Ideal Requirements

Increasingly, the industry is seeing service providers and software vendors who are prepared to invest in specialization and address specific retail issues. In addition to the usual payroll functions of tracking hours; calculating pay; depositing employee checks on time; withholding employee taxes; and regulatory compliance, more tailored services and functions are also beginning to emerge. Specifically, vendors are offering:

  • Multiple locations management;
  • Payroll-POS integration;
  • Simple export to General Ledger reports (preferably across multiple brands/companies when needed); and
  • Streamlined re-hiring of seasonal employees

That said, regardless of these additional capabilities, organizations that fall into the retail industry must evaluate prospective payroll software solutions first and foremost on the above criteria. After all, the retail sector has a unique payroll landscape and any software solution or outsourced service must be able to address these mission-critical issues first.End

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According to the 2011-12 CedarCrestone HR Systems Survey, the adoption of payroll technologies (and other administrative HR functions) in the retail industry currently sits at a whopping 94%.”



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