Page 104 - Essentials of Payroll: Management and Accounting

Payr oll Best Practices
plan options, all with different costs. The employee can scroll through
the list and select any option, while watching the selection automati-
cally change the payroll calculation on the other side of the screen.
Once the employee finds the selection that works best, he or she presses

a button to enter the change into the payroll system.Such a system should
include some selection “blocks” so that employees cannot constantly
change deductions; for example, the software may limit employees to
one health plan change per year.
This approach completely eliminates all work by the payroll staff to
enter deduction changes into the computer. An added benefit is that
employees are responsible for their own data entry mistakes. If they

make an incorrect entry, they can go into the system themselves to cor-
rect it. The system can also be expanded to include other data items,
such as employee names, addresses, and phone numbers. In addition, the
deduction modeling system just described enables employees to deter-
mine precisely what their net pay will be, eliminating any surprises. In
a more traditional system, an employee might make a deduction change
without realizing the full impact of the change on his or her net pay
and end up back in the payroll office, demanding a reversion to the old
deduction level. By using the modeling system, the payroll staff can

eliminate such repeat visits from employees.
This system will only work, however, if the organization is willing
to invest a significant amount of software development effort to design
an employee interface, as well as to provide either individual comput-
ers or central kiosks to employees so that they can use the system.Given
its high cost, this system is usually found only in larger organizations
with many employees, where the cost-benefit trade-off is obvious.

The software development effort required for this best practice is
substantial, so it must be budgeted for well in advance and must gain the
approval of the committee that schedules the order in which development

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