Page 114 - Essentials of Payroll: Management and Accounting

Payr oll Best Practices
much more easily than can the payroll staff. In short, with some rela-
tively minor control changes, it is possible to use an honor system to
track employee vacation and sick time.

Cost:

Installation time:

Switch to Salaried Positions
When processing payroll,it is evident that the labor required for a salaried

person is significantly lower than for an hourly employee; there is no
change in the payroll data from period to period for a salaried person,
whereas the number of hours worked must be recomputed for an hourly
employee every time the payroll is processed. Therefore, it is reasonable
to shift as many employees as possible over to salaried positions from
hourly ones in order to reduce the labor of calculating payroll.
Implementing this best practice can be a significant problem,though.
First, it is not under the control of the accounting department, since it
is up to the managers of other departments to switch people over to

salaried positions, so the controller must persuade others to make the
concept a reality. Second, this best practice is generally opposed by
unions, which prefer to give their members the option to earn over-
time pay. Finally, there may be government regulations that prohibit
converting employees to salaried positions, with the main determining
criterion being that a salaried person must be able to act with minimal
supervision. This situation will vary by state, depending on local laws.

Given the three issues just noted, it may seem impossible to imple-
ment this best practice. However, it is quite possible in some industries.
The main factor for success is that the industry have few hourly work-
ers to begin with. For example, a company with many highly educated
employees, or one that performs limited manufacturing, may already

87