Most organizations have invested in a biometric system to track and record employee timing. One would logically expect that the data is analyzed and also used for determining leave and other work-related pay items. However, most companies don’t have an automated method of converting that data into leave and pay – often following a stressful, timebound, inaccurate and manual method to finalizing the values for each period. And the costs for that are prohibitive. The surprising fact is that a vast majority of organizations follow this manual method.
The prime reason for the manual conversion of timings to leave and pay is because of numerous exceptions. Check in without checkout, No punch for the day, work on a holiday, work overtime and numerous other exceptions to normal days are commonplace. We have identified over 25 such exceptions. The process of regularization of these exceptions vary in terms of the route it goes through for approval, the actions that are allowed when such exceptions occur and the exact logic for converting these into statuses like a full day, half a day, not present, over time, holiday etc. One can determine the complexity of this effort through the calculations below
Let's say an organization has 100 employees.
Average number of swipes per day - 4
Average number of working days – 22
Percentage of exceptions – 10%
Steps that each exception has to go through for clearance - 2
Number of exception transactions to be completed just prior to payroll each period – 1760
If the number of employees was 500 the number of exception transactions = 8800
In addition, each transaction will take about 3 to 5 minutes of employee, supervisor and HR time.
Normal leave transactions and balance maintenance transactions are likely to take similar efforts in addition. There is no wonder that companies take up to 10 days to process leave and payroll every month. The costs are prohibitive and can be classified as below
a. Loss of employee working hours due to the absence Employees quickly realize that there the biometric data is not being used and many of them slow down presence or effort based on this. Avoiding this can improve productivity by a few percentage points – often a direct improvement in the bottom line.
b. Saving of time due to online submission and approval With portals, employee, supervisor and hr effort reduces sometimes saving as much as 5% of their time for productive work also contributing to the bottom-line directly
c. Overhead reduction The manual effort related to processing, regularization, approval, exception handling of leave, time and payroll inputs is very high often involving 1 FTE per 200 employees. They can be released for more value-added items
d. Leave balance reduction When things are not clear, supervisors declare in favor of their employees. With accurate processing, many of these reduce the liabilities the company has to pay in terms of unpaid leave and overtime claims.
e. Employee Engagement Avoiding having to chase up with supervisors and hr motivates employees. Having the latest leave balances and timing/ leave details at their fingertips indicates transparency - which is also highly motivating.
f. Accuracy Inaccuracy can be costly. Statutory compliance, employee distrust, loss of actual money are all realities that occur because of inaccuracy. Avoid them
There are many more. In short, the cost is prohibitive.
The need for an automated solution is obvious and a priority. Look for systems that have these capabilities
a. Have employee and mobile portals for these b. Has the capability to identify and act on all exceptions c. Has an easy to use regularization process d. Shift timings are considered in the processing e. Integrates well with the biometric and the payroll system f. Easily extendible for special and unique rules g. Good analysis of critical work indicators like late hours, overtime etc. h. Biometric system and many payroll systems and hr systems do not have the above capabilities. Ensure that the eLeave/ Workforce management system you buy has these capabilities.
www.KServeHRMS.com cover all of these areas and helps ensure that you avoid these prohibitive costs your company is facing period on period.
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