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When competition is fierce for top talent — in addition to high levels of worker stress and the time-consuming and costly hiring and recruiting process — employers need to understand how to approach employee flight risk. In many circumstances, employees who have decided to leave may not be open to reconsidering their decision, in spite of the benefits you offer or how much you solicit their feedback. But it's important for employers to identify some common signs an employee may be about to leave, take proactive steps in employee retention that can help keep a high-performing workforce, and understand how such strategies can positively impact the business.
What Do We Mean by Employee Flight Risk?
Employees who are a flight risk are workers who are most likely to leave their employer. A flight-risk employee may be dissatisfied with factors such as their current pay, position, or future with the business, to the point where they choose to look elsewhere for new opportunities. For this reason, flight risks and disengaged workers often go hand-in-hand.
Signs an Employee May Be About To Quit
Part of identifying whether an employee is about to quit involves taking steps well before they begin to feel unhappy or disengaged. This involves developing a strong benefits and compensation structure that aligns with employees' needs and skills, maintaining close relationships with them, and keeping lines of communication open. By learning and understanding more about their personal and professional concerns, you can recognize when someone is dissatisfied at work and take steps to address issues before they become breaking points.
The following are some common circumstances that may lead to an increased chance of an employee becoming a flight risk:
Major Life Changes Outside of Work
When something big occurs in an employee's life, it often presages a change in attitude about their job. Such big events can include marriage, divorce, a sudden (and/or serious) illness, childbirth, or the death of a loved one. We've seen this over the past few years during the "great resignation", as employees struggled with many challenges in the wake of the pandemic, opting for more work/life balance or prioritizing time with their families. In such situations, employees may reflect on what they're doing at the time and, if they determine the situation isn't making them happy, may opt for "greener pastures" elsewhere.
This is a tough situation for managers and HR teams, since they may not know the full story behind an employee's personal issues or changes that they're going through. Bringing emotional intelligence into conversations with employees early on might make a difference between an employee staying or going. On the other hand, acting without emotional intelligence (e.g., just offering a perfunctory "congratulations" or "sorry for your loss" and then forget about it), may deprive you of an opportunity to prevent the exit of a valued employee.
Changes in Job Role or Responsibilities
Employees should find meaning and value in the work they do each day. In circumstances where an employee's role or responsibilities have changed recently, they may be overwhelmed, underwhelmed, or feel that new tasks don't align well with their career aspirations. They may also no longer have a clear understanding of how their day-to-day work contributes to the business's larger goals. This could lead to the employee doubting their abilities, feeling unaligned with the business at large, and in search of a new start elsewhere.
Employees who take on new projects or roles need resources and training to help them ramp up and be put on a path to success. Managers and supervisors also play an important role here. They should have honest, ongoing conversations and check-ins with the employee about what the new responsibilities require, set measurable and attainable goals to help the employee stay on the right track, and work through any obstacles along the way.
Dissatisfaction With Compensation
One of the biggest catalysts for turnover is employee pay. And within this concern, there could be multiple issues:
- The company pays employees below market value and/or pay gaps exist between peers within the business
- Employees perceive that they're underpaid but don't understand how their compensation is calculated
If employee compensation isn't competitive with the rest of the market, or there are pay disparities between employees in similar positions, flight risks could be imminent. You should evaluate industry data about compensation as well as the business's pay-banding approach, which can clearly define upper and lower pay limits for a specific position. If you identify employees who are below the minimum of their salary range, or whose performance warrants a raise, you should communicate with impacted staff and make those adjustments.
In the case of perceived low pay, just paying your employees and hoping they come around likely won't go very far to assuage their concerns. You should also demonstrate your commitment to fair and equitable pay across your organization. Even where not required by law, consider adopting a culture of pay transparency and communicating about the methodology you're using to make pay decisions. If you're not, recognize that your competitors may already be disclosing this valuable information to your employees and other job candidates. Once your transparency plan is in place, it can aid in your recruiting and retention efforts, improve company culture, and help build trust with employees.
Changes in Company Policies
A new company policy or change in procedure that comes out of the blue can blindside employees, especially if employers don't ask for their input before making any decisions. That's because employees want to know that they are being heard at work and that their well-being is part of the consideration process. Where appropriate, check in with employees to see what feedback they have on current company policies or how they would perceive potential changes in the future. This type of feedback usually indicates where employees are feeling dissatisfied or have developed a sore spot for company policy over time.
For instance, if you're thinking about switching your benefit offerings, a good first step may be to get a sense of employee utilization rates of current benefits, what workers would like to see in the future, and where they think the business could be doing better. A conversation about benefits may lead employees to confide that the business isn't doing enough to help them save for retirement, and that they've been talking to other companies with a more robust 401(k) plan. Getting this feedback and taking it into account when making policy decisions can elicit more trust from employees and boost their confidence working for you. And in this example specifically, enhancing your benefits package can be great for long-term retention.
Lack of Development Opportunities
Providing training and development opportunities sends a clear message to your staff: you care about them and believe in their abilities. This can foster a sense of belonging in employees who may work harder with a deeper commitment to their teams. But without such opportunities, employees may question their future with your business.
Training is an important piece of the larger employee lifecycle. It can help develop the skills and expertise needed within your business and is critical in developing your organization's future leaders. Offering professional development opportunities for your employees is also key to their engagement and desire to stay with the company. Having a robust training program can help you stand out as an employer to attract and keep top talent.
How To Calculate Employee Flight Risk
Investing in the right technology may make it easier to take a deeper dive into the company's data and tie it back to critical decisions around employee retention and turnover. HR teams can use predictive HR analytics to help them identify employees who may be a flight risk (usually aggregated at the manager or department level vs. individual level), determine areas of the business where turnover risk is highest, and uncover any underlying issues. Analytics can also help HR more accurately determine what current retention strategies are working well.
Calculating employee flight risk with HR analytics requires details such as:
- Employee demographic data
- Tenure with the business
- Performance metrics and employee reviews information
- Engagement survey data
- Employee workloads
- PTO and vacation usage
- Absenteeism rates
- Compensation data
- Larger industry metrics around compensation and benefits
Building flight-risk models based on this information can result in a better understanding of:
- The catalysts that drive turnover
- Actions that can reduce or increase attrition
- Specific investments needed to drive retention
Of course, insights from HR analytics alone can't keep employees. What's important is turning insights into action once you have these findings. This includes talking to employees and managers, providing training, evaluating your compensation and benefits, and much more.
Why Is It Important To Identify When Employees Are Flight Risks?
Sometimes there's not much you can do to cause an employee to change their mind about leaving. After all, turnover is part of running a business. But it's important for you and your HR team to keep an eye on such behavior to help mitigate being caught by surprise. Consider what the impact of even one employee leaving can have on the business and the workforce that's left. Re-hiring and recruiting for an open position in a tight labor market is costly and time-consuming. Remaining employees may feel resentful picking up additional work in the meantime, and morale can take a considerable downturn.
Don't overlook the power that a well-timed conversation with a "suspect" employee might have. It could uncover causes for grievance that you can address and perhaps change for the better. The key here is being proactive in your retention efforts, communicating with employees, and demonstrating how much you value your workforce.
How To Prevent an Employee From Quitting
There are many reasons for employee departures, and understanding why individuals leave is key to helping others stay. Though it's impossible to retain every employee, there are many innovative retention strategies that can help your business mitigate turnover, foster an engaged workforce, and create a desirable workplace. While you can execute targeted strategies with the goal of improving employee satisfaction, it's also wise to consider that long-term worker retention is a holistic effort, which may include:
- Benefits offerings
- HR insights and analytics
- Quality hiring
- Providing career development opportunities
- Open communication policies, especially at critical junctures such as employee performance reviews and exit interviews (or even a stay interview)
Again, it's impossible to fully eliminate employee attrition. But you can encourage workers to stay by getting their input on areas for improvement and focusing on developing well-rounded employee retention efforts.
Stay Proactive To Help Reduce Flight Risk
The unexpected departure of a top employee is never desirable, but keeping an eye out for warning signs can at least reduce the element of shock involved. When early intervention is possible, you may be able to ward off that departure and retain your team. Beyond that, it's imperative to focus on retention efforts and proactive measures like offering a range of attractive employee benefits, which can go a long way in keeping great employees around for the long term.
Developing an accessible workplace is good for business and your employees, but the process can quickly lead to roadblocks without a thorough understanding of employer responsibilities and best practices. Whether it's the belief that certain employees won't perform well or fear of bringing profits and performance down, these are unfortunate but also common misconceptions.
Accommodating for accessibility in the workplace requires knowing what it looks like, understanding different types of accommodations your employees may require, and knowing how to create an inclusive and diverse environment for everyone.
What Is Workplace Accessibility?
Workplace accessibility is making sure everyone — regardless of their abilities — has the tools and support they need to succeed in their job.
When understanding workplace accessibility, employers should recognize that there are numerous federal, state, and local anti-discrimination and privacy laws protecting the rights of individuals with disabilities. Perhaps the most well-known is the Americans with Disabilities Act (ADA). The ADA stipulates that covered employers are prohibited from discriminating in employment based on disability status and are required to provide reasonable accommodations to otherwise qualified individuals with a disability unless doing so would create an undue hardship. The ADA also protects employees with disabilities from retaliation when enforcing their rights under this law.
Some common ways that ADA compliance may take shape in the workplace include:
- Providing Braille signage in common areas
- Installing wheelchair access at building or room entrances and exits
- Restructuring job functions or modifying work schedules
- Providing closed captioning or transcripts for audio recordings and videos
- Ensuring computer programs support assistive technology
Types of Accessibility in the Workplace
Understanding the many dimensions of accessibility in the workplace can help you make necessary adjustments toward employees with a range of abilities.
While you may be familiar with the examples listed above, know that accessibility in the workplace involves more than physical accessibility, which might be the first thing that comes to mind (e.g., accommodations around the office due to an employee's physical disability). Consider that if employees use digital technology to do their job, access HR information, or participate in a work event, those technologies and materials must also be accessible and compatible with assistive technology devices. Examples of technological accessibility may include providing closed captioning for video conferences or building a website that can be easily navigated by people with visual impairments via a screen reader.
Another important type of accessibility is attitudinal awareness. This is defined as a person's mindset that influences their behavior toward different types of people and concepts. Those without attitudinal awareness may discriminate against others, make false assumptions about someone's abilities, or simply avoid interaction altogether. These actions can be detrimental to employees as well as the business, which is why you should do everything possible to avoid them. Instead, communicate with the team, provide training to improve awareness, and focus on equity and inclusion.
Why Is Accessibility Important in Business?
It's not only existing employees who may need additional assistance that can benefit from developing an accessible workplace. An accessible work environment also can help businesses increase productivity, ensure a wider pool of talent can join and contribute to the business, expand their potential customer base, and comply with regulatory requirements. It's also part of building an inclusive workplace, giving employees varied perspectives, a greater sense of optimism, and better problem-solving skills as a result of working alongside colleagues with unique backgrounds and ways of thinking.
How To Make a More Accessible Work Environment
Working with people with different abilities is an organizational effort. Success depends on participation by every employee and leader to help others feel comfortable, valued, and equally treated. So how can you start making the workplace more accessible?
Ensure Every Aspect of the Recruitment Process Is Accessible
Applications and job forms should be truly accessible, with accommodations for those who may have trouble reading computer screens, for instance. Consider large print or versions available in Braille, closed captioning, compatibility with assistive technology like screen readers, and make sure descriptions emphasize essential job criteria. Other examples include making alternate arrangements for those who can't easily travel to an in-person interview, or providing an interpreter if a job candidate needs one.
Examine Your Company Policies
Make sure your employee handbook addresses accessibility as well as diversity and inclusion policies. Employees should have guidelines on how to request accessibility tools if they need help, along with any training on how to use them. And ultimately, make sure your company celebrates inclusion and those with varying abilities as part of its efforts toward a more diverse workplace.
Train Managers on How To Work With Employees With a Range of Abilities
Some managers may feel intimidated working with employees with disabilities. This may simply come from a lack of knowledge, so provide resources and training to help them feel prepared and empowered to manage with a focus on inclusivity.
Make Adequate Arrangements for an Inclusive Workplace for All
Actively removing barriers to participation, such as installing wheelchair ramps or providing hearing loops or computers, can help individuals with varying abilities feel welcomed and accommodated. Resources such as noise-canceling headphones, soft lighting, and adjustable stand/sit desks may also be helpful to others. If arranging for a conference or offsite meeting, check ahead of time to make sure the facility is capable of accommodating all employees.
Require Unconscious Bias Training for All Employees
Employees may be unaware of how certain conversations, words, and actions may be inadvertently discriminating against other colleagues. Formal, ongoing training sessions for all employees can go a long way in alleviating unintentional discrimination issues, and help nurture an inclusive workplace environment.
Make Reasonable Adjustments for Remote Workers
Remote and flexible working options have become increasingly common, so don't forget that offsite employees may need certain accommodations as well. Consider providing work-from-home stipends that employees can use to purchase ergonomic seating or sit/stand desks. Provide any other special equipment that workers may have had in the office that they may need now at home. Video conferencing technology can also help employees keep in contact with colleagues and reduce feelings of isolation or anxiety. Your employees, regardless of their location, should feel supported, included, and valued.
Stay on Top of Accessibility Laws
It's your responsibility as an employer to understand and comply with accessibility laws. Regularly assess your workplace and any applicable legislation to determine how you can better identify and address accessibility issues. Stay proactive, take a forward-thinking approach, and consider working with an HR professional who can help you better understand your obligations around accessibility.
Help Develop an Inclusive Workplace
At its crux, providing workplace accessibility means prioritizing diversity and inclusion, an effort that can help bring different backgrounds, experiences, and insights into a workplace. These factors can help a business appeal to a wider group of customers and help build a stronger, higher-performing workforce. Work with an experienced HR team who can help ensure your workplace is an open and accommodating one for all who work for and with the business.
Looking to maximize resources and execute business functions more efficiently? While it can be challenging, this article offers some starting points.
Knowing how to improve efficiency in your business is a key factor in any company's strategy for growth. When inefficiencies exist, productivity can suffer, creating a ripple effect throughout the organization that can impact leadership, employees, and customers alike.
Definition of Business Efficiency
What is efficiency in business? It's how well a business can convert the required time, effort, materials, and capital in relation to its output. Output can be products, services, revenue, or however the business measures its parameters of success.
Instead of having valuable resources disappear into its systems, an efficient business can maximize its output with the smartest possible use of those resources. A simplified example of efficiency in business is when one business generates $5 million in revenue with the same amount of energy and labor costs as its similarly sized competitor, which only produces $3 million.
Efficiency vs. Effectiveness in Business
Efficiency is not the same as effectiveness and the two terms often cause confusion. A common way to think of effectiveness vs. efficiency is the difference between doing the right things vs. doing things right. It's possible to have an inefficient process with an effective result or an efficient process that is less effective.
For an example of the latter, consider two salespeople. Using scripts and time limits, salesperson A has developed a streamlined system that lets them make 100 calls each day. Salesperson B invests their time in developing a hyper-qualified list of prospects and then spends more time researching each contact. Salesperson B makes only 20 calls each day. However, 3% of salesperson A's calls result in a closed sale, while salesperson B enjoys a 25% closing rate. Salesperson B has developed stronger relationships with those customers, which is likely to lead them to a more positive overall experience and favorable impression of the business.
Efficiency and effectiveness are not mutually exclusive. In the salesperson example above, salesperson A has a system that is vastly more efficient at making phone calls. Salesperson B is effective at closing sales. Ideally, a business figures out how to accomplish both.
Types of Efficiency in Business
Business efficiency can be measured in many ways. Here are some different metrics that you can use to measure business outputs against the resources required to reach your goals. Doing so can help you make improvements in your systems and the use of your overall resources — time, money, labor, effort, materials, and capital.
Labor productivity: How much are your workers able to produce or accomplish during a measured period of time? Equipment, technology, automation, training, physical and mental health, and engagement can all influence an employee's overall productivity.
Eco-efficiency: Eco-efficiency is a measurement of the impact your business operations have on the environment. Ultimately, an eco-efficient business is excellent at reducing all forms of waste. This includes waste in materials, operations, and administration along with minimizing the environmental impacts of your product and packaging. These calculations can be tricky. For instance, calculating the cost of using post-consumer recycled plastics for packaging or materials, which increases eco-efficiency, may come with more upfront costs, but the practice may net you more customers because they seek businesses that prioritize a low environmental impact.
Energy efficiency: Reducing the amount of energy consumed to create products or services is an important sustainable practice that can increase your bottom line. Your energy footprint is the amount of energy needed to operate all aspects of a business — bathroom, office, and warehouse lights, equipment, and even shipping costs, when you recognize fuel consumption as a form of energy usage. You can evaluate business energy efficiency by calculating how much is used to run different areas of your business. Reducing these numbers can save you money. Business energy efficiency is a specific subset of eco-efficiency.
Operations efficiency: Operations are critical to a business model and efficiencies in these core processes can help reduce overall costs. Business operations efficiency can be found in a variety of strategies such as the appropriate use of technology, outsourcing, or bringing tasks in-house for more control.
Process efficiency: Processes are used in every area of a business — internal communications, HR, operations, shipping, and even how meetings are conducted are typically subject to specific procedures. See what is working and what isn't. Make changes when needed. Look for ways to make modifications that can also increase efficiencies in other areas. For instance, packaging products with less material can lower energy consumption and environmental impact, and allow you to fit more product in trucks, thus reducing shipping costs.
Return on investment (ROI): An investment is typically a current cost that is used for future gain. This gain can be any metric — an increased pool of qualified applicants, reduced waste footprint, and generated income are all examples. Measuring the ROI, e.g., lower energy bills due to a new rooftop solar array, is one way to assess efficiency.
Benefits of Efficiency in Business
No one enjoys wasting time or money and your business is no different. Aside from the general satisfaction that comes with running a thriving business, there are many benefits that come with getting the most out of your resources. Here are some of the benefits of efficiency:
- Efficiency may reduce costs. Whatever your metric for calculating efficiency, improving it will likely yield cost savings. Streamlining time-consuming HR tasks, improving worker productivity, and using less to do more all improve your bottom line.
- Efficiency can increase profits. The flip side of reducing costs is increasing profits. Figuring out how to get more products in the hands of your customers for less overhead costs or spending less on operations translate into a more profitable business.
- Efficiency can grow your business. Less time spent on mundane administrative tasks can free staff up to develop strategies for growth and expansion. Improving eco-efficiencies can give staff a sense of purpose and dedication, unleashing the engagement and creativity you need to move into new markets. Developing new ways of packaging or operating can even set your business apart as an industry leader. These are but a few ways that efficiency can grow your business into exciting new directions and create new opportunities.
- Efficiency can improve employee morale. Finding ways to run your operations more efficiently can save employees' time and energy. Done well, this can be seen as a form of respect. Actions such as reducing the number of mandatory meetings or giving staff convenient, on-demand access to their benefits accounts can strengthen their sense of loyalty to your business, thus improving engagement and reducing attrition.
Ways To Improve Business Efficiency
Efficient business practices are less about what you do and more about how you do it. Here are some big-picture ways to help maximize your resources and execute business functions more efficiently.
Use free resources. There are many valuable free resources for businesses that you can turn to when you need them. National organizations such as the U.S. Small Business Administration and SCORE provide advice and resources that offer guidance on startup issues, tax concerns, and in some cases even legal matters.
Invest in quality branding. Having a cohesive brand is invaluable in presenting a clear message to your customers, vendors, key stakeholders, and the public. All aspects of your branding — from your company logo to your website layout and product offerings — must be consistent with the message you want to send to your target audiences.
Think from your customers' perspectives. If you asked customers, "How can we improve our business?" How would they answer? Details about your business might seem obvious to you, and therefore unnecessary to mention in your sales and marketing materials. But if you approach this from your customers' point of view, you may think differently. Productivity improvements start by looking at your business from a potential customer's perspective. Ask for outside opinions to avoid making business decisions based solely on personal bias.
Outsource key business tasks. Business owners and employees often wear many hats, from leader and recruiter to designer and payroll administrator. Often, knowing how to improve business performance starts by recognizing that no one person can do everything on their own.
Consider outsourcing complex tasks that are integral to your business but aren't necessarily within your realm of expertise. Bookkeeping and accounting, for example, don't often fall within a typical business owner's area of expertise. Still, it's an essential part of business efficiency. A skilled outsourcing firm can balance your books much quicker and keep you up to date on financial data that helps you plan for the short- and long-term growth of the business.
Improving Efficiency on a Personal Level Can Help Improve Efficiency on a Business Level
It's not just your business that stands to benefit from greater efficiency. Every business owner and leader can improve productivity with "efficiency hacks" that can include:
- Setting the right goals. Big goals usually have too many moving parts to handle at any one given time. Envision goals you can reach in a manageable way.
- Completing one task at a time. Productivity can easily be wasted when you jump between tasks and try to figure out where you left off.
- Prioritizing. Create your daily task list in order of importance. Get important tasks done first before interruptions take your focus away. And avoid putting anything off. Do it right then and there, if you can.
- Managing your time well. What times of day are you most productive? Tackle difficult tasks during the time when you have the most focus and dedicate other times for less demanding tasks. Consider working in 50-minute blocks with short breaks in between.
- Reducing distractions. Email can be a huge time drain. Consider limiting your email activity by scheduling time every couple of hours to check it and stick to it. Similarly, schedule phone time to make or return calls, and place your phone on silent during your planned work blocks.
Knowing how to improve business efficiency helps everyone in the organization. As part of the process, learn more about how you can help your employees increase efficiency by more effective-goal setting to increase productivity and engagement.
How Do You Measure Efficiency in a Business?
Just as there are different types of efficiency in business, there are many ways to measure them. Some measurements are applicable across the board. Benchmarking your metrics is critical so you can evaluate your progress over time. Comparing your type of business efficiency with similar businesses or industries is another important way to assess whether your business is on target.
There are different strategies to measure business efficiency. For a company selling products, inventory turnover, or the lag time between moving inventory through the warehouse and to customers, can indicate if a product is moving and responding to customer demand. Efficiency ratios are used as an indicator of a business's overall short-term performance and can tell a business owner the lag time between turning inventory into cash. Measuring eco-efficiency can get trickier and involves measuring net sales and quantity of goods produced and sold against energy, materials, and water consumption, along with greenhouse gas and ozone-depleting emissions. The World Business Council for Sustainable Development issued a guide to help businesses measure eco-efficiency and company performance.
The Role of Analytics in Improving Business Strategy
HR is another business operation where efficiency is imperative. Specifically, the process of employee recruitment and retention is simply too important to leave to chance.
HR analytics can provide human resources departments with better data collection, reporting, and the information needed to make data-driven business decisions. Whether a business unit manager needs the latest information on time and attendance to streamline their scheduling process, or a quick payroll audit by the HR manager to address a problem, analytics help makes data accessible to business leaders.
Here are some ways to leverage HR analytics and improve the way you run your business and increase efficiency:
- Recruiting. When a job candidate is brought on board but ends up not being right for the position, turnover can happen, and filling open positions becomes expensive and time-consuming. Recruiting analytics lets you see where your best candidates come from and which profiles tend to succeed more often over the long term. In addition, analytics can help clarify how your recruiting process is working and where there might be room for improvement. For example, if analytics show delays in candidate communication or long review times at the hiring manager level, this can provide actionable insights for making process improvements.
- Time and attendance analytics. With time and attendance analytics, companies can determine the most efficient patterns in employee scheduling to strategically manage the scheduling process, stay in compliance with company and legal requirements, and even identify patterns of absenteeism that could signal trouble at the individual or department level.
- Benefits and other services. HR data analytics can streamline the management of benefits and other services within human resources. Consider the reporting needed during open enrollment. An analytics-driven reporting system makes it easy to see who is enrolled and where decisions are pending. Analytics can also help HR managers understand which benefits are being used and which ones are being overlooked.
Common Payroll Mistakes That Can Lead to Errors and Business Inefficiencies
Payroll processing is a particular company operation where accuracy and efficiency matter. As just one example, businesses must submit taxes to federal, state, and local authorities, at specified times and in designated forms. Such demands require time-consuming administrative efforts which, if mishandled, can lead to costly penalties. Some of the most common payroll errors include:
- Filing late with the IRS. The IRS stipulates specific due dates for depositing taxes and filing returns. Late deposits and late filing of payroll tax returns can result in penalties and interest charges.
- Errors on tax forms. Errors made on tax forms may make it appear that you have remitted too much or too little in payroll taxes. Such mistakes can also impact reconciliation with other tax forms, such as W-2s.
- Misclassifying employees. You must take the appropriate steps to correctly classify each worker as an employee or an independent contractor. Misclassifying an employee as an independent contractor can result in retroactive payroll tax liabilities as well as fines and penalties.
- Processing payroll late or not at all. Late or inaccurate payroll processing not only creates unhappy workers, but it may result in fines and penalties depending on the jurisdiction, as well as, issues like missed premiums or late retirement plan contributions, which can take additional resources to rectify.
- Paying the wrong amount. Incorrect data entered into a payroll database can result in problems connected to paying employees at the right rate of pay and for all hours worked. Corrections can be time-consuming and can wreak havoc on your bottom line.
- Not maintaining adequate payroll records. State and federal regulations mandate businesses keep specific employee records. Some local and state jurisdictions may vary in their recordkeeping requirements, so employers must be familiar with such requirements in the location(s) in which they do business.
Outsourcing Payroll Leads to Productivity Improvements
Outsourcing payroll processing is a solution to both enhancing efficiency and helping to reduce your risk of the payroll processing mistakes described above. Among the key benefits:
More Time for Business Priorities
If you have a workforce, regardless of your business or industry, attending to payroll-related matters likely consumes a great amount of valuable resources. One pay period follows another (without interruption) creating a ceaseless demand for time and energy to ensure that employee data is input correctly — and then reviewed for accuracy.
The complexities of payroll processing require a significant amount of time committed on a daily and weekly basis. Although business owners are ultimately responsible for meeting payroll accuracy and filing requirements, having a provider on hand often saves a great deal of time and helps them feel more confident about staying up-to-date on legislation and regulations.
Integrity of Confidential Employee and Company Data
Data theft and breaches are all too common today, and payroll processing represents a potentially risky area for your company. Threats include identity theft, employees tampering with company records, or even embezzlement. The use of in-house payroll processing software is not risk-free, either.
By contrast, a trusted outsourcing vendor has information security controls designed to safeguard sensitive data. Together with redundant backup and multiple server locations, a quality provider invests in state-of-the-art systems for storing and protecting data, simply because it's part of the service provided to clients.
Stay Current With Tax and Employment Laws and Regulations
Every business with employees must comply with federal, state, and local tax and employment laws and regulations or face stiff financial (and possibly legal) penalties. Not only can these penalties cost you money, but they demand time and attention to avoid — time that takes you away from your business. A vendor that specializes in payroll processing has the knowledge to help you with compliance responsibilities.
Outsourcing HR Functions Boosts Efficiency
Outsourcing HR functions can result in a significant improvement in business efficiency. A skilled outsourcing company helps mitigate the risk of noncompliance with current reporting and filing requirements, as well as assisting with the development of worksite safety programs, and insurance benefits.
More small businesses are investigating the merits of entering an arrangement with a professional employer organization (PEO), which enables business owners to outsource the management of employee benefits and related areas, including these key tasks:
- Creating an employee handbook
- Building job descriptions
- Assisting with monitoring regulatory and legal compliance developments
- Maintaining Affordable Care Act documentation
- Providing comprehensive online HR resources
- Offering onsite employee training
- Helping with risk assessment
Outsourcing other key processes — such as marketing, website maintenance, and social media activity — are worth looking into as well. The more you can outsource to a reliable service or company, the more time you gain to concentrate on what will contribute to the growth of your business.
A More Efficient Business Can Help You Succeed
Employers who look to maximize their resources and execute business functions more efficiently can position themselves to enjoy the advantages that come from doing so. Those who don't are gambling with a future that can render their business obsolete.
Learn more how Paychex HR services can help you avoid costly and frustrating mistakes that waste energy, effort, and money. Instead, you can reap the rewards that come with improved business efficiency in key areas of your organization.