Drive Process Improvement with Best Practices

Implementing Best Practices to Drive Process Improvement Tim Wallen CPP

Agenda Why Best Practices Identify Current Processes Identifying Best Practices Implementation Case Study Examples APA Prism Award

What are best practices? a procedure that has been shown by research and experience to produce optimal results and that is established or proposed as a standard suitable for widespread adaptation Source: Meriam-Webster

Why best practices? Time savings Cost savings Ensure compliance Preparation for crisis

Good, better best. Never let is rest Til your good is better and your better is best. St. Jerome

What is best practice for one company may not work for another Industry Unions Employee headcount Regulations Size of payroll department

Identifying current processes Employee Self-Service Manager Self-Service Payroll cycle Off-Cycle Quarter and Year-End

Identifying current processes(continued) Evaluate current environment Metrics Process maps list steps involved in process identify potential bottlenecks or redundancies in a process Technology available

Identifying current processes (continued) Employee Self-Service Banking information Tax information Address and contact changes Leave requests Online W-2 Self-time entry

Identifying current processes(continued) Manager Self-Service Employee information reports Approve employee leave requests Approve self-time entry Assign alternate approval authority

Identifying current processes (continued) Payroll Cycle Data collection Approval processes Problem areas creating delays Payroll fraud Payroll reporting

Identifying current processes (continued) Off-Cycle Identify reasons resulting in off-cycle payments Evaluate run dates Consider ACH vs Paper Check

Identifying current processes (continued) Year-End Taxable fringe benefits Employee verifications W-2 reporting Reconciliations (monthly, quarterly)

Identifying current processes(continued) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total W2 Summary Diff Fed Wages Fed Tax Soc Sec Wages Soc Sec Tax Med Wages Med Tax 14,700.00 2,040.00 7,661.52 475.01 7,661.52 111.09 14,384.88 1,955.00 8,938.44 554.19 8,938.44 129.61 7,661.52 316.00 7,661.52 475.01 7,661.52 111.09 8,938.44 602.00 8,938.44 554.19 8,938.44 129.61 45,684.84 4,913.00 33,199.92 2,058.40 33,199.92 481.40 45,684.84 4,913.00 33,199.92 2,058.40 33,199.92 481.40 - - - - - - KY Wages Month 1 Month 2 Month 3 Total KY Wages 4,900.00 4,900.00 4,900.00 14,700.00 7,350.00 4,481.04 2,553.84 14,384.88 2,553.84 2,553.84 2,553.84 7,661.52 3,830.76 2,553.84 2,553.84 8,938.44 18,634.60 14,488.72 12,561.52 45,684.84 45,684.84 - KY Tax Month 1 Month 2 Month 3 Total KY Tax 182.66 178.06 184.20 544.92 276.30 159.90 67.88 504.08 72.48 67.88 73.25 213.61 100.29 74.02 74.02 248.33 631.73 479.86 399.35 1,510.94 1,510.94 - Lou Res Tax Lou School Bd Tax Total Local Tax 111.11 95.04 206.15 129.63 90.14 219.77 111.11 42.24 153.35 129.62 49.28 178.90 481.47 276.70 758.17 758.17 -

Identifying current processes (continued) Year-End ACA reporting Deceased employees

Identifying Best Practices in Payroll? Technology Cloud Computing Employee Self-Service Mobile applications Biometrics Industry

Identifying Best Practices in Payroll? (continued) Other Comparable Payroll Operations Benchmarking studies Networking with others Participation in education opportunities

How to Implement? Identify potential improvements Stakeholders Security impacts Training needs Estimate: Time Savings Cost Savings

How to Implement?(continued) Prioritize your improvement list Obtain management buy-in Build a plan to implement improvements with realistic timeframes for each task

Post Implementation Solicit feedback from stakeholders Evaluate the revised process does it meet the cost and time savings? Lessons learned from the process change

Case Study Examples Commonwealth of Kentucky New HR/Payroll implementation project began in 2007 Go-live April 1, 2011 Survival mode! Normalization of payroll processes

Process improvements: Limited funding for new projects Use existing staff and software Evaluate existing processes Prioritize evaluated list

Work Comp Buyback Program Before: Six agencies touched process Required approximately 8 hours for each transaction Average 1,920 annually Conservative error rate was 45% Reconciliation issues at year end

Work Comp Buyback Program (continued) After: Calculation tool developed to provide accurate calculation Ongoing training offered Wage type created in payroll system Employees agency is only remaining process holder

Work Comp Buyback Program (continued) Estimated savings: Time 7 hours per transaction Cost: $278 per employee transaction Annual Savings $533,260

Off-Cycle Payroll Payments Before: All paper checks Agencies would send paper check via overnight courier service or Agencies would send someone in a vehicle to pick up check in Frankfort

Off-Cycle Payroll Payments (continued) Challenges: We ve always done it that way! Same day settlement for ACH transactions - expensive

Off-Cycle Payroll Payments(continued) After: Modified off-cycle run dates moved back one day All payments are now processed through ACH network

Why do we need continuous improvement? Business changes Technology changes Legislative changes

Where are you? Business Processes Technology Solutions

APA Prism Awards Payroll Prism Award Best Practice Categories Technology Management Processes Overall Best Practices

APA Prism Awards (continued) Shared Services Prism Award Best practices implemented Measured results Applications due by July 31

? Tim Wallen tim.wallen@ky.gov