Improving Payroll Efficiency: A Payroll Operating Model Review

Challenges can arise when payroll processes are undocumented, responsibilities are unclear, and outdated systems are in use. This was the situation faced by a leading manufacturing and mining company that recently experienced a significant change in its payroll team. To establish a solid foundation for their payroll system rollout, the company engaged us at Payroll Experts Australia (PEA) to conduct a review of their payroll operating model. Read on to learn what we did.

Identified Challenges and Opportunities

The first step of the review process involved identifying and documenting the existing payroll operating model. Through careful analysis, we (PEA) uncovered risks, issues, and improvement opportunities within the client’s payroll and workforce management processes. This evaluation provided a clear understanding of the challenges faced and allowed for targeted solutions to be developed.

Designed the Target State Operating Model

Based on the findings from the current state assessment, we worked closely with the client to define the target state operating model. This involved recommendations and prioritisation of improvements based on risk levels and ease of implementation. By aligning the target state with the client’s specific needs and goals, our team ensured that the recommended changes would have a meaningful impact.

Implemented Quick Wins

To kickstart the transformation process and build momentum, we identified quick wins—small, actionable changes that could be implemented promptly to reduce risk and streamline processes. By acting on these recommendations swiftly, the client experienced immediate benefits, such as reduced payroll risk and increased operational efficiency. These quick wins provided a tangible demonstration of progress and motivated the payroll team to embrace further improvements.

Detailed Operating Model Design

To address the core areas of focus, we conducted a detailed operating model design. This encompassed six key elements:

1. Payroll RACI Matrix: Clarifying roles and responsibilities within the payroll team and ensuring clear accountability.
2. Payroll Continuous Improvement Process: Establishing a framework for ongoing improvement and optimisation of payroll processes.
3. Target State Pay Point Structure: Designing an optimised pay point structure and developing an implementation plan for consolidating pay points.
4. Payroll Cut-off Times: Analysing options for payroll cut-off times to improve efficiency and ensure timely processing.
5. Payroll Service Level Agreements (SLAs): Defining clear SLAs to set expectations and improve communication between stakeholders.
6. Visual Representation of the Operating Model: Creating a visual representation of the proposed operating model to enhance understanding and facilitate effective implementation.

Attained the Rewards The collaboration between the client and Payroll Experts Australia yielded numerous benefits and set the stage for ongoing success:

1. Reduced Risk and Improved Efficiency: By swiftly implementing quick wins, the client was able to reduce its payroll risk profile and achieve operational efficiencies. This freed up the payroll team to focus on further process improvement.
2. Clarity of Roles and Responsibilities: Clear documentation of roles and responsibilities enabled the payroll team and key stakeholders to operate more effectively. Responsibility gaps were addressed, and supporting functions were mobilised to provide necessary support to the payroll team.
3. Stakeholder Mobilisation: Key stakeholders, from the CEO to payroll administrators, were engaged in the process and witnessed the positive outcomes resulting from the implementation of quick wins. This mobilisation fostered a sense of collaboration and support for the upcoming changes in the payroll space.
4. Solid Foundation for System Rollout: With the structures and processes in place, the client can now confidently complete the rollout of the new Time & Attendance (T&A) system. The review provided the necessary groundwork to ensure a successful transition.

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The payroll operating model review conducted by our team empowered our client to address existing challenges and maximise the efficiency of their payroll processes. Our approach not only set the foundation for successful system rollout but also positioned our client for long-term success in their payroll and workforce management endeavours.

To find out more, contact Payroll Experts Australia today!

Businesses can email contactus@payrollexpertsaustralia.com.au or call 1300 287 213 for free first-step advice on how to ensure your Payroll processes can safeguard your Payroll compliance. Follow us on LinkedIn or sign up here to receive our articles direct to your email inbox.