Sue Grundy, Service Delivery Manager

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Sue Grundy, Service Delivery Manager

Maximising the value of your Payroll Department


Significant Value

Businesses can realise significant value through their payroll department, from greater accuracy through to highly valuable Management Information


Developing Efficiency

Overview of how organisations can develop the efficiency of their payroll department


Key Performance Indicators

• How much the payroll department costs to run

• How much each payroll within the department costs to run

• How those costs are made up


Costs evaluated by remit and by payee

•Cost per remit (payslip produced)

•Cost per employee (payee)


The Reasons why to do this:

• Illustrate areas of excessive expenditure

• Manager can make informed decisions

• Compare year on year costs

• Assist with change management by comparisons between before and after period of change


Information Required

• Payrolls • Number of Employees (Payees)• Payslips (Remittances)• Payment Methods• Payroll Staff• Payroll System• Stationery• Work area • Any other payroll associated operational costs

e.g. Postage, Administration


Example of Payroll Statistics

Weekly payroll • 100 hourly-paid employees• Due to high turnover, generates 110 remittances per week, all

paid by cash

4-weekly payroll• 800 hourly paid employees• 10% paid by cheque, remainder by BACS

Monthly payroll• 50 salaried employees, all paid by BACS


Costs incurred by the payroll department

Staff• Payroll Manager £30,000 + 15% on-costs• Supervisor £20,000 + 12% on-costs• 3 Assistants £15,000 + 10% on-costs each• The supervisor works on two payrolls. Three fifths of his time

is on the 4-weekly payroll, the remainder is on the weekly payroll.

• Assistant 1 works only on the 4-weekly payroll.• Assistant 2 works only on the weekly payroll.• Assistant 3 spends 3 days a week on the 4-weekly payroll and

the remainder filing for everyone.


Associated Costs

• Associated payroll departmental costs

Computer system• Computer maintenance (software and hardware) costs

£24,000per annum

Stationery• Payslips cost £60 for 1000 (so 6p each)• Computer paper costs £5540 per annum

Accommodation and overheads• The Finance Department has provided you a figure of £1350

per member of staff to cover the department’s share of the rent and other head office overheads


Pay Method Costs

Payment Method

Cash• Various charges associated with paying cash total

£9,200 per annum.

Cheques• Bank charges of £1 for each transaction

BACS• Costs amount to £715 per annum


Analysis of Payroll staff costs

Staff Costs

On-costs

Employee Salary % £ Total Weekly 4-Weekly Monthly Indirect Total

100 800 50 950

5720 10400 600 16720

Payroll Manager 30000.00 15 4500.00 34500.00 34500.00 34500.00

Supervisor 20000.00 12 2400.00 22400.00 8960.00 13440.00 22400.00

Assistant 1 15000.00 10 1500.00 16500.00 16500.00 16500.00

Assistant 2 15000.00 10 1500.00 16500.00 16500.00 16500.00

Assistant 3 15000.00 10 1500.00 16500.00 9900.00 6600.00 16500.00

Total 95000.00 11400.00 106400.00 25460.00 39840.00 0.00 41100.00 106400.00

Indirect (by payee) 4326.32 34610.52 2163.16

Totals 29786.32 74450.52 2163.16 106400.0


Analysis of Associated Payroll Departmental costs

Associated payroll departmental costs £ Total Weekly 4-Weekly Monthly Indirect Total

Computer maintenance Totals 24000.00 8210.53 14928.23 861.24 24000.00

Indirect cost, apportioned by remit

Stationery

Payslips 0.06 1003.20 343.20 624.00 36.00 1003.20

Computer paper 5540.00 p.a remit 5540.00 1895.26 3445.94 198.80 5540.00

Totals 2238.46 4069.94 234.80 6543.20

Accommodation & overheads

1350.00 total 1890.00 2970.00 0.00 1890.00 6750.00

Indirect (by payee) 198.95 1591.58 99.47

Totals 2088.95 4561.58 99.47 6750.00


Analysis of Payment method

Pay method £ Total Weekly 4-Weekly Monthly Indirect Total

Cash Weekly paid staff 9200.00 9200.00

Cheques£1 x 1040 cheque remits per annum 1040.00 1040.00

BACS£715 apportioned per BACS remit 671.93 43.07 715.00

Totals 9200.00 1711.93 43.07 10955.00


Effectiveness

• What is the most cost effective payment method?

• Which of the payrolls are costing the least amount to produce?

• Could I reduce the weekly postage costs over the next year?

• How can I reduce the stationery costs of the payroll operation?

• If the pay frequency changed how would this impact on staffing costs?

• How much could be saved by providing on-line payslips?


Questions & Answers

Please ask Questions


Thank you and please enjoy the rest of your sessions

Date post:	30-Dec-2015
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Sue Grundy, Service Delivery Manager

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