As the global coronavirus pandemic continues, businesses are actively re-evaluating their business operations contingency plans amid mass lockdowns and shelter-in-place directives. By now, most companies have found their way to a new operating norm with employees working from home where possible and returning to work where essential. The next great challenge for companies lies in finding ways to ensure their employees are paid.
Here are the top considerations for creating a payroll operations contingency plan.
- Policy announcements and changes: As a payroll leader, you are in a unique position to provide key inputs when it comes to making the kinds of short- and medium-term changes to payroll that are in line with your culture, business forecast and stated public positions. Decisions about employees depend on payroll data and projections that help answer questions like what percentage of our employees are on statutory sick pay? And what is the cost of furloughing people? Payroll leaders are now evaluating the cost to maintain employees with and without government programs and comparing them to scenarios that reduce labor costs by furlough in hopes of minimizing severance and cost to rehire later. Some organizations must consider how unemployment and other federal programs play into the decision to terminate and rehire employees. Payroll policy decisions are not always truly strategic, but the current pandemic crisis puts payroll policy and strategy in the spotlight.
- Upcoming legal requirements: Congress and the current administration have taken some actions to help employees get through the current economic uncertainty, which includes the passage of the CARES Act. Payroll operations will need to maintain compliance through this and many subsequent government measures for paycheck protection and eligibility for business loans and incentives. A landslide of new programs, measures, calculations and compliance actions – which vary by country, province and local governing bodies – will spur the demand for new configurations, calculations and tax tables. Plan now to ensure you have knowledgeable resources on hand who understand what changes are included in your payroll platform or services contract.
- Business continuity: As response to the pandemic extends beyond shutdown to reopen, payroll leaders are focusing on being better prepared in the future. Expect leadership to insist on updated and formalized business continuity plans for both internal and outsourced operations.
Ensure you have trained staff to continue operations and provide back up to cover absentee staff, global unemployment surges and employees exiting to fill new roles.
- Cost Takeout: Cutting cost is not just about cutting employees. Pandemic payroll delivery may have confirmed suspicions that your payroll processing cost is too high, decentralized payroll is redundant, or that your current mix of payroll provider and retained staff has too many points of failure. A rapid assessment of your delivery model to quantify your savings opportunity can be done in as little as two weeks, producing a roadmap to navigate a path with steps to identify savings and create more resilient payroll operations. In the midst of today’s crisis, ISG is finding new ways to negotiate above-market provider fees, consolidate and harmonize operations, and design and execute agile teams to furlough and rehire employees en masse.
Whatever your situation may be, plan now to ensure that employees are paid accurately and on time. As a payroll leader, this is your chance to support senior executives in making the right decisions for your workforce.
ISG helps enterprises evaluate payroll operations, benchmark costs and prioritize activities to mitigate risk and minimize disruption. Contact us to discuss how we can help.
About the author
Anoop Chawla
As a Director in the ISG Business Operations – HR Advisory practice, Anoop Chawla brings more than 22 years of experience leading HR technology and service delivery engagements. He offers ISG clients end-to-end transformation guidance and his proven expertise in HR technology and service delivery and extensive knowledge of the trends that are vital to their success.
