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Understanding Manual Pay Cycles in HR Shared Services

Payroll is the one process that by definition impacts every single employee in the company.  When looking at reducing the cost and complexity of payroll processing, much attention is given to increasing direct deposit rates, using pay cards, and eliminating paper pay advices.  While all are important, for some companies a very effective approach to reducing cost and complexity of their Payroll operation is to decrease the number of pay cycles, including both regularly scheduled pay cycles and out-of-cycle (or manual) payment runs.

Recently, a Peeriosity member at a large global technology company wanted to understand how many out-of-cycle/manual payment runs other companies perform each week for items like employee terminations, corrections, and special requests.  Because exception processing has the greatest likelihood for errors and rework, reducing the volume of out-of-cycle payments can have a big impact on the workload for the Payroll team. 

To get answers quickly from knowledgeable peers, the member used Peeriosity’s iPollingTM to create a question for members, with real-time posting of poll results and the ability for the member to see immediately who responded, what company and region they represent, with the opportunity to contact individual respondents directly using Peeriosity’s built-in communication tool, Peer MailTM

The iPollingTM question examined the frequency of out-of-cycle, manual payment runs.  Interestingly, for 32% of companies, an out-of-cycle run is scheduled to take place every workday, with an additional 36% of companies scheduling out-of-cycle runs regularly, but less frequently than daily.  At 28% of companies out-of-cycle runs are not scheduled, with requests processed on an as-needed basis.  Here are the details:

While processing outside of the normal payment runs has added cost and complexity, there are opportunities to reduce the volume of out-of-cycle payments, and quite possibly for many, the number of out-of-cycle payment runs.  Knowing the underlying business reasons, with clear guidelines and procedures for each approved exception, is an important first step.

Here are several of the comments added by iPollingTM participants:

  • Mostly for special state terminations and system requirements for replacements, transfers to contingent staff/subs.
  • We have a large number of employees in states where terminating employees must be paid on their last day, which accounts for the majority of our off-cycle checks.
  • We only run manual checks when absolutely necessary, and generally for a terminated employee in a states where it is required.
  • The frequency depends on the country. In the US we run daily off-cycles.
  • Out-of-cycle runs are done at least once each week and twice the week after pay date. Our reporting-only files ($0 checks such as stock transactions & relocation) are also processed as out-of-cycle runs on an as-needed basis.
  • We process off-cycles as needed, and mostly for stock options.
  • Most of our off-cycle processing is for commission plans that do not fall in line with our regular bi-weekly payroll processing. We also have operations in states that require terminated employees to be paid on their last day.
  • We have one scheduled off-cycle run every Thursday. However, we will process off-cycles on other days for emergency payments, such as quick pay terms.
  • We have an average of 5 requested off-cycles per week. This would include payments for terminated employees who need their final check within a specific time due to state regulations.
  • We process up to 30 manual checks or more per week due to terminations (state requirements), missed pay for items not recorded on the Time and Labor Management system (Union requirements or minimum dollar/percentage of pay thresholds), and items submitted after the payroll cutoffs.

How many out-of-cycle payment runs does your Payroll department process each week?  What efforts have you made to reduce the number of out-of-cycle payments?

Who are your peers and how are you collaborating with them?

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 “iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility to all respondents and their comments. Using Peeriosity’s integrated e-mail system, Peer MailTM, members can easily communicate at any time with others who participate in iPolling.

Peeriosity members are invited to log into www.peeriosity.com to join the discussion and connect with Peers.   Membership is for practitioners only, with no consultants or vendors permitted.  To learn more about Peeriosity, click here.

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