Improving Services and Operations For Payroll

Improving Services and Operations

Contents    

Introduction         2

Findings

• Area of Concern        3  
• Measurement and Improvement      5  
• Project Planning        8
• Skills and Considerations       11

Conclusion         13

Recommendations        14

References         15

Appendix A – Process Map (Current)      17

Appendix B – SharePoint Information (Example)    18

Appendix C – Process Map (Revised)      19

Introduction

Jardine Lloyd Thompson (JLT) is one of the world’s leading providers of insurance, reinsurance and employee benefits related advice, brokerage and associated services.  JLT are quoted on the London Stock Exchange and have over 10,000 employees in 40 countries. (JLT, 2018)

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The Pension Payroll Departments within JLT have 52 employees, 18 based in Orpington, UK and 34 based in Mumbai, India.  Over one million pensioners on various different pension schemes are paid from the UK Payroll Department on a daily basis with the Mumbai Department providing administrative support. 

This report will assess the way in which information is received into the payroll department and how it requires improvement.  Proposed improvements will be applied to the area of concern along with theory relating to the issue.

Area of Concern

Upon reviewing standard JLT processes, the way in which the payroll department receives information is the process that has the most recurring problems – this will be the area of concern within the report.  Appendix A details the current process used in order for a job to be created for Payroll. 

Scheme Information and Member Information is held and stored electronically on a Microsoft Office System named SharePoint.  Easily accessible for employees, the information held within this system is broken down by scheme name, member initial, surname and national insurance number.  Appendix B shows an example of how this information is stored.

A generic mailbox called JLT Pension Payroll is used by the payroll team, this being a central mailbox that can be accessed by all employees in Payroll within Microsoft Outlook.  Communication from any other departments or from members is required to be directly sent or scanned to this mailbox in order for it be uploaded to the specific SharePoint record – in turn creating a job to be completed by Payroll.

As stated previously, the JLT Pension Payroll mailbox can be accessed by all employees within Payroll however The Post Handling Team (PHT) of JLT based in Manchester also have access.  This is due to the employees within PHT ultimately being employed to deal with the communication that comes into JLT – this being either post or e-mails.  The information/jobs in respect of members are required to be manually entered on the SharePoint system in order for a job to be created. 

Manually inputting data for payroll jobs to be created is subject to errors.  A table below outlines the issues most likely to occur and what effect these have on the payroll department.  Whenever an error occurs, they will be highlighted to employees with either member queries, admin department queries or complaints.

Along with the queries and complaints, the issues highlighted above can cause an impact to JLT as a business.  Compensation payments, manual payment requests, and the time involved in dealing with these matters are a select few of the problems dealt with by what was at first a small manual human error.  There is also the client aspect – if a client requests to be made aware of every error that has occurred, further business commitments with them could be questioned on contract renewal.

Measurement and Improvement

Monitoring the input for over one million pensioners requires effective controls to be in place in order to monitor how the information is created, processed and stored.  An effective way of monitoring would be to use Key Performance Indicators (KPI’s).  “Key Performance Indicators (KPIs) are the critical (key) indicators of progress toward an intended result. KPIs provides a focus for strategic and operational improvement, create an analytical basis for decision making and help focus attention on what matters most. As Peter Drucker famously said, “What gets measured gets done.”” (KPI, 2018).

Currently, the performance measure used for payroll input is a Work in Progress (WIP) report.  This report can be run at any time and shows the jobs outstanding at ‘Doer’ and ‘Checker’ stage from Bizflow – Bizflow is a work system where all of the created jobs appear for completion before a payroll is run.  The WIP report however is only available and compatible to be run against Bizflow and not the information/jobs sent to the JLT Pension Payroll mailbox.  The area of concern showed how this is open to errors occurring as there is currently no KPI in place monitoring the amount of issues caused by the PHT team until a query arises.  “Performance measurement plays an important role in identifying and tracking progress against organisational goals” (Business Balls, No Date) – this statement shows the importance required for JLT to manage the performance of PHT relating to the payroll input on an ongoing basis.

JLT also require the implementation of benchmarking.  “Benchmarking is a way of discovering what is the best performance being achieved – whether in a particular company, by a competitor or by an entirely different industry.  This information can then be used to identify gaps in an organisation’s processes in order to achieve a competitive advantage” (ISixSigma, No Date).  This could be achieved internally by reviewing the process followed by other departments and offices or externally by reviewing processes followed by other companies which would help determine the best process to follow in order to minimise errors and also compete with similar competitors.

The use of automation should also be reviewed, “Automation is most prominently used where processes need to be standardised and repeated; where the human element is removed so that there’s less risk of human error, or inefficiency due to absence or other conditions. In today’s business environment, processes and systems are automated for the benefits of cost and time efficiency, error reduction, and resource and energy conservation” (Sage, 2015).  As the job creating process is fully manual, automation would be effective e.g. if an instruction to amend a payroll record was issued by Admin, the system could automatically create a job within Bizflow – in turn eliminating manual input from PHT.  Appendix C shows a revised process map and how it would work yet if missing fields was a problem and out of admins control, only then would manual intervention be required however this could be minimal. 

Other than automation, another effective system solution is a barcode system.  JLT acquired Ensign 4 years ago who had the ability and technology to attach barcodes to documents however JLT did not continue with this.  There are many benefits to a barcode system.  “Barcodes eliminate the possibility of human error. The occurrence of errors for manually entered data is significantly higher than that of barcodes. A barcode scan is fast and reliable, and takes infinitely less time than entering data by hand” (Verified Label, 2018).  This statement agrees that the barcode system eliminates the possibility of human error which is ongoing with the payroll jobs.  An example of how this could work with a change of bank details would be to issue a member the change of bank document on request and attach a barcode to it, upon receipt of the completed documents PHT would scan the barcode and the system would automatically add it to the SharePoint record and create a job. 

Even though the automation and barcode system would ultimately be effective, these would however fall into the category of a radical change.  “Radical change refers to a significant shift behind the fundamentals of a company’s practices, products, culture, norms, and so on. Radical change is often expensive and very time consuming” (Study, No Date).  This statement shows the importance that the changes could have substantial cost and time implications which would have to be considered by Senior Management.  Even though the costs would be substantial, the long-term benefits and reduced errors would eventually outweigh the original cost therefore this would also need to be taken into consideration.

In contrast to radical change, incremental change needs to be an option whilst the radical changes are being reviewed.  “Continuous change involves modest but continual changes to an existing process, whereas step-change seeks radical changes – indeed the total redesign of existing processes coupled with a significant improvement in performance” (Johnson, R & Clark, G, P417, 2008).  This statement shows that even though a radical change may not be implemented immediately, continuous improvement and changes can be introduced with a low cost in turn eliminating errors whilst the new systems are considered.

PHT would require immediate training and guidance – there will be a cost for this however once put in place, the employees will be following one strict process which is currently not being followed due to a high staff turnover.  Training to be covered can include but is not limited to new processes or more information given by the payroll department.  A full list of scheme names should be readily available for PHT as currently there are discrepancies with SharePoint and Bizflow e.g. on SharePoint the scheme name shows as ‘The Jaguar Pension Plan’ however on Bizflow it shows as ‘Jaguar Pension Plan’ this results in the job not pushing to Bizflow and requires someone in Payroll to amend it as they are familiar with the scheme names. 

In previous years, PHT were issued with an extract called an Alpha Listing from Payroll.  This listing was ultimately an extract from each database which was completed on a monthly basis.  The listing included every detail in respect of the scheme and the members within it such as full name, address, national insurance number and payment details.  This was helpful as if PHT could locate one piece of information contained in the correspondence from a member and match it on the Alpha Listing then the job would get created with no errors.  The Alpha Listing is no longer up to date due to their being no specific date for it to be run therefore currently is only completed by employees on and as and when basis.

Project Planning

“Total Quality Management (TQM) describes a management approach to long-term success through customer satisfaction.  In a TQM effort, all members of an organisation participate in improving processes, products, services, and the culture in which they work” (ASQ, 2018).

This project is ultimately customer focused and it is vital that all employees involved with the project are aware of this.  The Payroll Manager is required to consider any changes within the department therefore the responsibility and commitment is with them to plan the improvements and to ensure that all employees involved are aware of the TQM Model which is shown in Figure 1 below.

Figure 1: TQM Model (Research Gate, No Date)

Technical Managers in the Payroll Department are responsible for process changes and implementations therefore the responsibility will be with them to analyse the issues suggested to ensure an effective service improvement.  The first thing that should be reviewed is the Alpha Listing for incremental change.  A clear process for when it should be run and provided to PHT is required by the payroll employees.  A basic Gantt Chart has been produced below to show an estimated timescale and process for Technical to implement this:

Even though the Alpha Listing may help reduce some errors, the radical changes are to be reviewed on high priority.  A second basic Gantt chart has been produced below to show an estimated timescale and breakdown of the required meetings before initial planning can begin:

The System Change Project will require several weeks of meetings before the initial work can even be started.  As other departments need to be involved, the information resides with these teams to query and investigate the outcome of the change.  When the change is signed off and agreed by the Function Manager along with the CEO, only then can planning start for the system change.  Alongside this, all relevant department employees should be kept aware of the planned changes as ultimately the work will lie with them once completed.

As the system change would take a long period of time to complete, the continuous changes by PHT and Payroll would be implemented alongside KPI and Benchmarking monitoring as discussed previously.

In order for the project to be effective, SMART Project Management should be referred to in order for the goal to be effective.  The goal needs to be:

• “Specific: The goal should target a specific area of improvement or answer a specific need.
• Measurable: The goal must be quantifiable, or at least allow for measurable progress.
• Attainable: The goal should be realistic, based on available resources and existing constraints.
• Relevant: The goal should align with other business objectives to be considered worthwhile.
• Time-bound: The goal must have a deadline or defined end.” (Wrike, 2018).

The goal is to ensure information is received into Payroll efficiently and effectively in order to provide customer, client and business satisfaction.

Skills and Considerations

 “In order to manage change successfully, it is, therefore, necessary to attend to the wider impacts of the changes. As well as considering the tangible impacts of change, it’s important to consider the personal impact on those affected, and their journey towards working and behaving in new ways to support the change” (Mind Tools, 2018).  This statement shows the importance of the change and those affected and how it requires controlled management. 

Lewin’s Change Model shown in Figure 2 below shows the three stages and their importance.  Communication is important with any change and regular meetings are essential with regards to this project.  Input and ideas from both employees and management could help ease the process and by working together could take a lot of stress out of the situation.  Motivation is a key factor as employees that are not willing to accept change can cause disrupt within the team.  Once the change has been completed and everyone has the motivation and support required, the change can freeze. 

Figure 1: Kurt Lewin’s Change Model (Process Street, No Date)

Consideration is required before the change is completed in respect of how the change will be monitored upon completion.  This could be monitored by looking at the number of queries in respect of manual typing errors, wrong scheme selection and jobs not being created.  This can then be compared to previous numbers and only then will it be visible how effective the change has been.

Conclusion

JLT currently have processes in place for the way in which information is received into the payroll department however this process is open to ongoing errors.  The current process requires manual intervention from PHT and continuous assistance from payroll employees.  Due to the manual intervention involved, human errors occur which result in jobs being created under the wrong scheme, typing errors or no job creation at all.  Manual payment requests and compensation payments are common due to this occurring which come with a cost to the business and affects the reputation of JLT as a 3^rd party administrator. 

With the occurring issues in mind, two types of changes have been considered – these being radical and incremental.  The radical change would be for a system renovation including automation abilities or even a barcode system.  This type of change would come with a higher cost to the business and incur more management participation however would be effective in reducing human errors and non-creation of jobs.

Continuous changes however can be applied a lot quicker which include providing a full list of scheme names to PHT due to the current discrepancies and providing the Alpha Listing detailing all member and scheme information from up to date payroll runs.  These changes would provide the information required to avoid missing information from member or admin correspondence.  Technical Management in Payroll will review, analyse and oversee these changes.

The radical change principally requires the payroll manager input from the start and ongoing input and consideration with other department managers.  Various meetings need to be held in respect of costings, processes and time frames and only then would approval be granted by Head of Function.  On receipt of approval, the project planning can commence on the revised systems and processes.  The payroll and PHT employees’ input would be requested as ultimately, they will be the users following the revised processes. 

Skills and consideration need to be taken into thought with every aspect of the project.  These can include team motivation and providing regular support with team meetings, ensure staff are committed and accepting of the changes. 

Recommendations

In order for payroll to receive information efficiently and effectively to reduce errors, the following is recommended to ensure the goals are met:

• Introduce the use of KPI’s to review the number of jobs being sent to the payroll mailbox
• Complete a Benchmarking process internally by reviewing the process followed by other departments and offices and externally by reviewing processes followed by other companies
• Review system automation and the costs incurred for implementing this which in turn minimises the amount of manual intervention
• Review barcode system that was previously used by Ensign, such an ability would ensure a smooth process for the member in respect of change of bank jobs etc.
• Provide Alpha Listing to PHT to show up to date information for members
• Provide Scheme Information to PHT to avoid scheme name discrepancies
• Provide immediate training to both PHT and Payroll employees so everyone is following the same process and has up to date information

References

• ASQ (2018) Learn About Quality [online].  Available from: http://asq.org/learn-about-quality/total-quality-management/overview/overview.html [Accessed 25th November 2018].
• Business Balls (No Date) Performance Measurement [online].  Available from: https://www.businessballs.com/dtiresources/performance_measurement_management.pdf [Accessed 13th November 2018].

• ISixSigma (No Date) Understanding the use and purpose of Benchmarking [online].  Available from:  https://www.isixsigma.com/methodology/benchmarking/understanding-purpose-and-use-benchmarking/ [Accessed 13^th November 2018]. 
• Jardine Lloyd Thompson Group (2017) Jardine Lloyd Thompson Group [online].  Available from: http://www.jlt.com/ [Accessed 2^nd November 2018].
• Johnson, R & Clark, G (2008) Service Operations Management: Improving Service Delivery, 3^rd Edition.  Harlow: Pearson Education.  P415-455. 
• KPI (2018) What is a Ke y Performance Indicator (KPI) [online].  Available from: https://kpi.org/KPI-Basics [Accessed 9th November 2018].
• Mind Tools (2018) Change Management [online].  Available from: https://www.mindtools.com/pages/article/newPPM_87.htm [Accessed 2nd December 2018].
• Process Street (No Date) Change Management Models [online].  Available from: https://www.process.st/change-management-models/ [Accessed 2^nd December 2018].
• Research Gate (No Date) TQM Model [online].  Available from:  https://www.researchgate.net/figure/Figure-1-TQM-Model_fig1_295531927 [Accessed 25th November 2018].
• Sage (2015) The benefits of automated systems in today’s business environment [online].  Available from: http://www.sage.com/za/newsroom/sage-hr-and-payroll/2015/04/01/the-benefits-of-automated-systems-in-todays-business-environment [Accessed 19th November 2018].
• Study (No Date) Incremental & Radical Change [online].  Available from: https://study.com/academy/lesson/incremental-radical-change-definition-examples.html [Accessed 21st November 2018].
• Verified Label (2018) Top Eight Benefits of Barcodes [online].  Available from: http://verifiedlabel.com/knowledgecenter/know_barcodes.aspx [Accessed 21st November 2018].
• Wrike (2018) What is SMART in Project Management [online].  Available from: https://www.wrike.com/project-management-guide/faq/what-is-smart-in-project-management/ [Accessed 2^nd December 2018].

Appendix A – Process Map (Current)

Appendix B – SharePoint Information (Example)

Appendix C – Process Map (Revised)