Here’s how investigating one problem leads to the discovery of a much larger issue – and how fundamental HR assumptions can affect a company’s bottom line, as well as its risk and liability profile.
Pendolino Group’s actions on behalf of our client:
• reduced liability on their books
• created a new time-off program that aligned with our client’s core company values
• reduced administrative work and costs
• improved overall transparency and accuracy for reporting and compliance purposes
The story begins with our client’s request that the Pendolino team examine a sudden, new problem: mysterious and unbudgeted cash outflows. What starts with a look at payroll software evolves into a fundamental shift in pay and time-off practices, time-off management practices, and HR policies.
Our client’s accounting department notices that the company is losing money, unexpectedly. There are monthly expenditures that appear valid but are much larger than anticipated or planned.
The client mentions this to their internal HR lead from Pendolino Group, who alerts the CEO immediately. From there, the Pendolino Group is asked to help dig in and uncover the root of the problem.
Problem-Solving by the Entire Pendolino Team
When the Pendolino Group works with clients, the engagement includes a “point person” – an HR lead, manager, or director – who is embedded in the company or who works closely with the management team. But that one person is a member of a much larger talent pool of seasoned HR professionals.
When an issue occurs, each client receives the talents and efforts of not just one individual, but the entire Pendolino team, bringing a diverse range of expertise and perspective to problem-solving and solutions.
In this case, the team attacks the problem and quickly discovers that, within the company’s payroll system (Paylocity), employees are taking paid-time-off (PTO) that they have not yet accrued. The accounting team spends many hours of manual work to calculate PTO accruals each month. In addition, managers haven’t used the system to approve the PTO and don’t even know it is being requested by their employees.
As a result, payments to employees are being made that were not planned or, in many cases, warranted. And, the business has accrued a substantial fiscal liability due to manual processes and a PTO policy that is significantly above the benchmark practices of other businesses.
Examining the payroll system further, the Pendolino team discovers there is no structure in place to manage the PTO program. This would include mechanisms for tracking and measuring when PTO is requested, as well as when it is approved and paid.
Pendolino Group also learns that, on a management level, there are not clear definitions around what constitutes PTO, or governance around using it.
Solving the Financial Issue and Addressing the Root Problem
Once Pendolino Group pinpoints an issue like this, an entire process for fixing the problem and setting up new procedures is devised and put into action, engaging all the members of the team with specific expertise.
It starts with defining the strategy: what is the best solution for the company, given their current practices, staff, business objectives and workflows?
In this case, Pendolino educates the client about PTO in the realm of state regulations; this leads to a company-wide shift from PTO to Vacation and Sick Leave. This shift reduces liability on the books and improves transparency for the time that employees are using. This also helps the company in their compliance and reporting.
Once this decision to change is made, it is communicated to the rest of the company so different teams can adjust their practices. For the finance team, it means educating them about their new roles and responsibilities. From there, it means new payment-system configuration and a roll-out of training on the new system capabilities.
The client’s Paylocity HRMS and Payroll system had been rolled out quickly, and without consideration of the impact on existing HR and Financial policies. In addition, those employees using the system were not aware of all its capabilities and they had not been trained on how to best utilize the software system for these types of functions, as well as other critical payment, human, and financially-related processes.
Reconfiguring Paylocity, which is typically a very simple process in partnership with the Pendolino team, not only eliminates the problem – it also streamlines what has been a highly manual process. The Accounting team was investing a lot of time, manually calculating PTO accruals and payments, so the new process saves the company even more money by freeing up personnel time in the Accounting area.
Once the system is set up, Pendolino also facilitates the roll-out of the program across all employees, including a communication plan (working with the CEO) and roll-out of the new program and process to employees.
- Reduced liability on the books for earned compensation
- A time-off program that more closely aligns to company core values
- Reduced administration costs
- Improved transparency of reporting, accuracy, and compliance
Pendolino Group’s structure, with client HR leads, helps clients to manage and improve their human resources and financial operations in ways they haven’t yet imagined. While there’s one person who works with our client, day in and day out, there’s an entire team behind that person that can be called on when an issue arises. This differentiates Pendolino Group within the industry HR and ensures that clients receive the depth and breadth of talent they need to move their businesses forward.