Four pillars for effectively managing your end of year
The End-of-Year taxation process is an annual event that can reduce even the most hardened HR professionals to tears. End-of-year payroll processing involves tax calculation, employee compensation, and accurate deductions to be withheld.
This is a busy time of the year, and stressful since it involves employee pay, and there’s no room for error. Apart from your usual checklist of vital things to do (including auditing employee data and confirming accuracy), there’s a lot to contend with. But preparation for year-end doesn’t have to wait until March. In fact, it should ideally begin months earlier to ensure a smooth process.
As you begin to plan out your approach to the End of Year (EoY) process, something you should definitely keep in mind is what your employees expect from it.
Evolving Employee Expectations
Did you know that globally, USD 11 billion is lost every year due to employee turnover? And that up to 71% of employees are not fully engaged at their workplace? This alarming phenomenon of employee disengagement may be due to various reasons, but there seems to be a growing mismatch between what the employee expects from the workplace and what he/she actually gets.
Expectations are changing fast. With the seamless takeover by technology of every aspect of our lives, employees increasingly want more input into the company activities, more control over their personal information, and more security for their data. And with increasing financial savviness, coupled with the ease of online banking, they want to be able to control their own financial information pertaining to taxation.
There’s a lot at stake for employers here. Companies with engaged employees outperform those without by up to 202%. The verdict is clear: If you help your employees have a good experience at their workplace, you will be well on your way to having a smoother and more engaged workforce.
Impact of EoY on Employee Experience
An important subset of your employees’ overall experience is the end-of-year period. Not only does this period allow each employee to reconcile his/her income for the year, but it also provides much-needed clarity that will decide the employee’s financial behavior next year. Where to invest, how to claim tax benefits, how to minimize deductions from salary – These are important considerations for your employees, and it is vital that they have a smooth, transparent and secure experience with the entire process.
This is where your decisions come in. A comprehensive effort to effectively manage the EoY period will result in good experiences for your employees, and, consequently, a satisfied workforce.
ADP India hosted a webinar on 4 May 2017, to address best practices for the End of Year process. We had asked the audience a couple of poll questions. The graph below showcases the question and the answers.
Clearly, keeping up with the changing compliance landscape is a significant challenge. And this seems to be the case regardless of whether EoY is handled internally or outsourced.
One can improve the situation well before the next EoY period approaches. Here are the Four Pillars for Effectively Managing your EoY:
- Go Paperless
Have you experienced the stress associated with collecting your employees’ documents, compiling them, and then couriering them in time to your payroll vendor? Several things can go wrong there, such as loss or damage of documents, delay in transportation, processing errors. A simple solution is to eschew paper in favour of softcopies. Employees can email the softcopy documents (or upload them to the portal) from anywhere, and avoid having to wait for days to find out if their proofs have been approved. This adds to our initial point on how EoY can add to your employees’ experience.
2. Embrace Technology
It’s vital to make sure payroll is finalized in time and the correct balances are submitted to Finance. Spreadsheets and checklists are all well and good, but when software can help you with speed and accuracy, why not use it? Today’s payroll providers have state-of-the-art software technology that does all your work accurately, adhering to updated laws and compliances, while also prioritising data security. Additionally, if you use cloud-based storage, you can securely access your data from any location, at any time. This frees up a lot of your time and effort.
In addition, with increasing use of smartphones, employees frequently expect to have their data accessible on their mobile phone. Introducing an application in this scenario will enable employees to have more control over their own data.
3. Get Transparency
Employers who use a payroll processing vendor may have an online service where employees can review and correct data. If so, encourage your employees to use it as a means to review and edit personal data, and flag errors early on. This will also give them information on what documents are pending from their side, and when the deadlines are.
Your employees will feel more involved in the entire process, and therefore more likely to meet the submission deadlines. As a client, it’s also important for you to have a real-time service dashboard running between you and your vendor. This would bring the transparency on various aspects of services like – keeping up with agreed SLAs, the frequent errors that are causing delays, upcoming task/ compliance schedules and support performance.
If you do not use a payroll processor, or if they do not have an online portal, do encourage your employees to ask questions, be it pertaining to their finances or regarding investment opportunities they can avail. Try to always be aware of employees’ satisfaction levels, so as to prevent a flare-up if an employee feels dissatisfied with the system. Keep the dialogue going, and the information flowing.
Which brings us to…
4. Call the Experts
No one can provide the kind of detailed information on taxation as experts. While keeping experienced tax experts on your company payrolls throughout the year may not work for you, you would do well to avail their services during the crucial EoY period. India’s ever-changing tax laws are confusing to keep track of, so do bring in the services of tax experts to reassure your employees.
In conclusion, remember: It’s always a good idea to keep the End of Year process at the top of your mind all year round. So when April arrives, you can focus on preparing your system for the new tax year, verifying and updating your tax settings, and verifying employee records. After all, the end of one year also signals the beginning of the next.
Author Ramesh Dayalan is the Vice President – Services for ADP India & SEA. He brings in over 16 years of work experience in compensation and benefits, payroll process, statutory compliance, and business process improvement for clients across India and South East Asia. He has vast experience in compensation structuring, salary related tax advisory services and individual tax planning. He is a certified six sigma green belt.
Originally published by ADP India on HR.com.