The Other Green: Paperless Payroll

Updated: April 30, 2009

Introduction

You can't blame most HR executives and managers for reflexively associating the word "green" with money — and payroll . But many HR leaders are also beginning to "think green" in terms of both money and protecting the environment .

Perhaps the biggest resource-wasting activity in which HR departments routinely engage is the needless generation of paper checks and advice forms. Each year, an untold number of trees are cut down simply to create payroll-related documents that are typically used once and thrown away.

While paper documents can be recycled, it requires fuel-burning, pollution-generating factories to covert waste paper into usable material. Paper documents also require the use of printing equipment that consumes expensive ink or toner, as well as cartridges that must also be recycled. Finally, the printers themselves must be either recycled or sent to a landfill after they become outdated. In all, paper documents are costly and wasteful.

A better alternative to printed documents is to use computers and the Internet to create a paperless payroll system, one that eliminates the production and distribution of payroll checks and associated documents. Besides helping the environment, a paperless payroll can reduce or eliminate the costs associated with paper forms, printers and consumables, lost and/or stolen checks and document distribution.

Analysis


Analyze your current payroll system. If your payroll process hasn't had a major overhaul in several years, switching to a paperless approach is a good time to take care of outdated processes and other shortcomings. On the other hand, if your current payroll system is up-to-date, you'll have to take steps to blend the new technology into your existing environment.

Begin planning. As with any other major HR technology initiative, the devil is in the details when it comes to planning a paperless payroll system. The first step is to educate senior management about the approach's business and environmental benefits. Next, you'll have to sit down with your company's payroll and IT team to work out a system blueprint and timeline.

Check your payroll data. Most companies will have to collect additional information from their employees before launching a paperless payroll system. To arrange for direct deposits, for example, you'll have to ask employees for the names and addresses of their financial institutions as well as their checking or savings-account numbers and routing information. For employees that have no financial institution affiliation (the "unbanked"), you'll need to use an alternate payment technique, such as paycards .

You'll also have to collect your employees' email addresses so you can electronically send them their annual W2 forms and various other payroll-related documents. You may unfortunately still have to snail mail documents to the homes of employees who have no Internet access.

Find the right fit. Few businesses have the internal expertise needed to implement a paperless payroll system. Fortunately, spotting a budding trend, the number of paperless payroll service providers is growing rapidly. Companies such as TALX and Pay Plus Solutions promise to help businesses get on the paperless payroll bandwagon with a minimum of effort and trouble. But before you commit to any particular provider, check to see that the company offers competitive pricing, has experience with businesses in your field and supports the features you need, such as:

  • Payroll processing
  • Time/attendance tracking
  • Employee invoice and time sheet submission
  • Direct deposit/paycards
  • Tax forms and filing

Get ready to deploy. There's no sugarcoating the fact that implementing a paperless payroll system is a major project, one that's fraught with pitfalls. You and your service provider will need to carefully test the system for gaps and bugs before taking it live. To limit any potential startup damage, it's best to begin with a trial deployment covering only a small group of employees before applying the new system to the entire work force.

Seek feedback. Once the system is up and running, encourage employees to offer their opinions about the process as well as any suggestions they may have for improvements. Most employees with negative opinions won't hesitate to let you know what they think, but to get a full picture of the system's impact, you'll also want to know what you're doing right.

Learn more. For more information on paperless payroll, visit Paperlesspay.org, an organization that's dedicated to informing payroll professionals on current methods and compliance issues relevant to the elimination of paper payroll processes.

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