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the employee manual is important for laying out such payroll policies as when time sheets are due, how much vacation and sick time can be taken, when the payroll week ends, business hours, employment classifications, handling of severance pay, and how errors in pay are dealt with Since the employee manual should be considered a legal document that employees can use to assert their rights against the company, it is best to consult with a labor lawyer or local employers trade association to expand upon an initial rough draft of an employee manual It is also possible to have a consultant write the entire manual Once complete, employees should be required to sign a document stating that they have received and read the manual This document should be stored in their employee files Establish performance metrics Once the initial department setup is completed, the payroll manager should develop an interest in the department s level of performance This calls for the establishment of metrics, such as the time required to complete a payroll, the number of payroll transaction errors requiring fixes, or the total department cost divided into the total number of company employees The exact metrics used will vary by company, depending on the circumstances A key point is to ensure that the same calculation is used to track metrics from period to period, so the metrics are comparable over time Create management reports Most payroll department reports are based on the basic reports generated either by the in-house payroll software or the supplier to whom payroll processing is outsourced However, the payroll summary and register do not always supply sufficient information Consider generating additional reports, such as the names of those people not yet using direct deposit, or the specific types and number of payroll transaction errors created in each payroll cycle The payroll manager can use this sort of operational information to improve the performance of the department Create a department budget During the initial rush to create a payroll system and produce the first payroll, a planning feature like a budget is usually ignored However, after a few months have passed and one has a better idea of the company growth rate and related payroll processing requirements, it is time to create one This can easily be contained within one or two pages, itemizing major expense categories by month Typically, there are only two expense drivers for the payroll department The first is whether or not the payroll processing task will be outsourced and the second is the total number of company employees expected to be serviced by the payroll department Both expense drivers have a major impact on the number of people working in the payroll department, and the payroll expense is usually the largest department expense Schedule an internal auditor controls review Another task that usually waits until the initial department setup is done is a controls review by an independent group, typically either the internal audit department or a group of independent certified public accountants The purpose of this review is to ensure.

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When storing records, be sure to separate those items requiring permanent storage, such as board minutes and articles of incorporation, from other documents created during the same year, and shift them into a more secure location where they can be more clearly identified This added storage step avoids throwing out important corporate documents along with other payroll documents when the document destruction policy specifies that the other items be eliminated In situations where a large number of storage boxes are required for each year s documents, it is common to simply put an identifying index number on each box

This section was adapted with permission from Willison et al, pages 1283 1284 of the Sixth Edition of Controllership (Hoboken, NJ: John Wiley and Sons, 1999)

Payroll Recordkeeping / 201

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Irvine, S H, & Kyllonen, P (Eds) (2002) Item generation for test development Mahwah, NJ: Erlbaum International Test Commission (2001a) Guidelines for adapting educational and psychological tests Retrieved May 27, 2005, from http://wwwintestcomorg International Test Commission (2001b) International guidelines on test use International Journal of Testing, 1:95 114 Keller, J (1996) Public access issues: An introduction In B Kahin & J Keller (Eds), Public access to the Internet Cambridge, MA: MIT Press Kellett, D (1991) Practice tests in occupational selection further steps Guidance and Assessment Review, 7(5):1 3 Lievens, F, & Harris, M M (2003) Research on internet recruitment and testing: Current status and future directions In C L Cooper & I T Robertson (Eds), International review of industrial and organizational psychology (Vol 18, pp 131 165) Chichester: Wiley Lord, F M (1980) Application of Item Response Theory to practical testing problems Hillsdale, NJ: Erlbaum Mead, A D, & Drasgow, F (1993) Equivalence of computerized and paper-and-pencil cognitive ability tests: A meta-analysis Psychological Bulletin, 114:449 458 Pastore, M (2001a) Minority, low-income Internet use increases Retrieved May 17, 2001, from http://Cyberatlasinternetcom/big_picture/demographics/article/0,,5901_768141,00html Pastore, M (2001b) Hispanics increase PC adoption Retrieved February 15, 2001, from http://Cyberatlasinternetcom/big_picture/demographics/article/0,,5901_590991,00html Pastore, M (2001c) US share of Internet users continues to shrink, Hypergrowth over Retrieved May 21, 2001, from http://Cyberatlasinternetcom/big_picture/geographics/ article/0,,5911_76945,00html Pastore, M (2001d) Internet users in Asia Paci c to surpass US users in 2005 Retrieved May 16, 2001, from http://Cyberatlasinternetcom/big_picture/geographics/article/ 0,,5911_767371,00html Salgado, J F, & Moscoso, S (2003) Paper-and-pencil and Internet-based personality testing: Equivalence of measures International Journal of Selection and Assessment, 11:194 295 Stanton, J M, & Rogelberg, S G (2001) Challenges and obstacles in conducting employment testing via the Internet Paper presented at the 16th Annual meeting of the Society for Industrial and Organizational Psychology, San Diego, CA Wainer, H, et al (1990) Computerized adaptive testing: A primer Hillsdale, NJ: Erlbaum.

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