A legacy trading company with operations across the APAC dived into an unexpected legal quagmire when a statutory compliance check on their payroll forced them to pay exorbitant fines for payroll mismanagement. The company, which has group association in logistics, healthcare and industrial trading, is also a prime business venture that attracts several overseas dealership projects in Malaysia.
The extent of their business encompassed a large and diverse workforce which such conglomerates usually have and are accountable to. Their human capital management structure is as varied as their assets and operations, and hence requires a strong payroll architecture that delivers highly-complex and individualized payroll.
CLIENT PROBLEM
Diverse businesses have always been the nodal points of payroll dysfunction, primarily because continuity and investment are often neglected in the segment. As an organisation that relied heavily on shared services, our client saw payroll managers and payroll processes exiting the enterprise on a frequent scale. This led to systems being ill-governed and poorly maintained, attracting penalties and warning letters from statutory bodies over time. For the client, this was a huge dent on their reputation.
PAIN POINTS
- Faced challenges in legacy data availability for reference and accuracy in payroll
- Poor payroll process workflow that failed to meet timelines
- Unavailability of documented SOPs to manage knowledge continuity that leads to non-compliance of statutory timelines
- Failure to gain control to sustain improved processes
PROPAY’S SOLUTION
When Propay Partners studied the client’s payroll function in August 2021, we discovered that much of their payroll data had been entered manually over the years. Our overarching investigation revealed compliance gaps and payroll inconsistencies on a voluminous scale which revealed why the company was constantly being red-flagged by the government for regulatory non-compliance.
We proposed a full suite of payroll processes replete with stringent SOPs and better controls so that payroll workflow was automated at best within the organization’s capability. Our innovative mechanism helped the client streamline their checks and balances while still maintaining transparency. We re-evaluated their payroll process over the next 16 weeks through a six-step exercise: diagnosis, definition, measurement, analysis, improvement and control.
Through this investigation, we were able to course through the business needs of the client; identify their desired outcomes, and develop high-level payroll scoping by specifying the roles, responsibilities, objectives and deliverables of the function. We were also able to establish a project charter for smoother workflow besides determining what processes needed to be improved. Our team also embarked on value stream mapping and gathered inputs from
subject matter experts. Through data collection and auditing, we were able to probe potential root causes and the impact they created on output.
We also piloted solutions and established inspection matrices for better payroll control and governance. To ensure compliance, the client was advised to run Robotics Process Automation (RPA) for payroll to ensure statutory payments happened automatically from end-to-end without manual intervention. They were also advised to optimise their systems for data update including automating overtime conditional allowance for payroll and encouraged all the staff to use the system to update their personal particulars. In addition to this, the team at Propay Partners assisted the client with sustainable practices on tax reporting for benefits in kind (BIK) as well helped them appeal their penalty with the Inland Revenue Board.
RESULTPost our 16-week involvement, our client exhibited greater confidence in running risk-free payroll through our audit exercise, consultation and corrections to mitigate future risk. With our proposed solutions and selection metrics, our client was able to prioritize the proposed improvement solutions according to their capabilities and timeframe. They were able to leverage our capabilities to onboard a broad spectrum of payroll solutions that helps a diversified conglomerate like them to expand and strategise without having to compromise on the most important HCM function – payroll.
Our ISO-certified Quality Management Systems allowed them the additional benefit of liaising with a reliable payroll solutions consultancy that could personalise and deliver payroll accurately and on-time. Our client was extremely satisfied with us re-evaluating their payroll system and helping them prioritise it as a strategic function within their HCM framework.
