When a large firm’s human resources department was having trouble with delays in its payroll process, it implemented Total Quality Management (TQM) methods to make much-needed improvements. Luckily, the company had already completed successful TQM projects in areas of manufacturing, vendor payments and product availability – so the team was well-prepared to focus on the human resources payroll problem.
First, the project leader commenced with necessary pre-steps, such as sending key human resources personnel to an introductory TQM training program. They then brainstormed the key human resources problems and considered the results of each issue:
|Problems in the Payroll Process||Result 1||Result 2|
|Accuracy of data||Delay||Errors|
|Functioning of payroll centralization process||Delay|
|Manual data generation||Delay|
|Follow-up on data||Delay|
|High recruitment turnaround|
|Lack of standard operating procedures (SOPs)||Delay||Errors|
|Delayed response to employees||Delay|
Analyzing the list, the group determined that the real problems were the delays experienced by internal customers. Then, they brainstormed areas of delays and errors within HR:
The team determined that the payroll process was the problem, causing human resources personnel to experience a great deal of pressure to complete their jobs without error or delay. With a team consisting of four regional human resources managers, a finance department staff member, the payroll manager and key payroll personnel, they were ready to begin the TQM process.
In TQM, problems must be measurable and are based on Problem = Desire – Actual Status. Measuring the human resources team’s feelings of “being under pressure” was a challenge. Together, the team decided that employee overtime would serve as a measurable standard.
The team recorded each employee’s daily overtime, as well as the activities they worked on during the overtime. The first month showed each person worked an average of 36 minutes overtime each day. While this number didn’t appear to be too much at first glance, the team soon realized that the average wasn’t the problem: the days of higher stress and overtime were the real issues.
To produce a more accurate picture, the team calculated a standard deviation of 18.8 minutes, and used the average plus three standard deviations to calculate an actual overtime on the worst days of 92 minutes per person. The team decided to set a phase one target to reduce this by 50%.
The team mapped overtime hours and activities to determine the vital causes, and found that seven activities accounted for 81% of overtime:
|Master Changes in SAP||10|
|Head Office Formats||5|
Of these problem areas, recruitment and meetings were not yet suitable for change efforts; actionable items to be addressed first were data crunching, SAP changes and repeated changes in data formats requested from the head office. Together, these three areas totaled 29% of overtime, of which 60% originated in two regions, while another 35% came from just two people in the head office.
The team asked, “What were the two non-overtime producing regional offices doing that worked and prevented overtime?” The representatives from the regions described a one-time effort they made to develop data entry and storage formats that met the head office’s needs; it made sense to share these ideas with the two lagging regions to reduce their overtime, too.
The project team also discussed why the needed formats had not been developed and put in place already. They examined the following steps of the existing process:
The team initiated a two-phase process change, using Just-in-Time principles:
After two months of testing, a 48% reduction in average time plus three standard deviations was achieved; the highest overtime was reduced from 92 to 50 minutes.
While overtime reduction was maintained, employees were still experiencing stress due to errors or incomplete entries during the payroll run while searching for correct information. The team chose to select the most frequent errors, their root causes and the countermeasures that would eliminate them.
Using the metric errors per query per payroll, the group found 65 in the first payroll run. An example:
|Payroll Run||Errors and Queries|
The TQM team compiled the results and presented them to management. Improvements they agreed to maintain included:
Learning about TQM as part of an HR certificate training course can lead to long-lasting improvements in human resources processes, including payroll. It can also lead to mindset changes throughout an organization. One director reported after the TQM payroll project that an employee found an error in his work and reported it, including a 5 Why and countermeasure analysis to correct it. It was proof that TQM had made a sustainable improvement in the human resources department.