Wherever you do business – across the street or around the world – you can count on ADP to help you succeed. At ADP, we know you have questions about how to run your business more efficiently and how to manage your workforce better, whether you’re a small business owner or leader in a multinational organization. On this blog, we publish brief and timely posts about Human Capital..
Most business leaders know that happy employees are productive employees. Still, many people across the world aren’t satisfied at the office. A 2016 Pew Research Center survey found that 30 per cent of Americans view their employment as “just a job to get them by.”
That’s a problem for business executives, regardless of business size, said Dr. Susan Hanold, vice president of HCM Strategic Advisory Services at ADP. If people aren’t engaged at work, they’re going to burn out or head elsewhere. Unfortunately, executives are busy and don’t often keep their staffers’ well-being top of mind. Employee engagement, Hanold said, drops lower on the list of priorities.
In today’s work environment, employee engagement is critical. Finding talent is more challenging, which makes it even more important to retain good people, Hanold said.
Of course, keeping staff happy is easier said than done. Even the best leaders have trouble satisfying and engaging employees throughout the year. So what can you do?
Here are five ideas.
Give Good Feedback
Employees may dislike the annual review, but that doesn’t mean they don’t like feedback.
ADP’s 2016 Employee Engagement study found that staffers want updates on how they’re doing and they want to receive recognition. Why? Because they need to know how they can grow and move up in an organisation.
“You’ve seen a kind of resurgence around the manager touch point,” Hanold said. Managers want a better connection, a tighter relationship and better-quality conversations with their employees, she added.
Included in this is training and skills development. “Growth and development matter to employees,” she said.
Help Staff Climb the Ladder
One barrier to engagement is that employees think they have no way to climb the ladder. Feedback can help an employee do better work, but that employee still needs somewhere to go.
To facilitate movement, some companies have established more career positions so that people can move higher, faster. These aren’t big leaps upward, Hanold said, but more incremental moves.
“There are more steps than there may have been in the past,” she said, and that helps engagement. “They say, ‘I’m really moving up the ladder, and I have a place where I can go.’”
Hanold sees Millennials mostly taking advantage of this mobility, but there’s no reason members of other generations can’t do so as well.
Be Passionate About Your Business
Contrary to the widespread myth of the passionate business leader who’s following a dream, not everyone in a corner office is as engaged as he or she should be.
And if business executives aren’t happy, their employees won’t be either, according to Jennifer Martin, founder of Zest Business Consulting. Like their employees, executives must be open to personal development, and they must find purpose in the work they do.
“How does the leadership team feel about themselves?” Martin said. “Do they like the business? Are they treating their team with kindness and respect? Are they taking that kind of attitude to everyone who comes in contact with the business? It starts with how they feel and how they interact with their team.”
Give People the Perks They Want
Everyone likes to be recognised for their work. Receiving things like gift cards, a day off or an invite to a special event can help excite workers. According to the Global Business Travel Association, some companies are even allowing staffers to add extra days onto business trips to let them explore the cities they’re in.
Some companies offer bigger incentives, such as tuition reimbursement, gym memberships and even pet insurance. While offering something extra can be a good idea, companies often make the mistake of providing perks that employees don’t want, Hanold said. If your workforce is older, they may not need tuition reimbursement, for instance.
“You have to know your target audience and be progressive,” she said. “If someone’s already working out, then they don’t need a new membership. But can you give them a discount on their existing one? And make it easy for them to get these perks and benefits.”
Ask Employees What They Want
If you’re not sure how to engage your staff, there’s a simple solution: Ask. What do your team members need to stay engaged? A ping pong table in the break room? More nights out as a team?
While people may have different opinions, just talking with them shows them that you care, and that alone will make them feel better about their workplace, Martin said.
“Asking people for their insights tells them that you like and respect them,” she said. “And that gets them engaged.”
Every company should be trying to increase employee engagement. Although it may cost something to take everyone out for dinner a few times a year, for example, your happier and more productive staff will pay you back through increased productivity.
“There’s no downside to this,” Martin said. “If you have a deeper level of engagement, you get higher levels of productivity, and that not only boosts your bottom line, but you’ll have better retention rates too.”
Buckingham has been a revolutionary HR thinker, right from his first book, First, Break All the Rules: What the World’s Greatest Managers Do Differently, written with Curt Coffman. The book dissected the insights gleaned from over 80,000 interviews conducted with managers by Gallup Organisation. It posited the idea of managers creating and sustaining employee satisfaction at the workplace. The popular outlook changed after the publication of this book, with its key ideas of what the best managers do and don’t do influencing hordes of HR professionals in the years that followed.
Since then, Buckingham has started his own company to creating management training programs and tools, apart from writing several other books. His nearly two decades of experience as a Senior Researcher at Gallup Organisation preceded his role at ADPRI®. He champions a “strengths-based approach” towards employee engagement that ties in with the increasingly technology-driven nature of HR work. In his talks, he often demonstrates the correlation between strengths-driven, engaged employees and business fundamentals such as turnover rates, customer satisfaction, profits, and productivity. When it comes to data, he cautions against the proliferation of faulty data.
In the interview with HRM Asia, Buckingham has a challenge for HR: How much of the existing data you collect today is actually, “good data”? How much of that data is truly reliable?
“People are being promoted and fired because of faulty data. That has to stop,” Buckingham warns. “Don’t be a casualty of bad data. Data fluency means knowing the difference between good and bad data.”
For example, he says all performance ratings and 99% of 360-degree HR tools produce “bad data” as they do not measure the competencies that they are supposed to measure. That’s because competencies are inherently unmeasurable. In fact, Buckingham claims that all talent data is bad data. Because of this, most team leaders still do not reach for HR data willingly.
Just as in management, when it comes to data, patterns have to be challenged, and eventually broken.
Buckingham says to achieve this, there are three words all managers must know about data analytics: reliability, variation, and validity. Most HR tools fall short of at least one of these criteria – and many fall short on all three, he says.
Read the article here to find out what else Buckingham has to say about data, analytics, and more.
Every business owner is familiar with the concept of setting goals. Many business owners choose to aim high when setting their goals and measure their progress regularly to stay on track. By taking the same approach with employees, small- and medium-sized businesses can motivate and engage staff simultaneously with improving performance and productivity.
Although many in the working world dread the phrase “annual performance review,” if approached thoughtfully, it can offer real benefits to both employer and employee. Setting goals helps employees understand what is important to their employer and what is expected of them. It also provides direction on what an employee can do to advance their career.
Care must be taken to ensure the exercise is about the results and not just the process. Here are some tips to make goal setting a worthwhile experience for employers and their employees:
Focus on goals that are specific to your company’s objectives and helps employees develop career skills.
Make sure you involve your employees in the goal-setting for your business. By involving employees in the process for setting company goals, they will feel greater ownership and accountability.
Regularly review progress against goals and discuss business objectives, the employee’s role in achieving these objectives, as well as career development opportunities. By checking in with your employees on a regular basis, you have the opportunity to help them stay on track and they have the opportunity to ask questions, request feedback or get assistance. Nothing demoralizes an employee more than being surprised with unexpected critiques, when they have been hard at work all year – but on the wrong things.
Write down the goals you and your employees set. This makes it clear what will be measured.
Get specific on what success or achievement of a goal means and in what timeframe you want to achieve the results. Looking to increase your sales by five per cent over a certain period? Or want to decrease your delivery time by one day by next quarter? This clearly indicates the employees’ collective goals and timing in alignment with what the business wants to achieve. The more tangible and measurable the goal, the easier it is for everyone to know how they are progressing. This is crucial – specifics on timing and measurement helps keeps people focused even during the busyness of day-to-day of work.
Make sure your goals are achievable by taking resources and workloads into consideration. Do not demoralize your team by asking for things that are not realistic or reasonable. Lofty goals (sometimes called stretch goals) are good – but make sure they are possible.
Discuss goals regularly. Receiving negative feedback during a performance review because the manager did not take the time to discuss the employees progress with goals is discouraging and a sure way to disengage employees.
Setting goals, measuring progress regularly and discussing progress toward achieving those goals can help businesses achieve more and sets employees on a clear path to success and greater productivity. The time and thought invested in a clear process to set and measure goals will help businesses and their employees become more productive and achieve more together.
In part one and two of this series we reviewed the challenges of global Human Resources (HR) and payroll and how they can impact your cost and flexibility. This blog explores how poor HR and payroll systems and processes limiting the control you have over your business.
Having a global view of the workforce is essential for business leaders, but only very few actually have this. With 37% of mid-sized companies’ data left sitting in Excel (ADP Global HCM Study, January 2014) or similar types of databases, the value of putting all data in one system, accessible to not just HR, but also leadership, managers and employees, cannot be underestimated. Information from fragmented systems is simply not accurate or up to date, introducing uncertainty into key decision making processes.
Financial Controller of Yankee Candle, Rachael Merrett, explains the challenge, “We just didn’t know the information we needed (to know) about our people. Our US (head) office was asking us for more and more information about headcount, what type of people they were (salaried or hourly paid, male or female, or average salaries).”
Challenge 3: How standardised are your global HR & payroll systems?
Data visibility and a standardised set of processes enables companies to make real time, business critical decisions and focus on the strategy of your company. HRIS Manager EMEA of Covidien (now Medtronic), Dierk Russell, notes, “With consolidated reporting we know obviously a lot more about our payroll than we ever were able to do. Even with a good finance system and good chart of accounts the type of analysis we have today is far beyond what we used to be able to do.”
Visibility into the overall workforce is key to track key metrics and provide insights. A single data repository that enables reporting and analytics requires integration of HR data, common policies, processes and tasks into one platform.
The Webster Buchanan Research report, ‘Multi-country Payroll: Analysing the Business Benefits and Challenges’ identifies that “every international payroll function is geared up to meet unique local regulatory and business requirements, they tend to evolve on a country-by-country basis, with little standardisation around best practices and processes.” Most multinationals will use a mix of in-house and outsourcing. “In a large company operating in a dozen countries, for example, you could easily find 15-20 different processing partners.” It can be difficult to get visibility into individual payroll operations, ensuring they’re all compliant and guard against fraud.
For Yankee Candle there has been a massive impact, “Now, I can run ad-hoc reports, I can write reports, and I can interrogate the data all of the time. We can now extract reports that talk to our finance system. This has paid dividends because now we can easily put wage data into our ERP system,” says Rachael Merrett.
Centralisation is the key to streamlined service delivery and an HR operating model which world-class organisations are seeking to embrace. A network of in-country payroll specialists with deep knowledge of local legislation and HR details would lighten the load of shared services centres or local subsidiaries. By finding new ways to help maintain compliance and mitigate risk, improve business process efficiencies and, ultimately, help to drive organisational growth and international expansion, HR can demonstrate the strategic value they provide to the company.
Learn how you can better support the international growth of your business by choosing the white paper most relevant to your industry:
In part 1 of this series we reviewed the challenges of international payroll and focused on how they can impact your cost. This blog explores how poor HR and payroll systems and processes make change very difficult – limiting your flexibility.
Challenge 2: Flexibility and global payroll
Organisations across India are operating in a more Volatile, Uncertain, Complex and Ambiguous (VUCA) world. Senior fellow at Harvard Business School, Bill George, says in an article in Forbes: “Business is not running as usual…CEOs have little idea what to expect in terms of health care policy, financial transactions, national security, and global trade – all of vital importance to themselves, their employees, and their stakeholders.” In this type of landscape, reactivity is your competitive edge – and business flexibility determines your speed.
Only the fittest survive to fight another day
Change is the one constant in business – though it can take many beguiling forms. Papyrus France (now Inapa), a merchant in paper, supplies and industrial packaging, is part of a declining industry. “The big challenge for Papyrus is to adapt our structure. We are starting to adapt our HR tasks and payroll to be more competitive, stronger, efficient, and to take the time to implement other HR tasks and not to use all our time on payroll. It will provide more flexibility and responsiveness to the business to help it adapt to market changes” says Karima Cherifi, HR Director.
In contrast, Yankee Candle, a manufacture of scented candles, has been experiencing global growth of 30% per year with “HR systems that could not cope” according to Rachael Merrett, Financial Controller. “There was a very poor HR system, and the payroll system, didn’t give us any of the management information we needed – even things like holiday records, which were all kept manually. Nothing was linked up.”
Payroll and HR teams with poor tools and processes can crush business flexibility. Just keeping up with the demands of payroll data capture, processing, disbursements and reporting for every pay cycle can be hard enough – but add unexpected change and the burden quickly becomes overwhelming. Ultimately, there’s little or no time left for supporting your business and enabling the required transformation.
Legislative complexity and magnitude change stretches global payroll
The increasing complexity of legislation and frequency of changes can limit your flexibility – especially if local expertise is not available. For example, in one calendar year, there were over 20,000 changes in payroll regulation globally. Regulations may vary by region, by city, by business activity with collective agreements, or by company with company agreements. Brazil, for example, has more than 10,000 union agreements and Japan nearly 300 different minimum wages.
Adding to this pressure, the time companies have to implement changes required by new tax, employment, and payroll related compliance regulations is shrinking. The Good & Services Tax (GST), for example, was brought in with a lot of fanfare, but not much information. Many companies, and individuals, still have not grasped the nuances of the GST.
Findings from a study conducted by CFO Research in collaboration with ADP show that more than 60% of CFOs surveyed agree that companies have experienced increased pressure to respond to tax, employment and payment-related regulations in increasingly shorter timeframes during the past two years.
Without the right guidance, compliance can limit your flexibility as resources are diverted to coping with compliance requirements – rather than providing strategic input to accelerate your agility.
Simplicity and standardisation is the key
The Jeitosa Group International report, ‘Driving Globally Strategic Payroll: The Paradoxical Journey to Efficiency and Innovation’, argues that, “A key characteristic of the International model is that it is especially adept at understanding the needs of its local business units and sharing best practices and innovations across the global organisation.”
Karima Cherifi understand that investments in HR and payroll is important, “We had to change our policy. It’s a cost saving policy but it’s to also share best practices between the countries.”
Standardisation of payroll and HR systems through global payroll outsourcing can significantly increase flexibility. Companies consolidate consistent processes for all the countries in which they operate and leverage this efficiency to respond quickly to change. New offices are relieved from acquiring local payroll knowledge as they settle in new countries. They simply ask their supplier to “open another country”.
Learn how you can better support the international growth of your business by choosing the white paper most relevant to your industry:
International expansion and having a physical presence in a new country offers many Indian businesses the chance to reach a significant number of new customers and substantially boost profits. Inadequate payroll and HR processes can however quickly derail these plans – by increasing your costs, limiting your flexibility and reducing your control. Trying to solve all these problems could become very complicated. Ultimately your team may be robbed of the time and resources they need for other critical activities that support your growth.
In this blog series we will review the three key challenges of global payroll and HR – sharing real-life examples of where organisations have gone wrong and how your business can avoid these pitfalls.
Challenge 1: The cost of global payroll
Multiple systems multiply international payroll costs
Organisations that expand internationally usually choose to implement either a local in-house, or outsourced payroll system, catered to the needs of that particular market. Therefore, the economies of scale that can be gained from having a shared, centralised global payroll solution is lost. Often this is a bigger financial cost than leaders realise as a large proportion of payroll costs are hidden.
The less visible components of payroll can be easily over-looked as part of the due diligence scoping process – but these costs can add up and affect your company’s bottom-line. Examples of invisible costs could include IT components, system integration and time spent by staff working on payroll systems.
The ADP white paper, ‘Payroll at the heart of HR Outsourcing’ finds that payroll combined with personnel and benefits administration account for 35% of total HR costs.
Payroll costs represent nearly half of this. Multiply this cost by the number of countries you operate in and you get a sense for the large wastage that could be caused by acquiring and maintaining multiple systems.
Split operations splinter global payroll savings
One way for an organisation to enter a new country is to acquire other established, competitive businesses in the new location. Consolidating different payroll information and reporting systems can however create an expensive administrative burden. Philippe Mennrath, HR Director at KNAUF, a global supplier of building materials, explains, “Buying competitors gives us huge integration challenges – everything from getting new people to understand how we work, to getting them integrated into our HR and payroll systems.”
Fragmented payroll and HR systems multiply management costs – and impact your ability to gain clear insight and make timely business decisions.
The high price of retrofitting a local payroll solution
Running international payroll on a local payroll system can come at a high cost – both in terms of resources and time. Often a system built for one specific country’s taxation and employment legislation will not able to accommodate the unique requirements of other nations. Pepita Morales Saldana, Global Payroll Manager at TomTom, a provider of GPS navigation which has gone from having a few offices in The Netherlands in 2006 to being operational in 40 countries today, recalls, “We had one local Dutch system and in there we had to register all the information of all the employees worldwide. There is a lot of local information that you need to store but your system is not built for global information – it’s just built for the local Dutch information.”
Process efficiency drives cost efficiency
Cost is a key driver for most multi-country payroll business cases – and where “organisations automate manual systems or streamline processes, there will be a potential for direct cost savings”, according to the Webster Buchanan Research report, ‘Multi-country Payroll: Analysing the Business Benefits and Challenges’.
Jeitosa Group International’s Global Benchmarking Study found that “High-performing organisations are far more likely to have a global payroll team that has both visibility to and accountability for the functioning of payroll at the country level, across the entire enterprise.”
Dierk Russell, HRIS Manager EMEA at Covidien, a medical devices company that went from a fragmented payroll to a standardised outsourced model in EMEA, shares, “Before outsourcing we weren’t able to review or analyse the costs. Now it is very simple as its one contract.”
India is a country of over 1.25 billion people – but the global community is approximately 7.5 billion. Companies that successfully go global can enjoy a significant growth trajectory. With HR and payroll typically considered a company’s backbone, having standardised and integrated processes can accelerate your international expansion. A single vendor with a single contract can provide transparency on costs, making budgeting and financial planning easier, while relieving your team from the expense of an expanding back-office function. This leaves you free to divert more budget and resources towards successful expansion.
Learn how you can better support the international growth of your business by choosing the white paper most relevant to your industry:
In today’s world, connected systems have a major role in creating efficient workplaces. These systems help business owners stay on top of their day to day activities. Yet, several businesses still rely on HR systems which work in silos. According to a survey by ADP, HCM decision makers across the world revealed that companies on an average have more than 31 HR applications and 33 payroll systems. The situation is even more complex with trans-national companies, which manage an average of 40 to 50 different systems for payroll and HR. As a result, several HR professionals spend a lot of their time manually entering data into various systems and cross-checking to ensure there are no errors.
A unified HR system, in contrast, would simplify workforce management and unlock insights to support business performance. Besides, having a holistic HR system, with all of your HR data residing in one place, can help you identify potential gaps which might affect productivity as well as have greater control of your workforce needs.
How Can HR Systems Contribute to a Compliant, Connected Workplace?
Let us understand why connected systems are important in your organisation with the help of a byproduct of payroll processing: an employee’s payslip. This payroll output is one of the main components of the payroll process and aptly summarizes your company’s most important expense. If you look closely at the information required to generate your employees’ payslips, you will see that it is a derivative of data fetched from various modules in your HCM system. You will require data on pay components – allowances and deductions, attendance inputs, leave information. In case of an employee exiting from your organisation, you would require information on the Full and Final settlement to reflect in the payroll. It can be extremely time consuming to manually aggregate all of this data to comply with reporting requirements.
In case you do not have a fully integrated HR system, you would need to access –
The payroll system to verify the pay components and the respective pay inputs for each employee
The attendance system to get the right monthly attendance inputs
The leave system to access leave information such a as Loss of Pay (LOP) details
In case of a separation, you will also have to fetch data on arrears if any and consolidate the full and final settlement
Each system needs to be accessed separately to extract and merge the data so everything is in one place and only then can you continue with processing your payroll. And, this is just one part of the problem. Your payroll data needs to comply with ever changing payroll compliance rules, and with 83 compliance changes in India in 2016 alone, making a mistake could adversely affect your business.
As your business scales, you would require efficient systems in place not only to support your business growth but also to simplify compliance and control costs. Integrating your HR systems can help you to proactively monitor different aspects of your HR function, keep a track of your employees’ data and streamline administrative tasks by reducing the possibility of error.
Safeguard Your Most Important Asset – Your Employees
Having your HR data present in one centralised system would help you to draw meaningful insights through HR Analytics. It could help you take informed business decisions, improve productivity and increase employee engagement at your workplace. In fact, according to a survey by Bersin, companies that embrace an integrated data approach to HR have a 38% higher retention rate, 40% higher employee engagement and almost double the revenue per employee.
The data from an integrated HCM provides you a consolidated view of information collected from different HR modules –
It can provide valuable insights on employee engagement, turnover, performance etc. For example, if you notice a sudden spike in employee turnover, you have the data on hand to investigate what exactly is causing this, compare it with industry benchmarks and predict which employees are at a risk of leaving your organisation.
You can then develop successful retention plans to keep your top performers happy and avoid this from happening in the future.
You can also use this data to feed into your other systems and help assist other functions, such as your Finance department, in making annual plans and allocating budgets.
An Integrated HR System – Your Answer to an Engaged and Efficient Workplace
An integrated HR system can help streamline your day to day administrative tasks by preventing manual errors and saving the time and money it would take to correct them. With all of your HR modules available from one single interface, your employees can quickly access information, answer basic questions themselves as well as decrease the time spent by your HR function in resolving simple issues. With a single interface available to enter and extract information in one single go, this system can help boost HR productivity and help them concentrate more on high-value activities than redundant tasks. In a nutshell, an integrated HR system can help you build an engaged and efficient workplace for the future.
The European General Data Protection Regulation (GDPR) comes into effect on May 25, 2018. According to the International Data Corporation, this new legislation represents the biggest change to data protection law in three decades. It requires organisations to comply with both large-scale GDPR standards and country-specific employment regulations.
How do you ensure your organisation is prepared for a smooth transition to GDPR guidelines? The GDPR’s tiered penalty system is strict, and mentions fines of up to €20 million or 4% of your company’s global annual turnover for the preceding financial year, whichever is greater. Educate yourself on the nuances of the GDPR, and make sure your employees have systems in place to ensure compliance.
Does it apply to you?
From manufacturing companies, to online start-ups – it doesn’t matter whether or not you have an actual physical presence in the EU. You still need to abide by GDPR if you:
Sell goods or services to EU citizens and residents
Operate a website that uses technologies (such as cookies) to monitor people, some of whom may be based in the EU
Employ any residents of the EU
Collect any sort of data that may include information about EU citizens
Sounds like a lot! Data collection from anyone in the EU will mean you have to comply with the GDPR rules. GDPR nuances are many, and include notification on a stricter definition of consent, laws on profiling, data handling, data retention, data processing, breach notification requirements, and much more. It’s best to have your lawyer read the specifics, and that too before 25 May 2018.
Are SaaS-heavy companies particularly affected by GDPR?
The very nature of SaaS software makes it a challenge for IT and compliance departments when it comes to GDPR. Your company’s cloud ecosystem (or even another company’s cloud software that you use) involves several licenses and subscriptions, many perhaps unused or unmanaged and even forgotten. You will need to get all your licenses, data and applications in order – and have a complete picture of where they all reside. And then you will need to ensure they are compliant with the new regulations. Gather your IT, procurement, compliance, HR and legal teams to work on this, so you’re well in the clear by the time May 2018 rolls around. Start with reading the EU GDPR website.
Is GDPR relevant only to European companies? In short, no. GDPR will affect any Indian company that provides goods or services to consumers in the EU, or monitors the behaviour of people located in the EU. This is regardless of where the company’s offices or servers are based.
Will GDPR apply to the UK in light of Brexit?
Yes, the GDPR will also apply in the UK since it will still be part of the EU when the new regulations take effect.
Data, Data, Data
The GDPR sets out comprehensive new rules for privacy notices, consent and data breach notifications, among other things. Under current rules, employers must provide staff and applicants with privacy notices. Under GDPR, these notices must specify how long data will be stored, if it will be transferred out of the EU and also make it clear that individuals can make both access and deletion requests under certain circumstances.
Data Controllers will be required to notify the relevant data protection authorities within 72 after they have been made aware of a data breach that could potentially cause risk to the rights and freedoms of individuals.
Preparing for the new data landscape
The new EU legislation is clear: Data privacy is of paramount concern, and businesses that want to operate in any member states must be prepared to comply.
Here are steps to jump-start the process:
Audit HR processing — How are you handling personal data? Do you hold a registry of applications, processes, and categories of data being processed by your organisation?
Prep for Individual Rights Requests — The GDPR requires individual requests for information/deletion to be addressed and in a maximum of one month. Assess your current processes.
Implement an HCM solution — You may not have the technical expertise or available IT staff to make necessary changes in the next year. Cloud-based HCM tools can help you meet compliance standards without ignoring current HR needs.
Update privacy notices — Make sure your privacy notices address all GDPR obligations.
Evaluate your risk — As noted by Information Age, it’s a good idea to assess your risk of data breach and implement necessary safeguards. While the new rules don’t demand specific tech solutions to defend personal data, state-of-the-art methods and software are the expectation.
GDPR represents a significant shift in the way personal data is handled, processed and secured. We invite you to join ADP’s data privacy experts for a special recorded webinar to learn more about the impending GDPR legislation and make sure your organisation is ready to face the turbulence ahead.
Everest Group® has identified ADP as the highest-positioned “Leader” and a “Star Performer” in their 2017 Multi-Country Payroll Outsourcing (MCPO) PEAK Matrix™ report. For more details, you can download an excerpt from the Everest Group report.
The PEAK Matrix is designed to provide an objective, data-driven and comparative assessment of MCPO service providers based on factors including scale, scope, technology and innovation, delivery footprint and overall market success. As part of the report, the analyst firm classifies providers into “Leaders”, “Major Contenders” and “Aspirants” and according to Everest Group, buyers can use this framework to identify and evaluate different service providers. ADP’s additional “Star Performer” assessment is based on positive year-on-year movement on the PEAK Matrix.
Among ADP’s strengths, Everest Group noted that ADP offers wide country coverage serving 112 countries with products including ADP’s GlobalView® HCM and ADP Streamline®. It also highlighted ADP’s strong focus on analytics and consumerism offering employees and managers greater insights and a superior user experience.
Anil Vijayan, practice director at Everest Group said, “As the largest multi-country payroll outsourcing provider in the world, ADP’s solutions meet the needs of small and large enterprise businesses worldwide and it’s continuing to invest in expanding its geographic footprint. In addition, when it comes to technology and innovation, ADP is on the cutting edge with tools such as predictive analytics and benchmarking.”
Since Everest Group began its MCPO assessment four years ago, ADP has continually been recognised as a “Leader.” Ed Flynn, president of ADP’s Global Enterprise Solutions explained, “Multinational companies continue to be challenged when managing payroll for an increasingly global workforce, especially given the critical need to remain compliant with complex local tax and labor laws. We’re proud that our solutions help simplify global payroll so employers can focus on driving meaningful business results and building a better work force.”
Tax compliance is very important – this isn’t any doubt about that. We are all, whether an individual or a company or trust or any other organisation, always under strict compliance duty of the income tax department. In the modern digital world, the income tax (IT) department has access to a wide range of financial information of taxpayers through a computer-aided scrutiny system (CASS), which identifies cases where there is some discrepancy in the income tax return data. This system is used to identify potential cases of tax evasion and/or tax fraud.
You wouldn’t want to be caught up in the IT department’s net. To make the laws clearer, to ensure proper adherence towards tax laws and to keep a check on tax evasion, the IT department authorities issue notices under various provisions of Income Tax Act.
Why would the IT department issue notices?
Some common reasons to receive a notice from the IT department are:
Escaped Income This refers to income on which tax was not paid, whether knowingly or unknowingly, by the assessee in the relevant assessment year.
Non-filing of income tax return As per income tax provisions, it is mandatory to file income tax return if the income is above the exemption limit (currently Rs 2.5 lakh) for the relevant year.
Not declaring income An assessee is required to pay taxes on his or her total taxable income during the year. Total income is the sum of all incomes from salary, business income, house property, capital gains and other income.
Mismatch between TDS details as per Form 26AS and details filed as in income tax return: Form 26AS is a tax statement which provides consolidated details for all tax deducted for the assesse for that financial year. There should not be any difference between the TDS (tax deducted at source) details as per Form 26AS, and the details filed in your income tax return. Both should be reconciled, and any differences should be rectified, before filing the income tax return. If there is a mismatch of details, the assessee is bound to get a notice.
Mismatch in income, expenses and investments In normal scenarios, all investments and expenditure of the assesse should match with his or her income for that relevant financial year. If the expenses or investment of the assesse is more than the income earned, it may create suspicion of escaped income, which may lead to a notice from the department.
Know your Notices
What are the income tax sections and provisions that govern the rules and regulations under which notices are issued? And what actions can the assessee take to avoid consequences in case they have been non-compliant?
Here’s a handy list:
Inquiry before assessment: Notice under Section 142(1)
Notice: Sent under this section if the department wants to conduct a preliminary investigation and needs to enquire a certain case before starting an assessment.
Solution: The assessee must provide all documents and details asked for under the notice issued u/s 142(1)
Consequence of Non-Compliance: If the assessee does not comply with the provisions of this section, for each failure or may be prosecuted under Sec 276D which may extend up to one (1) year with or without fine.
Scrutiny Notice: Notice under Section 143(2)
Notice: This notice is generally served after notice u/s 142(1) has already been sent, and the assessing officer is not satisfied with all documents and proofs which was submitted by the assesse.
(Note: Where the assesse has not furnished his return of income, then notice under Section 143(2) cannot be issued to him and also scrutiny assessment cannot be done.)
Solution: The assessee must provide all relevant documents and details asked for under the notice issued u/s 143(2) to avoid further scrutiny.
Consequences of Non-Compliance: If the assessee does not comply with the provisions of this section, he or she may be penalised under Sec 271(1) for each failure, or may be prosecuted under Sec 276D which may extend up to one (1) year with or without fine.
Letter of Intimation: Notice under Section 143(1)
Notices: Three types of notices can be sent under Section 143(1)
Intimation of income tax return filed: This notice is released in case the details in the return filed by you are matching with assessing officers’ computation under Section 143(1).
Refund notice: This notice is released in case the officer’s computation shows amount excessively paid by the assessee and the same needs to be refunded.
Demand Notice: This notice is released in case the officer’s computation shows a shortfall in your tax payment. The assessee has to make the tax payment within 30 days of receipt of notice.
The notices under this section can be served within one (1) year after the completion of relevant assessment year.
Solutions: – Refund notice: The tax payer has to do nothing about it; simply wait for the refund amount to be transferred into the respective account.
– Demand Notice: The assesse has to make the requisite payment of tax within 30 days of receipt of this intimation.
Consequences of Non-Compliance: If the assessee does not comply with the provisions of this section and doesn’t pay the required tax before the due date, then the assessee may be prosecuted and the respective penalty would be imposed.
Notice under Section 148 – Income Escaping Assessment
Notice: The notice under this section is released if the assessing officer believes that any income chargeable to tax has escaped assessments.
Solutions: The assessee has to comply with the notice and file a Return of Income. The assessee can then ask for the copy of reasons recorded for issue of notice u/s 148. After receiving the details, if the assessee deems it necessary, then he/she can file objection to the issuance of notice.
Consequences of Non-Compliance: If the assessee does not comply with the provisions of this section, then he or she may be prosecuted and the respective penalty would be imposed.
Notice of Demand: Notice under Section 156
Notice: The notice under this section is served in case the assessing officer has assessed the assessee’ s income under any of the above sections and there is an outstanding tax, interest, penalty, fine or any other sum, payable in consequence of any such order passed.
Solution: The assessee, if he or she agrees with the order, must make the requisite payment of tax within 30 days of receipt of this order. In case the assesse is not satisfied with the demand, he/she may file an objection against the order.
Consequences of Non-Compliance: If the assessee does not comply with the provisions of this section and doesn’t pay the required tax before the due date, then the assesse may be prosecuted and the respective penalty would be imposed.
As you settle your tax matters, a final point to remember: always verify that the notice is indeed from the IT department, especially when it is via email. There have been cases of fake emails purportedly from the IT department, urging the recipient to pay his/her outstanding amounts immediately. Do your due diligence before you follow any such instructions from an email. Ensure the notice is indeed from the Income Tax Department before you even respond to it.
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