500 Company, Memphis, TN
Streamline payroll operations into one central department
has 914 branches in seven business units operating throughout the United States
with a total of approximately 60,000 employees and more than 2,000,000 payroll
checks per year.
most business units performed three payroll functions: process demographic data,
provide customer service, and process payroll data.
The payroll department entered the demographic data into the mainframe
payroll system, provided customer service, entered the payroll data into the
mainframe payroll system and distributed the payroll checks.
The total cost per check was about $2.80.
This included all costs of the process except those incurred at the
branch level. Based upon the
process mapping and redesign efforts, we estimated that the cost per check could
be lowered by 50% with a total investment of less than $250,000.
This investment included external consultants, software, and IT
analysis, mapping, and redesign portions of the project were completed by
December. A group of knowledge
workers from the various payroll departments accomplished this in three periods
of three days each. Each period was
spaced about three to four weeks apart. A
presentation to management was given at the end of each period.
This identified the inefficiencies and bottlenecks in the current process
and allowed us to estimate the potential gains from process improvements.
implementation project was started in early January with the selection of the
team. About half the team was
composed of supervisors from the business unit payroll departments.
The remainder of the team was composed of the external redesign
consultant and supervisors from the payroll department.
Implementation plans were presented to senior management within two weeks
of initiating the project. Action
plans were developed and within four weeks initial milestones were met. Microsoft Project Manager was used to monitor the project,
which included the following steps:
Test & rollout Plans
Refine & Transition
months after beginning the implementation phase of the project, most of the
payroll functions in the business units had been eliminated with the people
moved to other positions. The staff
in the payroll department was reduced by all the temporary help (eight) and
three people were transferred elsewhere in the company. The cost per payroll check had been significantly reduced
to $1.58. Error rates (DPMO)
are down from the previous year and customer service levels are up.
The project is in its final phase of stabilization and improvement to lower the cost per check another 10-15%, lower error rates, and improve customer service.
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