Improving Services and Operations

Contents

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Introduction

Rationale

Improvement Proposal

Measurement & Benchmarking

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Reference List

Appendices

Appendix 1

Appendix 2

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Appendix 3

Appendix 4

Introduction

In 1920, a group of business men launched The Slough Trading Company Ltd. In 1926, the company was renamed Slough Estates Ltd (SEGRO, 2018). The company started out with a 243-hectare site but by the end of the 1930’s boosted two sites and a workforce of approximately 23,000 people (SEGRO, 2018). Since its humble beginnings, SEGRO has continued to grow within the UK through various mergers and expanded globally with operations in Australia, Canada, USA and Europe (SEGRO, 2018). Today, it is the leading owner-manager and developer of modern big box and urban warehousing property within the UK and nine European states with £9.3 billion in assets (SEGRO, 2018).

SEGRO (2018) states on its website that it’s goal is to be the “best owner-manager and developer of warehouse properties in Europe and a leading income-focussed REIT”. To achieve this SEGRO has developed a three-pillared strategy which involves: disciplined capital allocation, operational excellence and efficient capital & corporate structure (Figure 1). This report will focus on the importance of operational excellence and the important role payroll management plays in the company’s development and operational efficiency.

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Payroll is managed by the payroll manager and the payroll administrator. There are seventeen different payrolls to manage across the UK and Central Europe (Appendix 4). SEGRO has outsourced payroll processing to ADP for Italy, the Netherlands, Luxembourg, Germany, France, Poland and the UK. Payroll for the Czech Republic is outsourced to Mazars, and Belgium’s to Partena (Appendix 4).

All processes are documented to reduce payroll errors which will not only serve as a reference document for the payroll function, but for all key departments involved in all payroll processes. Payroll processes constantly change with the introduction of new legislation, policies, and technology.  It is important that the organisation keeps procedures up-to-date to allow for better continuity planning and reduction of business risk.  Having a small Payroll team without formalised procedures is a great risk to the operations of the business.

It has been identified that existing payroll procedural documents needs development within SEGRO. This report seeks to evaluate the management skills and techniques which are important when updating these documents and recommend ways in which to improve them. Also, it will outline a timeline in which these improvements can be effectively implemented.

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Rationale

Even the most well-made processes and procedures require evaluation, because over time simpler, more efficient means of undertaking processes manifest (CIPP, 2018). Apart from the ability to make processes much simpler, quicker and more effective; outdated processes can lead to potential issues and errors in SEGRO’s payroll.

Appendix 1 illustrates all logged payroll errors between April and June 2018. These errors ranged from human input errors, communication errors, to checking errors. This is the further highlighted in Figure 2. The chart shows that of the eleven logged errors, seven were due to human input errors. This indicates that there is an underlying issue with the data the payroll department is being provided with by the Human Resource (HR) department.

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Appendix 3 depicts a fishbone graph as a means of uncovering the underlying causes for the high number of input error logs. The graph highlights that there is a loss of payroll knowledge and lack of communication outside of the payroll department, yet the Financial and Human Resource departments are heavily involved in the monthly payroll process. Secondly the fishbone graph indicates that there is also insufficient guidance. In conjunction, this rules out the personnel as the root issue and puts the blame on the procedural document, or lack thereof. Without employees receiving comprehensive material and guidance to carry out their task, consequently the payroll processes cannot be carried out as efficiently or effectively as required by SEGRO. To add to this point, without comprehensive procedures and policies employees are unable to learn from their mistakes and employees cannot be held accountable for their mistakes because they were not provided with the necessary procedures to carry out their duties.

The most practical solution to eliminate this unceasing issue is to implement new procedural and process documentation, allowing for the employees carrying out the individual processes to have their input into the structuring of the processes being re-developed. Who best to co-facilitate the development of new procedural documents than the various departments using it daily.

Payroll remains a highly tactical function, requiring endless support from personnel, and more often than not, accounting for the highest proportion of an organisations total expenses (Barack, 2016).  With that being said, there is a need to make the payroll procedure and processes more efficient and effective in order to assist in achieving one of SEGRO’s three pillars- operational excellence.

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Improvement Proposal

SEGRO’s payroll challenges, as seen in the SWOT analysis below (Table 1), include a lack of standardized payroll processes and procedures, lack of integration across departments, no continuity or review of processes, few payroll staff and a high work volume. From the SWOT analysis, the opportunities for improvement far exceed the strengths of the existing framework. It is also apparent that there are some considerable threats to maintaining the status quo which would include damage to the reputation of the payroll function as well as the company’s overall strategy.

It is important that a more comprehensive payroll management be implemented to enable the SEGRO’s multinational payroll function to contribute to the organisations goals. It is important that the procedural document is clear and unambiguous for all stakeholders (HR department, Finance department, IT department, HMRC, ADP, Mazars, Partena, and tax advisors), who are involved in the payroll processes.