Guide to Paid Time Off (PTO)

Paid Time Off (PTO) is usually a policy that companies institute to allow their employees to be paid for time that’s taken for vacations, illnesses, holidays, personal days, and other times when the employee may not be present at work. Sometimes these days are accrued throughout the year or the employer can set aside an amount of time that may be based on the number of days of seniority an employee has with the company.

Time-off benefits can be a very valuable part of any employee benefits package. While employers aren’t legally required by federal law to give employees days off for federal or state holidays, it’s a smart way to retain them, while providing job satisfaction. Employers can specify which holidays employees can take off. It’s the same for vacation: There’s no federal requirement, but smart employers grant paid vacation and sick days.

Protecting Both the Worker and Employer

With PTO in place, employees have the right to use the time flexibly at their discretion to support work-life balance. This has helped to thwart employees asking permission from their manager to be absent from work.

Studies in previous years show that between 1976 and 2000, the average American worker took more than 20 days off a year. Fast forward 15 years, and you’ll find that number has decreased to 16 days off annually. Overall, this has a negative impact on worker performance.

Because your employees are unique, some value travel, while others enjoy quality family time. Some want to sit at home with a book, while others want more time to train for a marathon. Plus, events often arise that are unplanned, such as a sick child, a car that breaks down, or a last-minute emergency dental appointment.

Prior to COVID-19, our 9-to-5 work schedule was not always conducive to the demands that tug on our lives. For this reason, as an employer, you should consider implementing PTO to allow your employees time to take care of themselves without fearing financial punishment.

Essentially, PTO allows employees to accrue time-off based on hours worked. For a certain number of hours worked, an employee earns a specified amount of PTO that’s credited to the employee’s “bank,” typically after a pay period. If an employee takes one day off, that’s considered eight hours of PTO.

PTO often replaces a company’s vacation and sick day policies. Instead of offering separate buckets of time-off for different reasons, you offer PTO as an “all-in-one” opportunity for employees to take time off as needed. It’s not really important whether they take the day off because they’re actually sick or because they simply need to recharge in front of Netflix. Irrespective, they’re taking time off that they’ve earned and are using it at their own discretion.

It’s easy to see the administrative and leadership benefits of PTO, because you avoid the hassles of tracking why an employee is out and logging the missed day into one system over another. Plus, it empowers managers to demonstrate trust in their employees.

According to the Society for Human Resource Management (SHRM), recently, 87% of companies recently offered PTO plans, with 91% offering paid vacation plans based on how long their employees have worked at the organization. For PTO plans, the average days awarded per year are based on the employee’s length of service, ranging from 13 to 26 days.

In the instance of a small business, employees who take time off can be a tricky situation. For example, as the owner, if you only have two employees and one takes a vacation, this means that you’ve temporarily lost one-third of your workforce. That’s why it’s critical to plan and coordinate when you offer your employees vacation benefits.

While we all know the importance of striking a solid work/life balance, we don’t always know how to implement formal company policies to give employees legitimate permission to take time off. And, without company approval, many employees leave free vacation days on the table.

Not offering employees time off can have an impact your company’s bottom line. In fact, employees who use vacation days are more likely to receive a promotion or raise, because time off allows them to recharge and maintain peak productivity levels, which is undoubtedly good for your company’s long-term growth.

Creating a PTO Policy

To ensure your company’s optimal success, below are guidelines that can help to create a culture where your employees will feel secure taking the time they need to maintain a healthy work-life balance. Keep in mind that while all business are different, don’t be discouraged. Creating a policy that works for your business is doable.

First, you’ll need to be familiar with and understand the legal aspects on a federal and state level. Then, you may want to evaluate your PTO policy based on the status of your employees, whether they are hourly, salaried, or union workers. It’s worth noting that employees who have the option of taking time off and receiving payment for it tend to be happier and more appreciative than those who don’t.

Steps to guide you when developing your PTO policy:

  • Learn the legal regulations for your state.
  • Compare your PTO policy with your competitors.
  • Set aside special dates and the types of coverage you want.
  • Meet with your accounting team.
  • Determine if you want team members to accrue and roll over their PTO or just use the time by the end of the year.
  • Determine how your employees will be grandfathered into the policy.
  • Have your employees request PTO at least two days in advance, unless the employee is sick.
  • Put the policy in writing.
  • Set up training sessions to introduce the new system.
  • Onboard employees to any new technology or PTO management tools.
  • Review the effectiveness of your PTO over the course of the year, then revise accordingly.

Be sure to present your PTO policy in easy-to-understand language so that every employee will be familiar with all the terms and conditions. If this poses a problem, you can always contract a professional writer or content editor to help you develop the policy.

Benefits of Combining Time-off Days

There are advantages to blending together vacation and other time-off days:

  • Employees perceive this as a benefit, provided it’s communicated well. It can be posed as an improvement compared with tracking separate accruals, because it can serve as an incentive for employees to take less sick time and have access to more vacation time.
  • Employees are less tempted to make excuses when they want to use a sick day but aren’t ill enough to see a doctor.
  • Often, it’s easier to administer this system up front, because there’s no question about which accrual the leave comes from. It can be simpler to administer, which can result in cost savings and consistency when tracking leave time.
  • It can help to reduce employee burnout, provided employees are encouraged to use their days.
  • Merging time off can help employees feel more empowered, because there’s no need to justify requesting time off. They simply take days, as needed, and are free to allot vacation, sick, and personal days to them, as necessary.

For every pro, there’s a drawback to consider…

  • Some employees may feel slighted if sick days weren’t previously monitored closely under a system of separate categories. They may feel penalized by having sick days count against their days off.
  • This system could mean higher financial liability when terminating employees. By separating accruals for vacation and sick days, employers are usually required to pay out only accrued vacation days, not unused sick days. In this way, the whole accrued bank must be paid out.
  • Employees tend to view the bank as vacation days and, therefore, may take more time off. However, while extra days taken as a vacation can benefit employees and employers alike, they also can mean more time that needs to be covered by coworkers. Employers may have to modify work practices to accommodate this.
  • Employees may be reluctant to take sick days if they see this lessening their vacation time, meaning they’re more likely to work while feeling ill.

If your company decides to separate vacation and sick time, then the amount of vacation time that employees are given is really up to you. Most employers link the length of time that an employee has worked for them to the amount of vacation afforded them. Ten vacation days might be offered after one year of service and be increased accordingly by one vacation day for every year of subsequent service. In the instance of milestones of service, such as five and 10 years, employees may earn an additional week of vacation.

Because small businesses are hit harder when employees take vacation time due to having less staff, vacations need to be planned strategically. If employees want to take all their vacation days at once, this requires more planning than merely taking a few days off here and there. What if employees want to take a vacation during a busy period (tax season or the winter holidays)? You’ll need to institute a policy/system that directs how to handle two employees wanting to take the same week off.

Too, the law doesn’t require employers to pay sick leave benefits and personal time off. But unpaid sick leave can get sticky. It may be legally required if a business is subject to either federal or state family and medical leave laws. You may be required to provide certain time-off benefits to your employees. While some of these can be offered at the employer’s discretion, several are mandated by federal and/or state laws, including time off to vote, jury duty leave, family and medical leave, pregnancy leave, and military leave.

Unlimited PTO

Unlimited PTO works the same as regular PTO, except you don’t assign a certain number of allotted days to your employees. Instead, you trust them to take necessary time off, as long as they get their work done.

This type of results-driven workplace culture is becoming increasingly popular, particularly in the startup and technology industries.

Offering unlimited PTO might seem like a crazy idea. You might think, “Wouldn’t this result in an empty office, with a bunch of employees permanently lounging poolside on a beach?” In reality, employees with unlimited PTO typically don’t take any more days off than employees with an assigned amount of PTO. In fact, a marketing automation company found that, after they implemented unlimited paid vacation, their employees took fewer days off.

Unlimited PTO can help you attract and retain today’s younger generation’s top talent. Additionally, this impressive benefit can incentivize employees to work harder and care about your company more. While you might be wary that some employees are taking advantage of the time off, you can mitigate those issues by enforcing regular performance reviews, ensuring that each employee continues to meet their deadlines.

Brian Halligan, CEO and founder of HubSpot, an inbound marketing and sales software company based in Cambridge, Massachusetts, points out three important elements to implementing a hands-off approach to employee vacation time:

  1. The state-of-the-art vacation plan these days is a relic of an era when people worked 9 to 5 in an office. Today, with COVID-19 and technology tools, such as the internet and mobile devices, employees work where they’re comfortable (often at home) and the hours they’re comfortable with (frequently in the middle of the night).
  2. He always found it strange when an employee would hand him a PTO form for a weekday, but never a credit form for the time they worked on a Saturday or Sunday. Since weekend days worked aren’t tracked for credit, the weekday time off just didn’t seem fair.
  3. Halligan says they hire very smart people who are very focused on contributing to the growth of his company and trust that they will use “common sense” with regards to taking an appropriate amount of time off.

How to Take PTO

This may likely sound ridiculous to people from select European cultures, but for Americans, it’s an all-too-familiar problem. There are a few reasons many Americans end up leaving paid vacation days on the table, including a sense of obligation to work hard all the time, and a sense of guilt when their day isn’t “productive.”

It’s time that all employees globally understand the benefits of time off. For example, working fewer hours correlates with higher levels of productivity in the form of increased GDP (gross domestic product). Additionally, an employee’s workplace happiness can help improve team morale.

If you offer your employees PTO and they’re anxious about taking it, consider the following steps.

  • Have them plan their time-off well in advance. Have employees consider when they might need it most. For example, after spending a month attending conferences, traveling, or attending all-day meetings, perhaps they’ll need time to recharge. Or, perhaps they’ll need a few days to relax in the sun in mid-January.
  • Have employees give their manager notice as far-in-advance as possible. We know they’re responsible adults, but make sure they check what needs to be completed before they leave.
  • Have them email their immediate team, letting them know they’ll be out-of-office well in advance, if possible. Make sure you let them know what you need in adequate time, so employees can get those projects done prior to leaving.
  • Remind them to set an automatic out-of-office reply to emails, and have them include an employee or manager’s email as an alternative if an emergency comes up. Also, make sure they set their company messaging system, to “away.”
  • Have employees consider blocking time on their calendars as “Busy,” so colleagues can’t book them for meetings. This will help them cross tasks off their to-do list.
  • Trust your team. Know they can handle the workload when you’re gone and vice versa when they’re out of the office.
  • Know that these strategies only work if your employees plan to take PTO in advance.
  • PTO is designed to reduce any guilt your employees might feel. With PTO in place, they’ll be better as a result.

Calculating PTO

Depending on the company or organization, PTO can be calculated in a variety of different ways. Some companies may have a set amount of days identified in their employee handbook that allows you a specific number of days off per year. An example would be if an employee landed a job and the employer’s policy was 10 days of PTO for the first year, 15 days the second, and 20 days the third year.

Some employees may have to accrue their PTO as they work throughout the year. An example is a full-time employee who works 40 hours per week. For every 40 hours worked, that employee may accrue 1 hour of PTO. If the employee saved up all their PTO during the year, they would have approximately 52 hours in a year to use. Assuming this employee works the average 8-hour shift, then this would break down to 6.5 days of total PTO during the year.

Also keep in mind if you, the employer, allow employee PTO to roll over to the next year or do you follow the “use it or lose it” rule. If all the time must be used within the same year, the employee would lose whatever time they had to use towards vacations, sick days, holidays, personal days, etc. if not used by the end of the year. Also note that sick, vacation, and personal days may be treated differently with some establishments.

NOTE: PTO is generally not included when calculating overtime. It matters how each employer and company sets up their rules related to PTO. Simple math can be used if a specific amount of time is accrued based on a specific number of hours worked. Also, employees can always keep track of their PTO by subtracting the days that they’ve have taken off from their allotted days. Based on this, if an employee has accrued 1 hour for every 40-hour workweek, the math below would be used to calculate their total PTO:

  • 1 hour x 52 weeks (1 hour per 40 hour week based on 52 weeks in a year)
  • This brings the total to 52 hours of PTO
  • To see how many days instead of hours the employee qualifies for PTO, simply take 52 (weeks) and divide by the amount of hours worked per day. Example: 52/8 = 6.5 days

Need Help Keeping It All Straight?

It can be challenging keeping track of which employee is off work and how much time each has used; plus, the vacation schedule for your business year can get complicated. ASAP Payroll Service can calculate PTO through its payroll system. We have ways to set it up, based on your company’s policy, if an employee gets a standard 2 weeks for the year or if they accrue over time. Let us know if we can help you devise a system customized to your needs. Contact us at 317 887-2727 or by fax at 317 887-2741.

How Important is Pay Frequency to Your Business/Employees?

Pay frequency means how often you, the employer, issue a “paycheck” to your employees. And, who doesn’t love payday? Whether you pay weekly, biweekly (every 2 weeks), bimonthly (twice a month), or monthly, “Christmas” comes with every payday. Generally, payday occurs on a Friday, 4-5 days after the period has been closed out. However, as a small business owner, you get to decide how to handle payroll at your business while being cognizant of the expenses involved in doing so. It’s a huge responsibility. You need to get it right, because payroll done wrong can cost you time, money, and employee morale.

Managing payroll can be very time-consuming and challenging. Based on how you pay your employees, certain payment methods are more of a hassle than others. Are you using outdated methods, like checks or cash, to pay your employees or are you increasing the frequency you pay your employees? This means that you’re spending money on printing supplies and investing unnecessary extra time on bookkeeping. Even direct deposit entails higher pay frequency, which can mean more transaction fees if you’re not utilizing online payroll software.

The best payroll schedule for your company will depend on how you answer the following questions:

  1. How much time and money can I afford to spend on payroll each month?
  2. How often would my employees appreciate being paid?
  3. How will I calculate overtime?
  4. What are my state’s requirements?

Consider Employee Benefits

When deciding how frequently to pay your employees, you’ll also want to factor in their benefits. You’ll typically run employee benefits, such as health insurance, on a monthly basis. As a result, paying your employees monthly or semimonthly is more convenient when calculating voluntary paycheck deductions versus paying your employees biweekly or weekly.

Yet, there are additional factors to consider when determining how often you pay your employees. Legal requirements, for example, must be met; then there’s your industry to consider; and finally, employee classification and payroll administration costs.

On the legal side, while the Fair Labor Standards Act doesn’t dictate how often employers must pay their employees, according to the U.S. Department of Labor, “Wages required by the FLSA are due by the regular payday for the pay period covered.”

Then, too, many states’ have minimum payday laws, so make sure the pay frequency you’re considering doesn’t conflict with your state’s requirements. Plus, some states have specific conditions for how often employees are paid, based on the type of work they perform. For example, some states have very complicated payday laws. In Arizona, paychecks must be issued no more than 16 days apart, and employees must receive a minimum of two paychecks per month, while Michigan’s payday laws are some of the least restrictive, because pay frequency is based on occupation. Then there are states with no payday requirements—Alabama, Florida, and South Carolina.

No two states mandate pay frequency the same way. You need to do your homework. Check out the findlaw.com website and go to the State Laws tab to determine the laws for your state or talk to a local employment lawyer to learn more about your state’s payday requirements, if you or someone you know has a question about employment laws in your state.

Of course, you can always pay your employees more frequently, but no less than what your state has mandated. You also need to pay your employees consistently. You can’t change how frequently you pay them for no reason. Courts will only permit changing pay frequency for legitimate business reasons. You can’t change pay frequency to escape paying wages. You also can’t cause any unreasonable delay in paying employees’ wages. In some states, employers must give advance written notice to employees who will be experiencing a change in their pay frequency. Even if your state doesn’t have this requirement, it’s in your best interest to provide adequate notice.

And, as the employer, making a change in your employees’ pay frequency is completely your call, because pay frequency can be easily handled through your payroll tool or by requesting it from your payroll service provider. However, again, it’s critical that you communicate the change clearly and give your employees plenty of advanced notice, so they can plan accordingly. It’s also a good idea to map out each payday for the remainder of the year after the change to make sure employees know they will be paid their full annual pay.

Depending on Your Industry…

From a competitive standpoint, it’s best to know how frequently other businesses in your industry pay their employees. For instance, if state law requires at least semimonthly payments, but most of your competitors pay their employees biweekly, it’s best to weigh the pros and cons of both pay frequencies before deciding.

You can base your decision on data from government sources, employer associations, or by surveying vendors. As an example, based on research provided by the Bureau of Labor Statistics, 70.6% of employees in the construction industry are paid weekly, 52.9% in education and health services are paid biweekly, 35.9% of those who work in the information sector are paid semimonthly, and 17.6% who work in the financial arena are compensated monthly.

Here’s a breakdown guide to help you determine how often to pay your employees.

Weekly

  • Weekly pay date.
  • 52 pay periods per year.
  • Employees prefer this, as weekly income makes budgeting and automatic payments easier.

Biweekly

  • Pay your employees every other week.
  • 26 pay periods per year (sometimes three per month).
  • Because paydays fall on different dates each month, cash flow is more difficult for employees to manage.
  • You, as the employer, save time and money, because you’re outputting half the cost of payroll processing compared to a weekly pay frequency.
  • It’s still easy to calculate overtime with an 80-hour pay period.

Semimonthly

  • Employees are paid on two pay dates per month, commonly on the 1st and 15th or the 15 th and the last day of the month.
  • Entails 24 pay periods per year.
  • Easier for employees to pay their bills, because they can plan/budget based on when they will be paid.
  • Employer incurs about half as much payroll processing costs as in a weekly pay frequency. This saves time and money.
  • Calculating overtime is challenging in an ~86 hour pay period due to the need to analyze each 40-hour work week separately.
  • This pay frequency is easiest when tracking accounting, since reports are often done at the end of the month.

Monthly

  • One pay date per month.
  • 12 pay periods per year.
  • Long stretches between paydays can be difficult for employees to budget financially. Can also put a strain on the employer’s cash flow management.
  • Employer saves the most time and money on payroll processing, because they only have to do it once each month.
  • Calculating overtime is even more difficult in an ~173 hour pay period, because each 40-hour work week needs to be analyzed separately.
  • This pay frequency is also easy for accounting to track, since reports are often done at the end of the month.

After reviewing these pay frequency options, you as the employer need to determine which frequency is best for your business.

How Are Your Employees Classified?

Employee classification can also have an impact on how employees are paid. Employees classified as exempt or nonexempt can be impacted differently in terms of how frequently they’re paid. As an example, to keep payroll calculations simple, some employers pay nonexempt hourly (overtime-eligible) employees weekly or biweekly. Exempt salaried (not eligible for overtime) employees are paid semimonthly. If your employees don’t work overtime, it’s more practical to have a single pay-frequency system in place for everyone.

The Cost of Administering Payroll

As mentioned earlier, the more often you run payroll, the higher your administrative costs. Some payroll providers may charge you each time you run payroll. If you pay your team weekly, those costs could add up quickly. If your provider offers unlimited payroll runs, you will still need to consider your cash flow to ensure that you have enough money on hand to run a weekly payroll.

Running a weekly payroll requires 52 payrolls per year. Operating a biweekly payroll typically entails 26 payroll runs, while a semimonthly payroll has 24 annual payrolls, and monthly necessitates 12 annual payrolls. Obviously, you need to weigh the complete picture when considering your costs, meaning, while it’s cheaper to process your payroll monthly, it may not be a desirable option for many of your workers. Doing this could result in challenges with attracting and keeping competent talent. However, if you process payroll weekly, this could “tax” your budget or lead to financial waste.

When it comes to managing employees, nothing is more important than making sure their paychecks are accurate and delivered on time. With ASAP Payroll Service, as a business owner, you can be confident in knowing your employees’ paychecks are handled on the industry’s leading payroll and tax software, Evolution.

Evolution is a SaaS-based payroll and tax management system that provides features, flexibility, and best practices to handle nearly every type of payroll, regardless of complexity or uniqueness.

Whether it’s a simple payroll for a small company or a complex payroll for a large business with multiple locations, Evolution can handle nearly every type of payroll. In addition, Evolution can support payroll entries from employers located anywhere in the world, provided they have internet access via Evolution’s proprietary SaaS-based system.

Contact ASAP Payroll Service today for help determining the best payroll frequency for your business. They can be reached at 317 887-2727 or by fax at 317 887-2741.

Keeping Up with the Growing Needs of HR

If you’re an HR professional, you know the volume of paperwork that comes with the job. HR is required to keep vast numbers of records on each employee; this can fill multiple file cabinets. Plus, keeping this data secure is another issue.

Then there’s the “democratization” of HR data, which means the demand for rapid expansion of access to such data by groups both inside and outside the organization. As recently as a few years ago, only HR staff members worked with personnel data. Today, employees, managers, health insurers, workers’ compensation carriers, senior executives, job applicants, and even regulatory agencies have/need access to it. As a result, each set of users requires different needs. For example, executives use summary data from the system to aid in strategic decision-making, while applicants derive initial impressions of the organization from the corporate recruiting website.

Solutions?

One solution is to manage your HR paperwork through technology and web-based applications. These can dramatically change how human resource management is handled, often resulting in cutting costs and expanding or improving services. Research has documented that businesses that adopt sophisticated HR technology far exceed their performance levels compared to those that do not. Your organization may already have automated basic HR administration in place; however, simple automation falls short of maintaining a competitive advantage. Today, businesses are challenged to take more aggressive steps in the form of “e-HR” technology to transform their practices and market their brand.

The term “e-HR” describes how HR service delivery uses web-based technology. Implementing e-HR requires a fundamental change in the way HR professionals view their roles. Now HR professionals must not only master traditional HR skills and knowledge, but they must also have the ability to apply that knowledge via technology.

A human resources management system, human resources information system (HRIS), or human capital management is a form of human resources software that combines a number of systems and processes to ensure easy management of human resources, business processes, and data. It involves the integration of hardware, software, and business processes used to implement an e-HR approach. HR departments often provide broader, more effective services when they operate via a web portal. For employees and applicants, this means having to rely on HRIS for most HR services. One potential downside to this approach is less interaction/personal relationships between the organization’s employees and its HR staff.

HRIS is flexible in terms of meeting the needs of a business. It can be as simple as employing a small employee database, developed internally by a company with a few employees, or as complex as fully integrated, multimillion-dollar Enterprise Resource Planning (ERP) software that offers economies-of-scale to large firms. Of course, there are many variations in-between.

The latest research regarding HRIS shows that it includes:

  • Implementation strategies available to HR executives who want to move toward e-HR.
  • Ways HR technology supports recruiting, selection, training, performance management, compensation, and benefits administration.
  • How effective e-HR is and the degree that employees embrace it.
  • Issues that influence the strategic use of e-HR technology.
  • Identifying common pitfalls in a technology-based HR delivery model and how to avoid them.

Taking an e-HR approach can have broad implications on core HR functions in a majority of organizations. While the following is not an exhaustive list of issues to consider, just know that some functions are not addressed in detail here, due to a lack independent research.

What are your options if you decide to implement HRIS?

Deciding to implement HRIS is a big step. In doing so, you have many options, such as deciding whether to develop your technology in-house or hire external vendors to handle it for you. If you go outside your organization, the advantages include the process being more cost-effective and, in all likelihood, providing a more complete HR solution. However, you could be overwhelmed with how to choose the right vendor and product for your business. To start with, you need to determine whether a single platform or an integrated solution is right for you. Are you looking to support multiple HR functions or use multiple smaller systems, sometimes referred to as “best of breed” solutions? Either way, each supports a different HR function.

Multiple HR Functions

An integrated HR solution deploys outsourcing strategies in the areas of human resources, workers’ compensation, employee benefits, benefits administration, and payroll to small businesses throughout the U.S. If you’re looking for an integrated solution, you’ll work with a single vendor to develop a platform that incorporates multiple HR functions. Frequently, these platforms are part of an enterprise-wide information system architecture that covers a variety of business functions, including a general ledger, customer relationship management, and logistics.

Option #2: “Best of Breed” Solution

A “Best-of-Breed” strategy acquires and deploys systems that offer the best possible capabilities in areas, such as payroll, recruiting, performance, onboarding, and more, and require an integration plan to “bolt together” each of these point solutions.

If a “Best of Breed” (BoB) solution is right for you, then you’ll consider multiple vendors and select the best applications for each functional area you’ve identified. In this case, you may find yourself working with one or more vendors to meet your HRIS needs. For example, you may find yourself employing a solution from one vendor, while a second handles your time and attendance issues, and a third is in charge of your payroll solutions. If you run a smaller business and lack the resources to purchase a single comprehensive solution, or you want to use technology selectively, this could work for you. However, whichever way you go, there are pros and cons.

Integrated vs. Best of Breed Solutions

Integrated solutions:

  • Feature a common interface “look and feel” across applications. This makes learning and transitions easier for users.
  • Use integrated data, technological infrastructure, and reduce the need to manage multiple technological architectures.
  • Offer greater ease of integrating data from multiple HR functions.
  • By only using one vendor, this lessens the complexity of vendor management.
  • Can be less costly per application to implement compared to BoB solutions.

On the negative side:

  • You have limited customization options. Due to the large scale and integrated nature of these solutions, they can be inordinately expensive to customize or maintain customizations when new versions are released.
  • You may not have the best solutions available in each functional area.
  • Upgrades can be challenging to handle, because of a possible domino effect: a change to one function may dramatically impact others.
  • You might be reluctant to introduce new features and upgrades, because of their complexity.

Best of Breed solutions:

  • Lets you develop a “best fit” solution for each functional area.
  • Provides quicker implementation: fewer employees are affected, because the system is simpler.
  • You’re not committed to a single vendor to meet all your needs.
  • In order to remain competitive, vendors need to be more responsive to your (user) needs.
  • You can purchase what you need in terms of functionality.

The cons of best of breed solutions include:

  • Difficulties integrating data across applications.
  • Each application poses a different interface. Your staff have to face increased learning curves.
  • Requires juggling management relationships with multiple vendors.
  • Different applications need to operate with each other, which, at times, can pose a challenge.

Delivering the Technology

Once you’ve chosen an integrated or best-of-breed solution, how will that technology be delivered? Three approaches are popular:

  1. Will you purchase and install hardware and software within your company and have your internal IT staff operate it? While this can be relatively time-consuming, in the past, it was the only approach available.
  2. In you decide on the hosted approach, you’ll purchase applications and have them installed, but they’ll be housed at your vendor’s site and will be supported by external IT staff.
  3. Software as a service (SaaS) is a software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted. It’s sometimes referred to as “on-demand software.” When subscribing to SaaS, the software is developed and deployed remotely and is accessed via a web browser.
  4. Vendors may offer businesses access to the same software package (known as multitenancy). This term refers to a software architecture wherein a single instance of software runs on a server and serves multiple tenants. Systems designed in this manner are often referred to as shared. A tenant is a group of users who share a common access with specific privileges to the software. SaaS is not very attractive to organizations that already have invested heavily in HR technology, because their previous investments may not be salvageable. SaaS is also less attractive to firms looking for customized software, because these vendors offer multiple organizations the same software on a common platform and cannot customize the software to each organization’s individual needs.
  5. Both hosted and SaaS approaches can be effective for organizations that don’t have the resources or technical expertise to implement a large, integrated system. Too, many vendors are starting to market SaaS applications available to small and mid-size businesses that want to provide employees with HR services similar to those at larger competitors.

Want Help Choosing What’s Right for Your Business?

ASAP Payroll Services offers the HRIS solution AdvancedHR. It’s a fully-featured solution that offers a unique combination of employee communication and traditional workforce management, which enables managers and employees to easily access and update their information. With integrated applicant tracking, new hires can onboard by e-signing their I-9, W4, WH-4, and any company documents, including employee handbooks. AdvancedHR can also handle benefits administration and online benefit enrollment. It totally integrates with ASAP Payroll Service’s payroll system, Evolution Payroll, to become your “one-stop shop” for all of your human capital management needs.

For more information or to receive a quote on how ASAP Payroll Service’s Advanced HR and Evolution Payroll software can work for your business, contact  (317) 887-2727 or visit our website at: asappayroll.com.