Changing pay periods? Focus on communication, lead time

An inside look at how BJC HealthCare merged the pay periods for 26,000 employees

Philip Cavoretto did what might seem impossible: His company changed payroll dates and, on the first day of the new pay period, his department had no phone calls from employees about issues with pay.

“It was amazing,” he said, adding it was one of the most successful pay periods they have ever had at his company.

Cavoretto is director of disbursement for BJC HealthCare, a non-profit healthcare organization with 26,000 employees and facilities located in Missouri and Illinois. When his company came together, one-half the hospitals in the group were paid one week and one-half another.

For a long time, the organization continued to pay employees on different weeks, concerned about whether technology at the time could handle such a large number of pays in one payroll cycle, he said.

“Sixteen years ago we didn’t even want to test the theory of whether we could pay everyone at the same time,” said Cavoretto, who has 34 years payroll experience.

Three years ago, BJC HealthCare decided the technology was strong enough to merge paydays.

The success of the change was due to intense pre-planning, Cavoretto said.

Spend at least 3 months planning

Organizations looking to change a pay period for employees, whether it’s to standardize pay dates after an acquisition or merger, because of new union agreements or to increase efficiency, need to spend at least three months planning, he said.

The committee getting ready for the event should have representation from every possible area of the workplace, including human resources, payroll staff, IT, communications, employee representatives, legal and an ombudsman, he said.

Once the team has been assembled, set regular meeting times and stick to them, he said. Even if things are going really well, the key is to keep thinking about how it can go better, Cavoretto said.

“Have a back up plan incase something goes wrong in the middle of the night,” he said. “Have a plan B and even a plan C.”

Take time to do a lot of practice and testing with the IT-related functions of payroll prior to the big day, so there are no surprises, including seeing how long it takes to print payroll documents such as cheques or paystubs, if the company is changing cycles because of a merger and there are now a lot more employees.

Keep employees in the loop

Tell employees about the change as often as possible, said Cavoretto.

“You’ll get more phone calls (with questions) if you haven’t done a good job of communicating,” he said “Communicate early, communicate often and communicate well.”

This means putting the message out there in as may ways as possible, at staff meetings and in internal communication products, he said.

It’s important to give employees as much notice as possible, said Janet Grossett, manager of compliance programs and services for the Canadian Payroll Association (CPA).

“You have to give them ample time.”

The CPA released a survey in September that found 59 per cent of Canadian employees said they would have trouble making ends meet if their pay was delayed by a week.

Both Cavoretto and Grossett say giving employees as much notice as possible is also important so they have time to go to their banks and make necessary arrangements to adjust when payments will be taken out of their accounts.

Employees may also have automatic deductions for savings coming out of their pay, so they may want to increase the amount if they will now be paid bi-weekly instead of weekly.

There are a lot of technical things to think about too, Grossett said.

Like how much CPP deductions will be if cycles are changing and in the interim pays if there are going to be any. Payroll staff will also have to produce ROEs for staff members when they are changing the pay periods, she said.

Ideally it would be best for companies to wait for a change until the new year. This eliminates issues of changing deductions, she said.

“It would be most effective to change it in a new calendar year,” she said.

When the dust settles, conduct a post-mortem

Even if everything goes well and there is a low likelihood a payroll cycle will ever change again, Cavoretto recommends having a post-mortem after the big day.

The lessons learned from the success of the change can be used in many other places. The success of BJC HealthCare’s switch was used as a best practice throughout the company, he said.

“We’ve had other projects in our company come to us, asking how we did it,” he said.

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