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CFO Bogged-Down In Repetitive Details

I'm a CFO trying to get out of the day to day operations of the business.  I feel I spend most of my time dealing with HR functions. I'm thinkg I need to hire an HR manager that is also a numbers person.

We 150 employees, two entities, combined revenues are $30 mill. We process basically 2 complete weekly payrolls. The payroll employee is pretty weak so I spend a lot of my time double checking & reminding the payroll position of overtime rules & what tasks to complete. I'm constantly dealing with emplee issues, FMLA leave, handbook. I need to be doing more of my "accounting" tasks. I'm trying to figure out what is the best way to solve this problem. Hire an HR manager to oversee the payroll position & handle all of the HR issues that come up so I can do my CFO job. Any insight would be greatly appreciated. Thanks!

Answers

Anonymous
(Director of Finance and Operations) |

I would hire an HR individual to handle the payroll.

Your time is valuable (quite literally) - an HR manager can do it better, faster, and (most likely) cheaper than you can. Furthermore, you'll have much more opportunity to focus on financial-related tasks.

EDIT: How is it that you have 150+ employees and no HR? Seems like the HR position is long overdue :)

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Why are you keeping an employee who you are "depending on", who is "pretty weak"?

That is also part of your problem.

Sarah Jackson
Title: Associate Editor
Company: Proformative
(Associate Editor, Proformative) |

Anonymous, in addition to basic functions like payroll and individual employee problems a properly run HR could really benefit the whole organization. I'm really surprised you're at 150 employees without one.

Here's a white paper on what specifically a well-run HR dept can do for the overall business, what to measure and why:

"5 Must-Have Metrics to Create an HR Value Center"

https://www.proformative.com/whitepapers/5-must-have-metrics-create-hr-value-center

Best... Sarah

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

Outsource and/or automate what you can and hire an HR Manager or Supervisor to take care of the rest. Hopefully, the outsourcing and automation will lessen (if not eliminate) the need for the HR/payroll clerk.

Hiring the HR Manager to supervise/monitor/check the HR/payroll clerk only transfers the waste of YOUR time to the HR Manager. You are NOT solving the inefficiency and knowledge deficiency.

Outsourcing can take form in a variety of available options and there are lots of software packages that can take care of the bulk of time keeping, FMLA monitoring, etc.

Anonymous
(Controller) |

You may want to research the PEO model. Provided us with tremendous value on health insurance premiums and will vastly improve our payroll management/compliance/reporting, etc. But it would be too expensive to do just for payroll purposes. Lots of qualified companies to do payroll services only.

Donald Kalkofen
Title: Outsourced CFO/Controller/Director/SEC 4..
Company: Consulting CPA
(Outsourced CFO/Controller/Director/SEC 4 startups & public companies, Consulting CPA) |

The other suggestions above are all good. My added thought is to consider hiring a Controller or Accounting Manager with strong payroll experience. I cannot tell by what you mentioned above, but you may not have enough responsibilities there to keep an HR person busy full time, but you can off load a few more items to a controller as well as payroll. Also, Controllers and Accounting mangers tend to have the attention to details you may be looking for here. Just some thoughts, hope this is helpful.

Steve Bennet
Title: Start-up CFO, Angel Investor and Profess..
Company: Bodega Partners
(Start-up CFO, Angel Investor and Professor, Bodega Partners) |

I echo Donald's suggestion to hire a controller and/or accounting manager. CFO clearly shouldn't be spending significant (or any) time on payroll. However, your comment that you need to focus on "accounting tasks" leads me to believe you aren't focused on CFO responsibilities. As owner of the business model, you should be focused on planning, growth opportunities, capital markets and other strategic areas. However, you do still need to be involved in day to day operations but overall business not accounting and payroll. HR, IT, legal are all important day to day stuff.

Didier Jupillat
Title: CFO
Company: Atlantic.net
(CFO, Atlantic.net) |

Personally, with 150 employees, I would definitely use a PEO provider, so that I don't have to bother about compliance, taxes, benefits administration, employee handbook, etc., and can offer a much wider and better range of benefits to my employees. Even the hiring and firing processes are greatly simplified with a PEO.

AND I would hire a dedicated HR manager to "nurture" employees on a daily basis and take care of payroll administration (he/she will still be the one reporting the hours breakdown to the PEO). That person could also be the Office Manager if needed, and/or perform additional tasks like managing expense reports or making travel arrangements.

Finally, with $30 million in sales, I would make sure one of my 2 or 3 accounting employees (depending on number of daily transactions) is someone I can fully trust at the Controller level or close, so that I don't have to bother about day-to-day accounting.

Shaun Gagnon, CLTC
Title: Strategic Executive focused on making co..
Company: Tooher Ferraris Insurance Group
(Strategic Executive focused on making companies healthier in all parts, Tooher Ferraris Insurance Group) |

PEO can work. A strong benefit consulting firm may offer these services (hr, payroll, compliance). Happy to discuss the different paths we have taken.

Dan Gollins
Title: Professional Interim
Company: Own interim business
(Professional Interim, Own interim business) |

Payroll ought to be one of those "commoditised" functions within a business. Outsourcing payroll would help to achieve this. It would cover the whole process including online submission and authorisation of overtime, and correct payroll deductions.

The main interests from a CFO point of view should be:
1). Are the correct taxes being paid to the government and deducted from the employees. An outsourced payroll bureau should cover this.

2). How is the payroll changing over time. An analytical review and monthly reconciliation of the figures should be done by the finance team (a junior accountant) i.e. gross pay last month, plus and minus starters & leavers and any pay rises etc equals gross pay this month.

3). Forecast the change in payroll based on budgets and forecasts.

This information should be routinely provided each month end by your Financial Controller.

For a firm with 150 employees, there should definitely already be an HR person. If not then, how can the firm be sure that the recruiting process is effective (i.e. the best people at the ideal salary), the existing staff are developed and assessed, and leavers are managed out of the business.

As a CFO, using a shipping analogy, you need to get on deck and out of the boiler room as otherwise you cannot provide the business with any view beyond the present, or think about what course to help steer the company on.

I have worked in a business where there were staff being carried and subsidised by the other staff. If nothing is done to address this, then all that happens is that the whole business is slowly put at risk. So from a business as opposed to any personal points of view, this should be your decision tree:

1) Insource or outsource payroll;

2) If outsourced, then find supplier, understand what is being delivered and costs;

2) If insourced, can existing staff be trained up to be effective?;

3) If not, then get rid and re-recruit new employee and put them in HR not Finance.

Hugh Cooper
Title: Managing Director
Company: Safima Solutions, Inc.
LinkedIn Profile
(Managing Director, Safima Solutions, Inc.) |

The anonymous comment is right on; with 150 people having an HR person is probably long overdue. Also, you might want to consider the pros/cons of a PEO. Not sure where you are located but if you would like to connect with me on linkedin, would be happy to talk to you. With over 40 years of experience, have been exactly where you are. As CFO, important you get out of the weeds and oursource as many of the mundane tasks as you can.

Richard Archer
Title: Director - Governance & Risk Advisory
Company: Hill International
(Director - Governance & Risk Advisory, Hill International) |

Hiring an HR Manager and then bogging that person down in the details of generating payrolls puts that person in the same position with respect to real HR management responsibilities as you are in with accounting details being a distraction from the contribution you could be making to organizational performance and strategy functioning fully as a CFO. Plus, it is poor internal control to have the person managing the personnel records also handling the payrolls.

The PEO model could make a lot of sense for you, especially if it allows providing additional benefits to the staff through the increased purchasing power of the PEO. PEO's are not a solution for everyone, but they could work. Even if your company contracts with a PEO, you should still consider bringing someone on board who has specific expertise in HR management & regulatory compliance.

Are you using one of the payroll services? If not, and you decide not to take the PEO path, it is something you should consider, particularly if you have employees in multiple payroll taxing jurisdictions.

No matter which way you decide to go, Wayne Spivak's question is relevant. Why are you keeping someone on staff who is so weak that it results in critical time being taken from the responsibilities you have as CFO that can contribute to organizational performance? Is the person a relative of the owners of the company? Some other connection that prevents the person from being fired? Even in those situations, find some place else to transfer (promote?) the person where he/she won't cause you so many problems and hire someone qualified to do the payroll (if you decide to keep the payroll in-house).

John Clouden
Title: Controller
Company: Buffalo Pharmacies, Inc.
(Controller, Buffalo Pharmacies, Inc.) |

Out source the HR and Payroll functions. We cut a full time position who did accounting and HR. The PPO company does onboarding, explains benefits, handles insurance enrollment etc., assists our managers on how to manage and council employees etc. I am the gate keeper for hire/fire so there is integrity between the company and the PPO. My current involvement in HR/Payroll is about 4-5 hours a week now depending on the issues. It was a great move. We have about 160 employees and billed 39mill in gross this past year.

Anonymous
(HR) |

1 HR position per 100 employees is average.

Lyle Newkirk
Title: CFO
Company: Corrigo Incorporated
(CFO, Corrigo Incorporated) |

At your company's size you need more strength in the payroll area. If it were me I would hire a very good payroll person who can do some HR functions. This would be more helpful than an HR person who can do some payroll functions. But it does depend on your company. If you and your CEO think supervisors need support from an HR person you still may wish to go that route. On the other hand if supervisors are fairly capable of handling people issues, you can get by a little longer without HR overhead.
One other note: use ADP, Paychex or some other service that does a lot of the work for you. You should not be doing payroll tax returns and other payroll type busy work in house. If nothing else, you limit your company's liability by moving these functions to a third party. I worked for ADP at one time and am slightly biased but also know that the pricing is very reasonable in exchange for what you get.

Mark Emerson
Title: General Manager
Company: gothamCulture
(General Manager, gothamCulture) |

I absolutely agree on Lyle's comment about third party payroll. You could not get a payroll clerk for the price of ADP or similar. For the liability alone I have always done payroll through a third party.

Anonymous
(Finance & Accounting Manager) |

You're CFO...should think more about strategic not about executing...ability to delegate is one of strong point of leader without losing your accountability....Hire a professional in HR and Accounting...also it will lower risk of errors....no one can do everything...think about long goal...

Amanda Pritchard
Title: TBD
Company: TBD
(TBD, TBD) |

Make sure you are thinking not just about people (adding a position to compensate for workload and/or less than a 100% productivity/quality in current positions) BUT also about process and how the HR/Payroll/Accounting function is designed.

Hiring a person or even outsourcing doesn't solve all problems; it can actually hinder what you are trying to accomplish with underlying process issues.

Take this as an opportunity not just to say, "I need an HR Manager or maybe I should outsource" but also "why do I need a new position and what is the underlying issue at hand...."

Anonymous
(Controller) |

A company the size of 150 employees, with the CFO reviewing payroll work gleams issues whether it is payroll or other financial matters.

CFO should make it a high priority (primarily by delegating) to ensure all "Accounting & HR" related work have proper controls & processes in place, whether they are completed internally or externally (just an FYI, I have come across errors completed by 3rd party providers, so they also require regular reviews of their work).

Whether its the payroll clerk or anyone else that cannot be relied upon to complete accurate work, the CFO should implement and document a review process with these employees, as it may come a time to move in a different direction with them.

Once the top items have been primarily achieved, CFO can move on to more strategic issues.

The CFO needs to "execute" no differently than the payroll clerk. If the CFO doesn't move on this, than they will likely be moved, to get someone in to ensure the payroll clerk is functioning appropriately.

Patti Louie
Title: CFO
Company: Volunteers of America of Los Angeles
(CFO, Volunteers of America of Los Angeles) |

I would consider having payroll every other week or twice per month, if that makes sense for your organization.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

I would consider bi-monthly. With the exception of an entry to cr cash and db payroll payable on the 15th, you only have one set of entries at month end.

There are NO accruals because the pay day is always the last day of the month or last business day of the current month (should the "30th" land on a weekend).

If you have hourly employees this becomes somewhat problematic, but you can overcome the issues.

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