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Are small and medium Québec businesses slow To optimize yheir Management processes?

Written by : ADP Canada
In an economic setting geared towards globalization, optimizing business processes plays a key role in the operation of both small and large businesses. As a result, HR management processes, including payroll, constitute an essential element in a small business’ ability to compete. Franchisees themselves also face these very critical management issues.

A recent CROP survey, conducted on the behalf of ADP Canada, among 300 SMB’s in Québec, indicates that in 2006, it is not yet common practice to computerize the management of employee records. Only 17% of businesses (26% among those with more than 50 employees) use computerized processes for HR management. The vast majority (82%) do not use a computerized system. Among those that are equipped with such a tool, an in-house system is the most common method used by the businesses in this survey. Amazingly, 4% of these companies still manage their payroll by hand!

As for direct deposits, this payroll distribution method is preferred by a majority (67%) of businesses, and jumps to 91% for businesses with more than 50 employees. Nonetheless, one business out of three (33%) still pays its employees by cheque. This proportion grows to 48% in small businesses operating in the wholesale and retail sectors. Even more astounding is the fact that 1% of businesses surveyed admitted paying their employees… in cash.

Paper is still the most widespread method of maintaining payroll and HR-related records. In fact, more than 80% of Quebec small businesses maintain a copy of their employee-related data on paper, while 95% of small businesses that have been operating for ten years or less do so. Hard drives, security tapes and business servers are also cited as secondary data conservation methods.

In addition, 43% of the businesses surveyed confirm that their employee payroll would be either greatly or somewhat affected if a major problem, such as a computer virus, a fire, or a flood were to occur. The number is more significant in small businesses with more than 50 employees, where 51% confirm that they would be greatly affected.

“Small business managers can now benefit from all the advantages related to technological progress that were once exclusively available to large businesses. In light of this survey’s findings, I would state that small businesses are placing themselves in a very vulnerable position regarding the management of a key component of their operations. There is certainly reason to wonder which actions must be taken in order to optimize HR and payroll management practices,” concludes Mr. Serge Lamarche, Vice-president, Customer Service, ADP Canada.

Is outsourcing worth Considering?

The survey also reveals that 42% of small businesses have chosen to outsource the management of their payroll department. A total of 88% of the companies who have opted to outsource their payroll have chosen a provider of employer-related solutions. Almost all the businesses who have chosen this method say that they are either very or somewhat satisfied (98%) with the service they receive. From the managers who considered outsourcing their payroll management, 24% of them were motivated by cost reduction and another 16% were prompted to do so by a lack of time. Other influential factors include a lack of internal resources and difficulties related to legislative compliance.

About the CROP Survey

The survey was conducted between August 15 and September 6, 2006 by the CROP research agency on behalf of ADP Canada. The telephone survey is based on a sample of 300 Quebec-based small businesses with 10 to 249 employees. For a sample this size, the results are considered exact, with a margin of error of 5.67% or 19 times out of 20.

With more than 50,000 clients across Canada, ADP Canada (ADP) is the country’s largest provider of employer-related services. Among ADP Canada’s traditional outsourcing products and services and those offered via the internet, the company offers payroll, human resources management, time and labour management, as well as occupational health and safety, and comprehensive outsourcing and consulting services. ADP Canada pays one in five Canadians. For more information on the employer-related services offered by ADP Canada, please click here
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