Lean Six Sigma Project Team improves UH payroll process

The Lean Six Sigma project team from the Quality Improvement in Project Management course, taught by Dr. Jamison V. Kovach, Associate Professor and Director of the Lean Six Sigma Program in the College of Technology, investigated reducing payroll processing errors for the University of Houston System payroll department. In this course, graduate students conduct real world, quality improvement projects to solve problems for Houston-based organizations using the Lean Six Sigma methodology (i.e., a structured problem solving approach).

Team members achieved full Lean Six Sigma Green Belt certification from UH after successfully passing their final project review in March 2013. The UH Payroll Department now has a process that works more smoothly and is better prepared for a rollout of a new electronic payroll process later this year.

The department's investigation of ways to implement electronic time reporting for bi-weekly employees began last year, but members learned that major process improvements were required before implementing the new system. Assessments revealed that the payroll department was constantly running payroll, sometimes twice weekly during off-cycles, which made it difficult to adhere to pre-existing UH processes. Through their analyses, team members discovered ways to address the strong need to make major improvements to prepare for a new electronic system.

"Initially, it had been great idea to run more payroll cycles and meet employees' needs to get paid on time, but the growing over-dependence on going around our established process to serve our customers presented another set of problems," said Joan Nelson, Executive Director of Human Resources at UH Main Campus. "Our challenge was to figure out a way to reduce the number of off- cycle payrolls without causing payment delays for employees," she said.

Using process mapping, the team developed strategies for improvements and to reduce the causes of the errors, which included online orientation for students, creating a best practice checklist to share with campus administrators, devising dashboards/metrics for departments, and implemented an Employee Acknowledgement form to education new employees on payroll processing.

"We found that one of the causes for frequent off-cycle payroll processing was the delayed submissions of time sheets. We have developed online training and orientation to increase employees' understanding of their roles and responsibilities in addition to providing online access for payroll processors," said Nelson.

Given these improvements, bi-weekly payroll processing errors decreased to 6.77% from 10.35%, meeting the overall goal of reducing the number of off cycles and errors to at least 7%. The number of payroll processing cycles was reduced by 50%. "We anticipate the number will reduce to 2-3% as the electronic processes are implemented and as the paper is reduced," said Nelson.

"A big benefit from this effort was that we learned a great way of process improvement and partnered with our students to help improved processes for the university, Nelson said. One of our key HR initiatives is to look at how we influence student success in their transition to the real world. We are very proud that our student workers have become partners with us in this effort," she said.