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AB Hi-Fi HR management and payroll process

AB Hi-Fi is a multi-store retail business that sells products such as DVDs, CDs, mp3 players, game
consoles and TVs. In addition to retail stores, AB Hi-Fi sells music, games and DVDs via its website. Much of
the in-house processing for HR management and payroll relies on manual, paper-based systems. The narrative
of the HR management and payroll process for AB Hi-Fi follows.

Phase 1.0 Employee recruitment


AB recruits a wide variety of staff, including many part-time employees who work in their retail stores. AB
has a standard formula to calculate staffing requirements at each of their retail stores based on employing one
manager and two full-time sales employees for each store, and sufficient part-time labour to meet estimated
demand based on the previous month’s sales in that store. If an analysis of sales indicates a need for a new
part-time staff member, or an existing full-time staff member leaves the organisation, the workforce planning
division sends a request to human resources staff to commence a recruiting campaign. The recruiting officer
searches the existing position descriptions and finds the position description that most closely matches the
request.
The recruiting officer creates a search plan for the vacant position, detailing which media outlets they intend
to use for the advertisements, the advertising copy to be used, what kind of applications are expected (both
volume and quality) and the expected costs of the advertising campaign. Once the search plan is complete, the
recruiting officer forwards the plan and the associated position description to workforce planning for approval.
Workforce planning approves the plan, authorises the expenditure and returns the plan to the recruiting officer.
On receipt of the authorised plan, the recruiting officer emails their prepared advertising copy to each agency on
the search plan and requests a positive confirmation in writing of the advertisement placement dates, copy and
costs. The advertising agency emails their invoice and a final proof of the advertisement prior to publication,
which the recruiting officer checks against the original search plan. The recruiting officer emails the advertising
agency to authorise placement of the advertisement.
After the closing date for applications for the position, the recruiting officer downloads and prints out all
applications submitted electronically. The recruiting officer checks each application carefully against the key
selection criteria contained in the position description, noting and recording any issues such as criteria not
addressed by an applicant, or any applications which fail to provide evidence of mandatory skills required for the
position. Once applications have been checked by the recruiting officer, they print five copies of each application,
and the report containing their comments, and forward them to the chair of the selection panel. After the
applicants have undergone the selection process, the chair of the selection panel notifies the recruitment officer
of the outcome of each of the applications. The recruitment officer sends an email to each unsuccessful applicant
advising them that they are no longer under consideration for the vacant position. The successful applicant (or
applicants) are sent an email advising them of the offer of a position and requesting that they contact the
recruiting officer for further information. When the potential new employee contacts the recruiting officer, they
are advised verbally of the details of the position offer being made (salary, starting date and employment terms
and conditions) and asked if they wish to accept the offer. If an applicant does not wish to accept the offer or
requires additional details, they are given the details of the chair of the selection panel and asked to contact
them. Applicants who accept the offer are emailed a new employee details form which they are asked to complete
and return to AB prior to their starting date for employment. When the recruiting officer receives the completed
form from the new employee they print it out, then use the details on that form and the selection committee’s
original outcome notification to create a new employee record, including details of conditions of employment,
applicable salary scale and their starting date.

Phase 2.0 Payroll


AB pays its employees fortnightly. Every Tuesday morning each store is required to send all part- time
employee timesheets for the previous week through to the payroll officer. The payroll officer ensures that the
timesheets have been approved by the relevant store managers, and checks that the total number of hours
worked have been calculated correctly. Once the payroll officer is sure that the total hours worked look correct
they enter the total working hours for each employee into the payroll system. The computer system calculates
the total amount due to each employee using the employee data and the relevant wage rate.
On every second Wednesday morning the payroll officer uses the computer to process the fortnightly
payroll. The payroll officer inputs an instruction for the computer to start payroll processing. The computer
extracts the previously calculated details of wages amounts due to employees for the preceding two weeks, and
then calculates salaries payments due using the employee details for each salaried employee. The amounts of
tax and superannuation to be deducted from each employee’s salary are calculated. Tax deductions are
automatically assessed using a computerised PAYG tax table. Superannuation deductions are calculated by the
computer using a formula of 9 per cent of the gross salary or wage due to the employee. Details of the total
payroll amounts payable are automatically sent through to the accounts department, and individual payslips are
generated and sent electronically to each employee. At 11 pm every second Wednesday, the computer
automatically generates a file containing details of all salary and wage payments and deductions to be paid and
sends it to AB’s bank, which disburses the payment to the employees and third parties. A copy of the total payroll
payments made is sent through to the accounts department.

Phase 3.0 Performance management


Every full-time employee has their performance reviewed annually. Full-time sales employees are reviewed
by the relevant store manager. Store managers are reviewed by the relevant regional manager. Part-time
employees do not have their performance reviewed. To prepare for the performance review, the HR officer
creates a summary of data in the employee file, including the total paid to the employee over the year, current
leave balances due to the employee, and a brief description of any notes made on the employee file during the
past year. The HR officer sends this information through to the relevant manager, and advises the employee via
email that their annual performance review is upcoming. After the performance review has been conducted, the
relevant manager advises the HR officer of the outcome of the review by giving the employee a ranking between
one and five, and indicating if any salary adjustment is required. The HR officer enters the performance review
ranking for the employee and, if a salary adjustment is required, updates the employee record to reflect the new
salary level payable.

Phase 4.0 Employee termination


Employees wishing to resign from AB Hi-Fi are required to provide four weeks notice in writing of their
intention to resign. Employees send their notice to the HR officer, who records the date that notice was given
and the termination date requested on the employee file, then sends a copy of the written notice received through
to the payroll officer and the relevant store manager. On the designated last employment day for the employee
the relevant store manager (or regional manager in the case of a store manager’s resignation) is sent an
automated email reminding them that they need to recover any store keys and identity cards issued to the
employee.

Considine, Brett. Accounting Information Systems Understanding Business Processes, 4th Edition.
John Wiley & Sons Australia. (Considine 576)