Is Automated Hiring the Wave of the Future?

Small Business Payroll HiringWhen it comes to deciding which job applicants get turned down and which ones end up on their small business’s payroll, most small business owners trust their gut instincts. However, some U.S. companies – for now mostly larger ones – are letting computer programs make their hiring decisions.  Is automation the future of hiring, even for smaller businesses?

The appeal of a computer that can make hiring decisions is easy to understand. Advertising open positions, taking and reviewing applications and interviewing the top candidates consumes a lot of time and energy. Once a candidate is selected, businesses typically invest thousands of dollars per hire in training and hiring-related administrative costs such as processing payroll forms and other paperwork.

Unfortunately, research shows that businesses might not even be getting a good return on investment for their interviewing efforts. A recent editorial on even suggested that hiring literally whoever walks through the door, and not evaluating them until they’re on the job, may be just as good a way to fill some positions as a complicated and costly screening process. That advice may be extreme, but the author cites research that shows that interviewing is not a good way to predict actual job performance. In fact, repeated studies have shown that 45% to 75% of new hires wind up not providing the traits and skills that their employers wanted and that they were trying to screen for in the interview process.

In a September article, the Wall Street Journal reported that big companies that need to hire a large number of low-level workers in relatively high turnover positions are resorting to applicant screening software. In many cases, this software is what makes the final hiring decision, based on information supplied by and about each candidate, in addition to a battery of screening questions.  The questions themselves are developed based on analysis of past hires and correlations spotted by data-crunching computers.

For example, in a call center position, it was found that employees with the longest commutes tended to have the shortest job tenures. To reduce turnover, the company began factoring candidates’ commute time into the hiring scores assigned to each candidate. Another company, eager to reduce accidents and workers’ comp claims, began excluding job candidates who scored lower on questions relating to work ethic and attitudes toward drugs and alcohol. The company saw its workers’ comp claims fall by 68 percent. According to the website, companies will be forced to turn to this kind of  automation to efficiently perform high-volume hiring.

However, for most positions, and for smaller companies, computers are not going to be taking over the hiring process any time soon. In an article published just a few days ago by Dr. Charles Handler, founder and president of, said he agrees with author Michio Kaku  that humans still have “the one commodity that robots cannot deliver: common sense.” Dr. Handler explains that because machines can’t think creatively or use intuition, there is a limit to how useful they can be in the hiring process. The human brain is still a better tool for digesting and evaluating some kinds of information, and for making certain decisions. Fortunately, this opinion no doubt agrees with the gut feelings of most small business owners – that their intuition and experience will tell them which job candidates are the best fit for their companies.

Finding and hiring talented, hard-working employees for a large or small business certainly isn’t the easiest thing in the world, whatever process you use.  Making sure that your employees are paid accurately and on time, however, can be a snap – if you rely on the dedicated payroll professionals at Padgett Payroll Services. You can find out about the full range of payroll services we can provide to your business, including convenient online payroll processing, by visiting, or call us today at 877-244-5842.

Improved September Jobs Numbers Fuel Discussion of How Unemployment Rate is Calculated, What It Means

Sept 12 Employment Payroll StatisticsWhen the announcement came last week that 114,000 workers were added to the nation’s employee payrolls  in September, just about everyone seemed to be caught off guard by the surprisingly good news. Officially, the U.S. unemployment rate fell below 8 percent for the first time in almost four years, going from 8.1 percent the month before down to 7.8 percent. Exactly three years ago, in October 2009, the official unemployment rate topped out at a whopping 10 percent.

Apart from some quickly dismissed allegations that the Department of Labor Statistics may have cooked the books to generate favorable news on behalf of the Administration, the monthly jobs figures raised some valid questions about how the numbers are to be interpreted.

For instance, there are actually two ways that the DLS calculates the unemployment rate. One is to survey businesses’ payroll processors, the other is to survey households directly about the employment situation of those living there. The catch is that the household survey always shows lower unemployment than the payroll survey. Not only that, the gap between the two varies, and it’s not insignificant – the difference between the surveys can be as much as high as one million jobs.

In September, the payroll survey showed modest job growth, while the household survey showed a much larger jump in employment. There are many theories as to why these two surveys differ and how they should be proportionally weighted in calculating the “true” unemployment rate, but suffice it to say that these figures will always be an estimate and at best will show general trends.

Another fact that calls unemployment rates into question is the federal government’s definition of “unemployed.” Only jobless people who are actively seeking work are classified as unemployed. In the past few years, some of the small monthly dips that have occurred in the unemployment rate have been attributed to discouraged workers dropping out of the job market, rather than actual job creation. That seems not to have been the reason behind September’s improvement, but some observers say that if these discouraged workers werecounted, the unemployment rate would have been well above  10 percent for the last few years, and would still be around 11 percent now.

Padgett Payroll Services is an experienced payroll management company that has served small business in North America through good economic times and bad.  We’re proud to be partners with small businesses across the United States and Canada – the kind of businesses that form the backbone of our continent’s economy.  Learn more about how Padgett Payroll can support your company’s success here Then contact us via our website, or call a Padgett Payroll Services representative at 877-244-5842.

Setting Up a Small Business Payroll System

Small Business Payroll SystemsEven for small business, payroll systems are essential to make sure that employees get paid accurately and on time, and that payroll taxes are remitted properly. Establishing a well-organized payroll processing system – and sticking to it – will make it a little easier to deal with federal, state and local tax and labor laws. In addition to saving time a good payroll system can also help you avoid costly government penalties that could potentially devastate your enterprise. The Small Business Administration suggests taking these steps to set up a payroll system:

Get an Employer Identification Number (EIN) from the IRS – before you hire your first employee. The EIN must be listed on your company’s tax returns and other documents that must be sent to federal, state and sometimes county or municipal agencies. Some state and local governments issue their own tax ID numbers that you must obtain from state and local agencies.

Properly classify those who work for you as either employees or independent contractors. It’s important to know the difference, but sometimes drawing this distinction isn’t easy. If workers are improperly classified as independent contractors, your business could wind up paying a small fortune in back taxes and penalties.

Complete new employee paperwork, especially IRS Form W-4. The amount of federal tax you withhold from an employee will be based on the information that he or she supplies on this form.

Establish a regular pay cycle. Be sure that the pay period you choose complies with the laws in your state. Some states require that employees be paid at least bi-weekly, for instance.

Thoroughly document your compensation system. Write up a payroll administration manual that addresses your company’s pay cycle, method of tracking hours worked, paid time off policies, overtime policies (which must comply with federal, state and local labor laws) and any benefits you offer. Keep your manual updated with any changes you make to your payroll and compensation policies.

Choose a payroll processing system. In-house payroll processing options are available, but strongly consider payroll outsourcing if you don’t have the time or the background to give payroll administration the close attention and care that it requires. Accuracy is of utmost importance in payroll processing, and ultimately you, the employer, are responsibly for correct payroll reporting and payment of taxes.

Keep good payroll records. Keep your records organized, and be sure to retain all records for at least the minimum period of time specified by state and federal regulations.

Report and remit payroll taxes accurately and on time. Familiarize yourself with both IRS and state reporting regulations. Remit tax payments and submit quarterly and annual reports as required.

Padgett Payroll Services help small business owners simplify their lives by expertly handling their companies’ payroll management functions. Thousands of small businesses have learned the advantages of outsourcing to Padgett Payroll Join them by contacting the experienced payroll specialists at Padgett through our website, or by calling 877-244-5842 today.