In short, we need standards
Out of necessity, Argyle created a third-party mission-driven organization to oversee standards around employment records. Welcome from stage left, The Open Employment Data Standards (OEDS).
Standards are a necessity because employment records are at the foundation of our society — renting an apartment, buying a car, refinancing a home, applying for a new job, getting a new loan — this information is at the core of any approval process. It follows that there should be a regulated standard for how employment records are stored, accessed, and transferred. It is surprising that this does not yet exist, and it is time for a framework. In establishing The Open Employment Data Standards (OEDS) Argyle aims to unify employment records. Just as the Financial Accounting Standards Board maintains GAAP accounting principles that are adhered to by all publicly traded companies, OEDS is a mission-driven organization built to provide clarity for all employment records stakeholders.
The aim of OEDS is to foster transparency and industry-wide alignment of a data-set that the global economy relies on.
Any firm that transmits employment records should do so in accordance with established guidelines. OEDS provides a framework for these criteria.
Read More at OEDS.org
Employment Record Origin Tracing
For some context, let’s start at the beginning, with a man named Henry.
Henry wanted to become a CPA after graduating from New York University in 1947. But at 19 years of age, he was too young to get an accounting license. Instead, he started his own company, Automatic Payrolls, that same year.
Every business dreaded processing weekly payrolls for their employees, and for good reason - it was time-consuming, riddled with errors, and resulted in fines. Worst of all, it was manual. Henry's sales tactics were baked directly into his company name - payroll could be automated.
In his memoir, Henry recalls that “Automatic” defined the service only from the client’s perspective.” Over the years, automatic payrolls would acquire over 100 outsourced payroll vendors, diversifie themselves into outsourced accounting services, expanded internationally, and entered the brokerage business. It became the tabulator for the United States bowling league, and then changed its name to Automatic Data Processing. The sales tactic remains the same – making the process "feel" automated.
But, it’s not necessary to concentrate just on ADP. PayChex, the world's second largest payroll processor by paycheck volume, traces its 1971 founding roots to a franchise model. Each office manages its clients and processes their payroll autonomously. Thomas, who founded PayChex and remains the company CEO to this day, was an innovator himself. In 1989, he unveiled Taxpay — an 'automated' service for clients that prepared, filed, and delivered tax returns to the IRS on a company's behalf. ADP quickly replicated this capability.
The services of payroll processors, a study by the IRS in 2015, found that 33% of employers had payroll errors. This resulted in $3B in fines. Human error is inevitable. The data, however, speaks for itself. 33% of employers have errors in their payroll, which shows just how many manual procedures are involved in payroll processing, despite automation or the introduction of web portals that contain buttons labeled "run payroll." There has been innovation, yet the back office remains mostly unchanged.
33% of employers have errors in their payroll
Publicly traded companies adhere to a robust standard set by the Financial Accounting Standards Board (FASB) for financial disclosures. These universally recognized standards for accounting principles are not just in place to reduce fraud - they produce a sanitized and uniform way to analyze business financials. The best governing body for payroll data is HR Open Standards Consortium. Labeling this consortium "independent" is yet another marketing strategy as it is funded primarily by ADP and Intuit.
Payroll data is in disarray. Every payroll vendor stores, processes, and provides data to its clients in its own unique way. For an efficient system to operate with balance, this process should not be unique. Rather, there should be an established criteria that all participants abide by to level the playing field for workers. Manual calculation errors are common, past periods of payroll data mysteriously change without reason, common data elements such as employee title or hire date can disappear, etc. And in culmination, there is no definite standard on what an employee can do with their own records, something that should be their right.
Building the Solution
Vendors who oppose the development of standards around the production and storage of payroll data have a motive. They don’t want to put in the work to fix their own systems. At Argyle we fix this. Just as the FASB has done with financial data, the OEDS provides a standard for the employment records.
OEDS maintains a standard for employee records that spans four categories: specification, coverage, compliance, and capabilities. The OEDS has laid the groundwork to re-imagine how employee records should be structured so that clients, consumers, employers, and employment record processors are presented with a framework that functions across employee types and geographies.
Join the Movement
This is a team effort. We are looking for members to join the OEDS who share our desire to build a new standard for employee records we can all use. You can apply for membership at OEDS.org
To learn more about OEDS in the context of today’s economy, check out the Press Release on Business Newswire.