Survey results regarding adjustments of companies to eSocial (SPED)
Part of the Brazilian Federal Government SPED (Public Digital Bookkeeping System) program, eSocial is considered by many the most complex and ambitious component of this program. It should promote predictable and digital consolidation of all social security and labor tax obligations.
The subject is no longer new for companies, has been part for a few years of the agenda of HR strategic meetings (the subject's first mention appeared in 2007) and is becoming more urgent, as the deadlines and requirements were getting clear, until we got to version 2.1 of the regulation.
In the last 2 years, we have helped several companies prepare for the start of the data transfer process. The subject requires not only systemic adjustments, but also reviewing HR processes and other areas involved. With the intention of creating a more analytical view on the subject, we recently conducted a survey with several companies that are facing this challenge.
Our perception that companies still understand, erroneously, that this subject is predominantly guided by technology (system adaptation) was confirmed in the survey: 32% of respondents have not yet started assessing their processes, while only 19% have not started their IT diagnosis. This perception corroborates the fact that the vast majority of respondents (69%) believe that their companies are on the right track to meet the demand by the scheduled date, but part of these companies still haven't even paid attention to the necessary process changes.
We understand that, as it is a legal demand, companies tend to focus on the project in order to simply comply with the imposed requirements, not investing in a full structure review, how to process information and executing daily processes that will be strongly affected. We can mention as facts detected in the survey:
- It will be easier for the government to apply penalties, as it may cross-check information between several areas, seeking discrepancies;
- Few organizations have focused on consolidating information sources and eliminating divergences;
- In addition, few organizations have put in effort to review common items such as the existence of two or more processes that treat similar information differently and may generate different records.
Details on the data collected by our survey are in the summary below. If you have questions about the information presented here, or want more information about eSocial and implications for your business, contact us.
Survey regarding adjustments of Brazilian Companies to the federal government demand eSocial (SPED) (data captured between December/2015 and January/2016). We divided the results into 4 categories for better analysis of the information:
1. Information about HR area
2. Relationship between HR and other company areas
3. Company adaptation to eSocial requirements
4. General information about respondents
1. Information about HR area
a. Profile of HR activities: in the companies, we identified HR activities focus having a similar distribution between operational and tactical, but a smaller share with a more strategic focus. This predominant feature of activities closer to the daily routine justified in some way the tendency to focus on IT adjustments (focus on structuring and review tends to be a more strategic decision for the organization).
Basic reading of these results shows:
- Only 35% of respondents identified their HR areas as participants in strategic planning;
- 24% report having a prominent role in the unfolding of strategic planning actions, but that does not necessarily mean they have an active role in setting directions;
- The remaining 42% reported having their focus on routine activities, sometimes participating in specific projects.
b. Average transactions/month: We consider in this indicator all transactions reported monthly (absenteeism, terminations, admissions, etc.), which allows us to analyze through 2 prisms:
- High number of transactions: will represent greater complexity of adapting within the time limits required by eSocial (focus on meeting deadlines, for example, sending information regarding admissions, at the latest, by the day before the start of the employee).
- Low number of transactions: if they are from different types, will add complexity to the process by hindering process standardization (no recurrence to justify a closer measurement and monitoring process).
c. Area maturity level: process documentation.
The existence and depth of detail of documentation related to area processes says a lot about the structure of an operation: less documented processes (from its flow to procedure details) means greater risk of failure in its execution. We identified by gathered results that the vast majority (64%) have only part of their processes mapped, and some of them (29%) only at a macro level. Adaptation to eSocial when performed only from the systemic point of view, will bring a great risk to organizations with this attribute, as some processes may not have the necessary structure to enable compliance with the dates set by eSocial, or even two or more different processes can generate the same information with divergent content when sending data to the databases of government agencies.
d. Area maturity level: process automation (activity control workflow).
Process automation by using an activity workflow makes standardization and auditing easier when performing activities, as it allows fine control on activity performance status. We identified that only 29% of respondents consider that all their important processes have automation, a fact that brings us an important point of attention on the risk of gaps in the execution of company routines. We can mention some examples:
- Incomplete process execution (existence of activities "on hold");
- Processes that exceed their execution deadlines;
- Among others.
e. Satisfaction (processes and systems): As we have addressed a few times over this analysis, we believe that the two great pillars worked when adapting the HR area to eSocial are Processes and Systems, and we identified that usually the focus of organizations is directed to the component Systems (both scope focus and investment availability). We identified that the perception of satisfaction at companies regarding systems and processes are balanced (around 50% for each side, divided by the "indifferent" group). This fact directs us to the conclusion that the eSocial topic is an excellent time to strengthen initiatives that can also review the Processes pillar (given its importance for organizations), including in the scope of eSocial projects the review of all activity bases for HR and partner areas.
f. HR information maintenance level: One of eSocial's main points of attention is the data analysis that will be carried out when the file is received, comparing it to the databases of government agencies (Revenue Service, Caixa Econômica and Social Security). Any divergence in this analysis will result in the record being denied and, consequently, the company not meeting its deadlines. Updating records is not a frequent and common practice for HR (we identified that 76% of respondents confirm this fact), and simple items like name change due to marriage may generate problems for organizations when sending their information.
2. Relationship between HR and other company areas:
In a project to analyze and adapt companies for eSocial, invariably some processes need adjustments (as they don’t meet 100% of the law details, or risk of sending conflicting information). Several areas are involved in producing information for eSocial, and many actually send additional data - Occupational Safety, Payroll, Legal, among others. Good communication between areas and the correct alignment of actions will be the foundation for the success of required adjustments.
a. Relationship between HR and Occupational Safety: The Occupational Safety area is a major partner of HR in the processes that will be impacted by eSocial. We identified that respondents understand there are many communication gaps between areas:
- 69% do not have a standardized process for information exchange;
- Only 19% do so systematically.
This fact has the power of generating great risk to the organization, as basic information such as Payroll and Work Leave, if not properly synchronized at the time of delivery, may lead to inconsistencies in government bases and possible inspections and/or fines.
b. Centralization of Occupational Safety information by RH: The finding that almost half of respondents claimed that HR is responsible for centralizing Occupational Safety information, combined with the analysis of the previous item on the lack of a formal flow for information exchange between areas, amplifies the risks of divergences and delays when sending information (transmitting divergent or even outdated information).
c. Perception of process maturity in several related areas: The two areas involved the most in eSocial processes (Occupational Safety and Legal) were assessed with a higher level of maturity, with 65% and 71% of designed processes. However, looking at the results, we consider that all areas related in some way to the eSocial obligations have good process maturity, which will facilitate structuring information to send. The potential existing risk, similar to the one presented for the relationship between HR and Safety, is the communication flows and processes between areas (exchanging information).
3. Adaptation to eSocial requirements
a. Readiness perception of organizations: We identified through direct questioning about the perception of adherence and timing of adjustments (question: "In your view, is your company prepared for the challenges of eSocial?") the perception of a positive outlook among respondents (69% believe that their organizations are prepared).
We proposed a second direct question, with an inverted topic, to capture any differences in perception (question: "What's your level of concern with the changes contemplated by the program?"). The result confirms the initial perception of respondents (69% believe that they are on the right track).
b. Current phase of adaptation projects: Analyzing the responses related to the phases of an eSocial adaptation project, step by step, we note that the perception of readiness does not reflect the reality of conducting the required adjustments. Few companies reported having finalized their diagnosis phases (38% for both Processes and IT). In addition, responses clearly emphasize the major focus companies provide to technology, as 32% of respondents have not yet started assessing their processes, while only 19% have not started their IT diagnosis. Another feature that we have identified is the fact that some organizations have begun adjustments to their processes in accordance with needs identified in IT diagnosis, without even completing or starting the process diagnosis. This behavior tends to generate less structured solutions, focused on generating information but not on analyzing whether the process is being properly executed.
Another important survey result refers to the eSocial version treated by adaptation projects. We were able to identify two important circumstances:
- Many of those responsible for conducting these projects are unaware of the version being analyzed;
- Some companies are still working with eSocial version 2, even that version 2.1 has already been announced in mid-2015.
c. Key findings in the diagnosis step: Of those respondents who said they had completed their diagnostic steps (38% of the total sample), and confirming previous perceptions, 90% identified as a result the need for process adjustments.
4. General information about respondents
a. States where they operate: Data were collected from companies operating in several states (companies operating in more than one state were listed in all applicable).
b. Revenue: 83% of responding companies, considering their revenue, must comply with the obligation in September 2016 (companies with revenue greater than or equal to R$ 78 million in 2014). Remaining companies must comply with the obligation starting in January 2017.
c. Number of employees
d. Respondent's area of operation: To ensure greater quality and accuracy of the information gathered, the survey focused on a limited group of respondents: HR professionals (usually those responsible for conducting the eSocial subject) or professionals from other areas when they are responsible for conducting the project (e.g.: Project Management Office, IT. etc.).
e. Respondent's position