Payroll: Why Settling For Good Enough, Just Isn’t Good Enough

Payroll:  Why Good Enough Just Isn’t Good Enough

According to Ralph Waldo Emmerson “Money often costs too much”. Whilst the humour of this comment is not lost, there may well be some truth in this statement and from my own experience perspective, especially when looking at payroll.

As companies continue to invest in payroll as part of their wider HR suite, it’s important we get the most out of our people, processes and systems. Sometimes this involves not only changes in the organisation and processes, but also a change of mindset from our people.

About a year ago, I was watching a documentary about a train company. Senior managers being interviewed were trotting out the usual lines on why it’s important to be “passionate” about what they do. But one employee who had worked for the railway for 40 years, said that passion, in his view, was all nonsense. All that matters to customers is that the trains get them where they want to go on time.

It’s the same with payroll. Whilst there are many reasons to go to work, our pay cheque is the primary reason. So, for me, there are three key things that matter in payroll for organisations:

  • Paying People accurately
  • Paying People on time
  • Doing this as effectively (time and cost) as possible

For my blog I wanted to focus on how organisations can meet these key objectives.

Manual Numeracy Should Not Be A Lost Art: Invest In People Not Just Machines

Let’s start with the accuracy. Whilst just about every system automates calculations, a strong payroll team can also do these calculations manually if required. When I learned payroll seventeen years ago, it involved checking HMRC pay tables, running percentage calculations, following processes and instruction sets and having good numeracy etc.

Every system you buy can do the maths, but when you’re up against difficult deadlines and notice something has not been catered for, the ability to calculate tax, NI, absence payments, and salary sacrifice schemes, means you can fall back on the investment you’ve made in human skills.

Good Problem-Solving Skills Are Key To Payroll Management

We’ve all worked in teams where lack of attention to detail has resulted in twice as much work, which impacts people being paid on time. In payroll, attention to detail equates to accuracy and not spending time correcting mistakes or delaying employee pay.

That’s why good problem-solving skills can be just as valuable as numeracy. As we all know, a payslip is the product of all kinds of things – from annual pay reviews, cost of living increases, national minimum wage changes, regional weighting and promotions etc.  Whilst these processes are owned by HR teams, payroll plays an important part in helping to solve issues upstream or downstream.

Growing, Shrinking or Unchanged – How Payroll Must Adapt To Circumstances:

No organisation is permanently static, and a payroll organisation may have different demands and priorities at different times. Adapting your priorities and time will help ensure payroll remains cost effective–  particularly against a back drop of changing legislation, acquisition, cut backs etc. I’ve outlined three common scenarios below.

  1. For growing organisations, payroll leaders must understand how changes in Terms & Conditions impact the pressure on their service levels so they can respond accordingly. Payroll must understand the variety and complexity of what growth means to pay. Organic or acquisitive growth triggers changes, which often makes things more complicated in the short term with tasks taking longer. By harmonising payroll and HR, organisations can keep track of what’s changing and minimise mistakes and assumptions.
  1. For shrinking organisations, payroll managers must look for opportunities to simplify and streamline their service delivery to drive down cost. For example, look for the opportunities around process improvements, such as setting tighter deadlines and areas to add value. Whilst it’s important to keep enough head space to respond to new legislation and changes, there are often obvious areas of efficiency that are overlooked as they’ve been the norm for different circumstances.
  1. For organisations going through a static period, even with an accurate payroll, mangers must not fall into the common complacency trap, but rather refine what they are doing to either reduce timescales, reduce costs or both. It is vital to monitor peak and quiet times across the week and the year, and then look for the best time for internal work to be done. By proactively planning projects around workloads, organisations can ensure you maintain workload balance.

Payroll is undoubtedly a cost centre, but a high value and important one that requires proactive attention and planning. As digital transformation continues to make significant changes across the HR suite, it’s easy to assume that payroll will just get swept along with the changes – which isn’t the case, because often organisations are reluctant to focus attention and effort on changing a business function that is deemed to be “good enough”.

The buzz words in HR tend to be the likes of goal and objective setting, succession planning and so on. Payroll can be left behind if it is deemed to be working fine. The biggest risk is that unless an organization considers the points I have made above; investing in both people and processes, it will only ever just be “good enough” and never outstanding.

The recent innovations in Payroll technology may seem daunting for organisations to deploy. If you’d like to find practical tips and advice on how best to manage such changes, click here.

Mark Mackenzie is a Solution Architect and Senior Payroll Consultant for Gavdi Group.

He has been working for Gavdi for almost six years and in SAP HCM Payroll and SuccessFactors for seventeen years on projects for small private sector organisations with fewer than 1000 employees to large multinational organisations and public sector organisations with up to 300,000 employees, in retail, services and manufacturing.

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