We’ve previously discussed how to watch out for red flags in your Payroll processes so you can handle issues before they arise. But what do you need to do when you actually notice these issues?
The best thing to remember when you notice an issue is to be proactive – even if you come across a potential issue that’s not causing problems at the time, it’s better to handle it early than to wait until things go downhill.
Below is the sort of red flags you might notice which you should act upon.
If your payroll is inconsistent…
Of course, you can’t react to this red flag if you’re not measuring the length of time it takes you to complete a standard pay run window in the first place. It’s not enough just to determine whether you paid your employees on time.
Any process, Payroll included, takes a certain amount of time to run. This duration is not exactly the same every time the process runs – there is a mean duration and an expected variance of time needed to complete the process. What tends to happen is that the process deteriorates over time and so the mean duration starts to get longer and longer, whilst still not falling outside of the expected maximum. If you’re only looking out for the process duration to breach the maximum threshold, you can miss out on the fact that it’s gradually trending away from its mean.
Don’t just wait until you have a threshold trigger. Look for a departure from the standard and act early so that you can deal with the issue before it becomes a bigger problem. You can also track every aspect of the Payroll execution process separately because it may be that most of the process is under control except for a single factor, like timesheets. You’ll then know where to focus your efforts to increase your consistency and remove room for error.
Thresholds are good but tracking trends is better. It’s not about exceeding a certain threshold but rather that you’re slowly getting worse over time or that there may be huge variability. Consistency equals control, so variability from week to week can be another sign that something’s not quite right.
If you’re using too many manual processes…
To continue the conversation about inconsistency, manual processes are often the reason for variable and inconsistent payrolls in the first place. On top of that, anything that is manual comes with the added risk of human error. Any change intended to be made by a human may simply be overlooked or just not done correctly.
There is also another problem. If someone changes roles or moves on, the person who takes over from them won’t usually execute those manual processes in the same way. Clear and concise documentation can help with this.
That’s why, aside from documentation, your better option is to do what you can to cut down on the number of manual processes. The more you can automate, the more efficient your Payroll process will be and will have less room for error.
If you can’t point to progress…
The goal here isn’t just to fix the problem, although that’s a great starting point. What’s even better is to empower your team to fix their own problems. Build a culture where people feel responsible for their roles and their function at the company. That way, you’ll start to see ongoing improvements, instead of just waiting for things to break.
Note that in this context, “things breaking” doesn’t have to be something as immediately obvious as a rocket exploding. Instead, it can be that your system has made the damaging error of underpaying people silently.
Getting Some Help
The challenge of spotting and reacting to these red flags is that most organisations don’t have the staff or the in-house expertise to tackle them effectively. This is why specialist companies exist.
Even if you have someone in-house who’s going to lead these changes, they’ll benefit from mentorship from someone who is trained and experienced in the area, and who does nothing but that special task each and every day. It’s counterproductive to just throw someone into the deep end and expect them to get on with it.
It’s much more effective to bring people in from outside the company – and that’s where we can help.
Businesses can email email@example.com or call 1300 287 213 for free first-step advice on how to ensure your payroll processes can safeguard your payroll compliance. Follow us on Linkedin or sign up here to receive our articles direct to your email inbox.