Happy New Year! Many of us will have had a break over the holiday period - a chance to reflect. This time of year naturally brings a lot of ‘out with the old and in with the new’ and ‘new year, new you’ narratives. But payroll has neither of these luxuries; no rest, no break, no opportunity to reinvent itself. Payroll is always on.
From December, when payroll teams complete a usual month’s work in three weeks due to early pay dates, it is a quick transition into January payroll data and instructions, processing, approvals, funding, payslips, reporting and settlement of liabilities. And February’s data and instructions typically start before January’s post-payroll is closed out. Payroll keeps on running; it keeps on processing, reporting and paying. It has to!
In such a relentless cycle without any downtime, how should payroll teams assess, fix and enhance payroll systems and processes? How can teams develop proper controls for a workaround that popped up in, say, August last year but is now a standard part of the process? Making changes to a live system is not an appealing prospect. Perhaps the only thing more unappealing is the consequence of not tackling old payroll problems!
Every organisation and payroll is different, with different strengths and challenges. Nevertheless, here are some ‘old payroll chestnuts’ to consider.
1. What is not in payroll?
Payroll can only process the information provided by the business. Revenue PAYE audits look at payroll processing for accuracy, but their real focus is on what is not being processed. Employee expenses, contractors, company cars, business visitors—the list goes on. Responsibility for identifying and including this data can’t rest with payroll, but payroll can ask the question and should explicitly call out that their reporting only relates to the information they are given.
2. Unclear roles/responsibilities and lack of expertise, controls and checks
‘Falling between two stools’ is my favourite idiom to characterise the risks of unclear roles and responsibilities. Along with the four friends called somebody, anybody, everybody and nobody!
Clear roles and responsibilities are essential. Otherwise, with the best will in the world, misunderstandings will arise from misinterpretation of data or items and actions missed. Clarity on roles and responsibilities is also necessary for any effective documentation of payroll processes. These are essential hygiene factors for payroll operations.
Shared clarity of roles will also support appropriate resourcing. Where it is known that X is responsible for Y, it is possible to advocate for why X needs experience, training, support and so on. Fit-for-purpose controls and checks similarly flow from, and back into, such a transparent payroll system.
3. Ineffective use of digital data
Time taken for manual data entry or correcting errors arising from manual data entry is a big loss for a team with time-critical deadlines. It takes resources away from value-adding tasks such as checking and reporting. Leveraging technology and the power of payroll data is a huge area of focus for payroll teams. An organisation’s digital agenda must encompass niche development opportunities as well as those with wide application. Payroll team members often have an excellent insight into digital data gaps or duplication, and great ideas about how to address them.
4. Negative employee experience
Employees who have a negative payroll experience will eat up a payroll team’s time, either in responding to queries (or providing relevant information for HR to respond to the query) or making adjustments. In our experience, many employee payroll issues are not within the payroll team’s control. Unless the root causes of employee issues “with payroll” are tackled, goodwill gets depleted in both directions—goodwill towards payroll and payroll’s goodwill to other functions. Does your organisation have an “understand your payslip” reference guide? If your organisation has an unusual compensation and benefits structure, do you run drop-in clinics or information sessions for employees?
The four key actions to take now
Pick the priority that is causing issues for your payroll team or employees (or an opportunity too good to miss!) Build a project team including relevant stakeholders - Finance, Tax, HR, IT, Facilities, team leader/employee representatives and unions (if relevant).
Identify and communicate the anticipated gains and implications of the enhancements, of what good will look like going forward, and what each contributor will be required to do. Projects like this can be a great opportunity to remind colleagues of just how wide the payroll map spreads and how little of it is 100% within the control of the payroll team.
Plan for the additional resources and controls needed to upgrade the payroll engine and keep it running on time. The majority of work will usually be conducted outside the payroll software, but will require staff time and expertise.
Build in go/no-go gates and parameters for those decisions. Agree and document these with all key stakeholders in advance—payroll is too important to be ‘fairly confident it will be okay’.
And then, shout from the rooftops about the success and benefits of the project. You might even have time for a celebratory cup of tea and a belated mince pie before the next project has to be tackled.
We are here to help you
PwC Ireland’s Payroll Solutions team has experience supporting clients with micro to macro payroll problems and opportunities. We utilise the lenses of the Payroll CODE (compliance, operations, digital and employee) to help clients identify priorities and appropriate solutions, including planning, communication, documentation and implementation phases. We also run payrolls ourselves, so we get it!
