12 Best Practices to Totally Transform Your Payroll World

My recent articles have aroused passionate discussion and poignant feedback from the payroll industry globally. Overwhelmingly people claimed that payroll as a function is held in low esteem and many who perform the often-thankless task, are not deemed professionals by those that employ and manage them.

Crystal balls and magic payroll buttons aside, the question left at the end of the day is “How do we turn the tide?” Well here’s how! If we utilise all of our previously unobserved knowledge to deliver first-rate value add products, services and insights for employees, business managers and other stakeholders, there will be a paradigm shift. Guaranteed! People will begin to acknowledge the complexity of payroll and come to value the true worth of our knowledge.

Mahatma Ghandi said “Be the change you want to see in the world.”. So let’s do it payroll professionals! Let’s be, and lead the change!

Reading the Linkedin and other feedback from the “magic payroll button” article left me saddened more often than not. There are people who have committed to getting the job done through hell and high water for as much as 40 years and still feel that no-one truly understands the effort or personal commitment it takes to get the job done. We endure late nights, miss out on our family and postpone life. Many of us are refused leave at Christmas time and work public holidays year in and year out.

At the other end of the spectrum, there seems to be an abundance of those same payrollers with an absolute sense of humour and the ability to brush off the negative, step up and say “OK! What’s next?”

So here it is! Here’s the “What Next”. Over the coming 12 weeks, starting on Monday, I’m delivering a payroll innovation per week for you to implement. To some of us, these are hardly innovative, but every time I’ve stepped into an organisation, many of these are usually the first steps I take to quickly turnaround the perception of the service. They are easy wins. Take 12 weeks or 12 months to implement these ideas, it’s your call, but you will begin to live in a new world when you start to move down this path.

The 12 payroll innovations were selected to not only highlight your expertise to all “customers” of the payroll service, but also as they are key areas for time and cost efficiency gains and they will see you on your way to delivering service excellence. Any decent benchmarking program will focus on these areas as measurables. Here’s the list of the 12 innovations that are coming (and not necessarily in the same order):

1- Creating a knowledge base (for employees, managers, administrators and your payroll team)
2- Give your employees a “pay rise” by implementing programs with tax advantages
3- Becoming a vital information resource for Business Units and Finance
4- Creating a seamless New Employee Process for the whole organisation
5- Identifying and eliminating pain points for your team and customers
6- Creating valuable services and staff benefits via your third party creditors
7- Implementing error rates analysis to reap the rewards of superior service and cost and time efficiencies
8- Automation 101 – The Essentials of Automating Payroll Processes
9- Utilising Your HRIS or Payroll System for all its worth
10- Extracting the absolute maximum out of a limited training budget
11- Creating functional masterpieces with excel
12- Restructuring your payroll processes to create efficiency gains and service specialisations

While you await the first article, I will intoduce you to author Ron Kaufman and his book “Up Your Service!”. It’s an absolutely brilliant game changer! I came across this book years ago and now it’s a well worn management tool. Do yourself a favour and sign up for the Up Your Service! Insights newsletter at http://www.RonKaufman.com At the very least.

Ron explains the term “perception points” and how to radically shift other peoples’ perception of us by spending some quality time analysing our perception points. He does this in the easiest to read, bite sized and palpable chunks. If you are not converted by page 5, I’ll be surprised. In a rather large nutshell, the book tells us, if we didn’t realise already, that we have to accept some of the responsibility for how we are perceived. Absolutely every tiny detail we present to the world matters!

Step one in changing others perception of ourselves, is to look within and to examine what we are projecting. With the Up Your Service! book in hand, you will be keen to scrutinise yourself carefully, your team and your physical surroundings. You will understand the absolute importance of ensuring total professionalism in the end product of your services and begin to look at everything from the perspective of your customers service experiences and their five senses.

The whole concept of Ron Kaufmans “perception points” is that every time someone experiences a sight, smell, taste, sound or a feeling they are perceiving and your job is to ensure the perception you aspire to.

To begin the process, stop being the payroll manager for a moment, put your customer hat on and start observing your service. Stand at the entry door to your pay office and be your customer. What do you see? What do you hear? What do you feel? Is your office or workspace organised? Are your people welcoming? What do people get to physically see and touch from you? Does it make you proud? Cringe? Or just acknlowledge that it could be a little better?

Are your emails professional? Do you have forms that look like they’ve been photocopied a trillion times over the last 20 years? Are there archive boxes, filing and enough piles of paper around your office to give your Safety Representative a heart attack? Does everything you present say we are professionals and we are proud of our work?

Listen to the phone calls and empathise with the person on the other end of the phone. Attempt to understand if there is a deeper layer of concern to the questions being asked or objections being put forward. Are you and your team providing superior service or are you simply telling customers to buzz off in the nicest possible way? How do you show them that you actually exist to serve them?

To stand up and be noticed, we need to be someone of worth, or do something of worth. It’s time to change the course of history and start putting payroll on the corporate agenda… but it’s up to us to work on changing our world from the inside before we can start expecting the slightest change of mindset by a majority of those on the outside.

Join us on the journey by following this blog (top left of this page) or joining The Professional Payroll Manager group on Linkedin and each Monday your next step will be in your Inbox. I would love to have actual conversations along the way about your successes, your issues and any ideas and questions you want to share.

I am also trying to purchase bulk copies of Ron Kaufmans books, so if you would like to purchase through me via paypal, message me at any of my social media contacts and I’ll keep you posted when I’ve received a definitive reply.

(C) 2012, Louise Vidler

Follow on Twitter @louisevidler
Join the discussion via Linkedin group: The Professional Payroll Manager

How The Magic Payroll Button Really Works

It’s time for a little trumpet blowing and foot stomping by payroll professionals.  Alarmingly, there are still so many managers and business leaders who think we have a magic payroll button that takes little to no skill to press. For some, the belief is that anyone with half an ounce upstairs could run a payroll! When something goes wrong, the question is raised “Why is it so hard!?”.

Sadly, it’s often the managers of the payroll team with this flawed perception.  They might serve their team and themselves well to spend a little time getting a new perspective on what I honestly and unbiasly believe is one of the most committed work groups in a company.  What other department stays as long as it takes through hell and high water to process an EFT file, again and again, without thanks.

Lets take a look at the diversity of knowledge a payroller is actually required to have… and how we get that seemingly magic button to work…

Service Excellence

We are expected to be consummate customer service representatives, with superior conflict management skills; responding to technical questions on the spot; remaining calm in the face of irate employees, who sometimes hit you with a tirade of swearing. We must be mind readers; hide our anger as we are treated as lower class citizens by people who think that God created us unequal; hide our laughter at the ridiculous requests; and empathise with the employee who needs their money yesterday because they can’t feed their kids or put petrol in the car to get to work.  We solve problems day in and out and its’ when we can’t, or don’t, that others in the organisation begin to hear about it.

Business Relationships

Payrollers liaise with employees, managers, the finance team, the human resources team, solicitors, workers compensation insurers, auditors, the Child Support Agency, medical funds, unions, employer associations, banks and finance companies, social security, superannuation funds and the taxation office.  These people and organisations make demands upon us and expect the same service excellence that our employees expect from us.  It doesn’t matter if we have a Service Level Agreement stating when we will respond to requests, because most of these relationships are bound by law and so are the timeframes in which we have to jump.

Time Constraints

Payrollers actually performing the payroll process are under constant stress during the time between the receipt of the input data, to the time the funds are transferred to the bank.  If we are lucky enough to have all the data provided correctly and on time, its a fairly calm payroll day, but that is not a standard practice in the world of payroll.  There’s usually a pretty tight timeframe, a whole list of queries awaiting resolution by people who won’t return phone calls and emails. Achieving a zero error rate demands a great deal of validation and questions.

Policies & Procedures

Apart from having to know the company policies & procedures intimately, there is usually a fair amount of time spent by pro-active Payroll Managers referencing policies or documenting and updating payroll procedures as innovations are implemented and best practices are discovered.

Employee/Industrial Relations

We have to be constantly mindful of the consequences of our actions on employee relations and foresee human resource management issues that may emerge, or are already in effect. Every interaction with an employee and every payslip is a potential ER/IR disaster if not managed well.  This is a top of mind issue for all payrollers.

Accounting Principles

In order for payrollers to competently process payrolls, we must understand accounting principles to effect many of the transactions we do in our standard day.  Debits and Credits run deep in the simplest of payroll general ledgers, multiplied by the complexity of organisations with numerous companies and differing cost account structures.

Advanced MS Excel

Ask any Payroll Manager what their major reporting tool is and the answer will invariably be MS Excel, so add advanced Excel to the list of tricks a professional payroller has.

IT Systems Administration

Unless you have dedicated reources for your payroll, HRIS or time & attendance system, many payrollers are tasked with this function.   Report writing in some payroll systems is an acquired skill from years of practice and often the only avenue for extracting decent data from the payroll system.

Project Management

At any time, there will be multiple payroll projects in the pipeline.  System upgrades, new EBAs, legislative changes to address and more.  Payroll Managers and their staff are juggling diverse management needs, moving target dates, sometimes a lack of resourcing, shifting management priorities and insufficient hours in the day to keep their projects from falling over.

Legislative & Industrial Framework

We are expected to have in-depth working knowledge of the endless legislation that affects the organisation: Fair Work Act and its’ predecessors, Workers Compensation by state, OH&S, Payroll Slips Regulations, Annual Leave, Long Service Leave and Public Holidays by state, Superannuation Guarantee Acts … phew!

There are those of us to have to be more than familiar with Sarbanes Oxley, Immigration Act, Australian and International Standards and the legislation surrounding corporate governance. Added to this is each of the Industrial Instruments an organisation works under. We must know how the binding legislation or award modernisation system works in with these awards and which bits count these days and which bits don’t.

Complex Taxation System

An absolute imperative is intimate knowledge of taxation for every possible payment type paid under every fathomable scenario. Payrollers contend with legislation, calculation and queries on income tax, fringe benefits tax, medicare, student loans schemes, GST, payroll tax by state…another phew! …and that’s not all of it.  If the business employs expats or has overseas operations then international tax issues become prevalent.

Remuneration & Benefits

Payrollers worth their salt understand Salary Packaging and its complexities. We have to, to apply it correctly in the system, tax it correctly and ensure the benefits are applied correctly.

Global Best Practice

It is expected that effective validations have been performed to minimise or eliminate errors.  It is imperative the payroll is delivered on time.  It is expected that it is 100% accurate. It must be time and cost efficient. Process and metrics must compare to global best practices.

HR/Payroll Analysis

On top of ensuring the company and statutory reporting is delivered on time, there”s those constant ‘little’ urgent queries. The ‘little’ queries that require considerable time investigating or pulling information to answer the original, simple question.  Then there’s the analysis, budgetting, forecasting, scenarios, cost impacts, etc that come with frequency, but never enough warning.

All of the functions and requirements listed above are only a part of the skill based that Payrollers must have to be successful in their roles.  Understanding a day in the life of a payroller may go a little way to explaining the personality of some of us as well.  Payroll people are renowned for being…let’s say frank… and that’s partly because a decent majority of us haven’t got time for flowery and fluffy. There’s so much work to get through and often we simply want the facts, the required outcome and a timeframe.  To achieve 100% accuracy, a service excellence rating to die for and a reputation to be proud of takes a wealth of knowledge, committed effort, resilience, many tears and mastering the art of juggling tasks and priorities.

In all of this, the only buttons that I’ve ever witnessed possessing some kind of magical powers are the shutdown button on my computer, the light switch button and the elevator down button at the end of a tragic payroll day.

If you have any questions you would like to raise personally, please email Louise Vidler at The Professional Payroll Manager.

© 2012 Louise Vidler T/As The Professional Payroll Manager.  All rights reserved.

All materials contained on this web site not otherwise subject to copyright of other parties are subject to the ownership rights of Louise Vidler T/As The Professional Payroll Manager. Louise Vidler T/As The Professional Payroll Manager authorises you to make a single copy of the content herein for your own personal, non-commercial, use while visiting the site. You agree that any copy made must include the Louise Vidler T/As The Professional Payroll Manager copyright notice in full. No other permission is granted to you to print, copy, reproduce, distribute, transmit, upload, download, store, display in public, alter, or modify the content contained on this web site.

Why HR and Finance Must Both Hold Payrolls’ Hand

One ongoing political battle in many organisations is who the Payroll Service should report to. Finance wins over mostly because of the sheer expense that is payroll. Then there are those organisations that see the payment of their most valued assets as an integral function of the Human Resources team, so the Payroll Service sits under HRs’ wing. Politicking aside, if organisational leaders actually sat down and measured the pros and cons on either side, it would be evident that the Payroll Service must have a solid working relationship and open communication lines with both the HR and Finance teams.

An important consideration in the #HR-v-#Finance pull of the #Payroll Service is to attempt to understand the mentality of both players, in the most general sense. Pull out your organisations’ HR and Finance mission statements and try to find commonality between them… I dare you!

Human Resources people are typically “people people” whose purpose in life is to implement strategies and programs to recruit and retain proficient, nurtured, engaged and empowered employees and to keep them safe and well in the process. In HR, grey lines exist at every turn: special circumstances and impacts of decisions with on flow effects to other employment relation issues and/or future strategies. HR people regularly have to consider the bigger picture, often for what are seemingly the minutest of details to outsiders.

Finance people are typically “numbers people” who usually perform comfortably within the predetermined and unwavering confines of accountings’ legislated rules, local and international standards, authority levels and organisational policies. They are comfortable with black and white. Being very generalistic, the purpose of Finance is to compliantly account for and report on all financial transactions within the designated timeframes.

Picture putting your HR and Finance people in a room and performing a group personality test. The room would separate into three distinct groups. In one corner are the “creatives” and “counselors”, most of which happen to work in HR, and in the other corner are the majority of the Finance team who are the “methodicals”. Polar opposites in the personality spectrums.

Left standing in the middle of the room are the in-betweeners: a mix of bewildered people who may be wondering if they have chosen the right career path, and conversely, those people whose personality types allow them to move comfortably amongst the HR and Finance personalities. (Just a note… seriously consider the latter for Payroll Management positions.)

Back in the organisation, sitting in the middle of the HR and Finance personalities is your Payroll Team, a complex mix of all the personality types. Every sizeable payroll team seems to have at least one member who cannot function outside the documented rules, without exception and at least one who spends all their time bending over backwards to ensure the staff are kept happy, possibly at the expense of some of the rules.

One of the hardest tasks for Payroll Managers is to have their team provide outstanding service within the confines of such a regulated employment, taxation and accounting environment and in the timeframes established in the majority of industrial agreements. The primary objective of a payroll service is to consistently deliver fully compliant, on time, best practice, and cost and time efficient payroll processes at a minimal cost per employee, with a zero error rate and zero impact on employee relations. To achieve this in unison with the grey areas of HR, and the black white of Finance, is a constant struggle.

While it is important to understand the differences in personality and objective between Finance and HR, Payroll does not get to sit in the middle as an innocent pawn. Payroll Managers need to understand (and teach their team to understand) HR strategy and to know the impact of their service to employee relations, with the same veracity a Payroll manager will have their team understand the legislative, accounting and compliance issues.

While ever the conflicting requirements between HR and Finance continue on either side of the payroll function, this will not be achieved with any consistency. Your HR, Finance and Payroll Management need to come together and devise a workable strategy that keeps everybody working towards their common and individual goals. HR has to come to the party on the black and white deadlines and compliance, while Finance needs to work into to their authorisations and policies some of the grey HR requirements.

Only by understanding the personalities and the objectives of each of the business units and combining these into a workable solution for the benefit of the whole business, can the payroll team then begin to provide a consistently outstanding, service excellence focused and fully compliant payroll service. The absolute one certainty in all of this is that it doesn’t matter who the Payroll Team report to in the organisational chart. It matters that there is a solid working relationship between the HR, Finance and Payroll Teams so the best of both worlds can be achieved.

Food for thought for your organisation? I welcome your feedback!

If you have any questions you would like to raise personally, please email Louise Vidler at The Professional Payroll Manager.

© 2012 Louise Vidler T/As The Professional Payroll Manager.  All rights reserved.

All materials contained on this web site not otherwise subject to copyright of other parties are subject to the ownership rights of Louise Vidler T/As The Professional Payroll Manager. Louise Vidler T/As The Professional Payroll Manager authorises you to make a single copy of the content herein for your own personal, non-commercial, use while visiting the site. You agree that any copy made must include the Louise Vidler T/As The Professional Payroll Manager copyright notice in full. No other permission is granted to you to print, copy, reproduce, distribute, transmit, upload, download, store, display in public, alter, or modify the content contained on this web site.

You Absolutely Must Measure Payroll Error Rates!

“More people would learn from their mistakes if they weren’t so busy denying them.”  J Harold

A critical function of the Professional Payroll Manager is to minimise, if not eliminate, error rates. Payroll errors occur for a myriad of reasons and if you spend your days fire fighting, rather than investigating, you will probably see a compounding increase in the ongoing error rates.

• High error rates are detrimental to a service excellence focussed payroll team for so many reasons:
• It is a reputation destroyer
• Highlights compliance issues and attracts the attention of auditors
• Interferes with industrial/employment relations
• Inhibits efficiencies and blows out costs of payroll production

By implementing an effective measurement system, you can identify the volume of errors and the resultant root causes of each one, in order to execute solid corrective measures to eliminate reoccurrences. The root causes are easily identified and usually fall into one of the following categories:

• Payroll staff require retraining or instruction in a particular area
• Employees, Line Managers or HR staff require learning or instruction
• Effective processes and checklists are not in place
• Incorrect parameters (or a bug) in the payroll system
• Input information is not supplied correctly
• Fraudulent activities may be occurring

When building your error measurement system you need to record and analyse the following data as a minimum:

• The affected employees and the rate of incidence
• Dates of occurrence, identification and resolution
• Who was involved in the end to end process
• Who identified the error and how
• Why it was not identified in the payroll process
• The reason for the error
• The re-occurrence risk
• The corrective action required to eliminate further similar errors

Remind yourself and your team that error reporting is not about counting and allocating mistakes, but is about implementing systems and checkpoints to minimise errors and to improve capabilities, service and efficiencies.

An effective error measurement system makes good business sense, shows your commitment to service excellence and continuous improvement and goes a long way to ensuring compliance and efficiency.

If you have any questions you would like to raise personally, please email Louise Vidler at The Professional Payroll Manager.

© 2012 Louise Vidler T/As The Professional Payroll Manager.  All rights reserved.

All materials contained on this web site not otherwise subject to copyright of other parties are subject to the ownership rights of Louise Vidler T/As The Professional Payroll Manager. Louise Vidler T/As The Professional Payroll Manager authorises you to make a single copy of the content herein for your own personal, non-commercial, use while visiting the site. You agree that any copy made must include the Louise Vidler T/As The Professional Payroll Manager copyright notice in full. No other permission is granted to you to print, copy, reproduce, distribute, transmit, upload, download, store, display in public, alter, or modify the content contained on this web site.

What does Payroll Management really mean?

Whether you manage a payroll of 20 or 20,000 people, the fundamentals remain the same.  Large or small, the payroll function must always include the same integral functions.  There are also certain personal qualities, attributes, skills, experience requirements and abilities that are required of Payroll Managers.

The typical position requirements of a Payroll Manager are to:

• Continually adapt the payroll function to remain legislatively compliant
• Lead, motivate and manage the payroll team
• Develop and implement effective policies, procedures and business systems
• Lay solid audit trails
• Identify and manage risks associated with payroll production
• Identify, report and assist in managing employee relations issues that arise
• Interpret awards and legislation and inform management of changes
• Understand basic accounting and general ledger concepts and complete monthly general ledger reconciliations
• To assist with or manage salary packaging
• Liaise with internal and external customers
• Complete all company and statutory reporting including PAYG, Payroll Tax, FBT, etc
• Manage the organisations’ superannuation funds
• Manage Workers Compensation Claims and associated policy renewals
• Support the senior management team

The typical personal skills and attributes required of a Payroll Manager are:

• Professional in conduct and presentation
• Exceptional communication (written and verbal)
• High attention to detail
• Progressive and dynamic
• Pro-active problem solver
• Change manager
• Proven supervisory experience
• Hands on management
• High exposure to and ability to manipulate relevant payroll system
• Advanced computer skills, usually requiring Excel or Lotus advanced abilities
• Autonomy and initiative
• Tenacity
• Analytical

To successfully manage a payroll function means to achieve and exceed all of the positions requirements of the position utilising all of the skills and attributes listed above (and those of your particular position description).

A good payroll function lays good audit trails, through the use of finely tuned business systems that incorporate processing check points, explicit procedures manuals and organisational policies, which are legislatively compliant.  You will be consistently evaluating and pro-actively moving your payroll function forward towards ‘the ultimate payroll service’.

A professional Payroll Manager consistently identifies risks, reports those risks to management and addresses them within the scope of their role.  Risks in payroll management are ever-present, far-reaching and potentially damaging to cash flow, the share price & public perception, yet can be easily managed.

Properly managed and systemised, each payroll process can result in zero (or close to it) errors and be systemised to ensure it is produced in the most time and cost efficient manner possible.

Senior management will view a professional payroll function with the respect it deserves.  They will seek information from you and value what you provide.  You, as a professional, will have taken the time to understand what management require and how they intend to utilise the information.

The employees of your organisation will feel that they are respected.  They know you will be doing your best to respond to their queries.  They will hear the smile on your voice when they are talking to you and your team.  No matter how inane the enquiry may be, you and your team will treat them with the utmost respect.  Your external customers will be treated with the same respect, urgency and professionalism that you bestow upon your internal customers.

If you have any questions you would like to raise personally, please email Louise Vidler at The Professional Payroll Manager.

© 2012 Louise Vidler T/As The Professional Payroll Manager.  All rights reserved.

All materials contained on this web site not otherwise subject to copyright of other parties are subject to the ownership rights of Louise Vidler T/As The Professional Payroll Manager. Louise Vidler T/As The Professional Payroll Manager authorises you to make a single copy of the content herein for your own personal, non-commercial, use while visiting the site. You agree that any copy made must include the Louise Vidler T/As The Professional Payroll Manager copyright notice in full. No other permission is granted to you to print, copy, reproduce, distribute, transmit, upload, download, store, display in public, alter, or modify the content contained on this web site.