FEATURE INSIGHT
It pays to be accurate
Catherine de Salvo, managing director at ScottBradbury Ltd, delves into the cost of human error within payroll, explores why relying on software isn’t always a good idea, and provides an introductory tip or two for overcoming the natural barriers to accuracy. There are a couple of fun accuracy activities, too!
I magine the scene: a group of people from different organisations, brought together to discuss ways of reducing data error. In the group are three or four payroll professionals. If you were one of them, what examples would you have of things that have gone wrong with your payroll? How about, continuing to pay someone long after they’ve left? Starting a new employee on the wrong salary? Paying part-time staff full-time rates? You undoubtedly have your own horror stories of things that have gone wrong, despite your clever payroll software, which promised to eliminate mistakes.
The error cost multiplier Accuracy within payroll is crucial. And the good news is that typically, most competent people have an accuracy rate of around 97% so most of the time everything works fine. But that 3% error rate is a killer in terms of wasted time and damaging repercussions. Making an error in someone’s name or transposing a couple of digits takes a matter of seconds. Finding it again, so you can put it right, can take hours, days or even months, depending on how quickly the error is picked up. ...typically, most competent people have an accuracy rate of around 97%... It’s surprisingly common for people not to spot that their payslip or bank balance isn’t right – even if they’ve been underpaid – until the repercussions start. It’s the ‘error multiplier’ factor which takes a tiny error rate of even under 3% to seriously expensive levels. A single data input error
which takes seconds to make, can waste 20% or more of an employee’s time.
The ripple effect Take a piece of paper and draw concentric circles on it, dividing the inner ring into four sections and the outer ring into eight sections (see Diagram 1). In the centre circle write down a short description of a payroll error you know about. In the first (yellow) ring, identify four different direct consequences of the error you have identified. What happens? Who has to be informed? In the outer (blue) ring, identify a further two repercussions for each direct consequence. How does it get escalated? What are the knock-on effects? It’s easy to see how a single error ‘ripples out’ to demonstrate the multiplier effect. One apparently ‘tiny’ error usually leads to several people and other organisations being involved, disruption to work, significant wasted time and damage to trust and reputation. Causes of mistakes People don’t make mistakes deliberately, so telling them not to doesn’t work. It’s as helpful as telling people not to get a cold. Sound advice, but useless. People work
| Professional in Payroll, Pensions and Reward | September 2019 | Issue 53 40
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