TECHNOLOGY
Payroll maturity: how does your organisation measure up?
Nick Clarke, director, product management, Zellis, provides a quick guide to what payroll maturity looks like at three key levels
I t goes without saying that a healthy payroll department is fundamental to helping the wider organisation meet its business objectives and enable positive employee outcomes. However, many different factors determine the success of a payroll function, including process accuracy and efficiency, team roles and responsibilities, compliance and risk management, employee experience, and reporting and analytics. In other words, how well each of these elements work, both alone and in combination with others, is a measure of their maturity and the maturity of the wider payroll function. The three key levels are explained below. Level 1: Lowmaturity Immature payroll processes generally lead to high error rates, elevated costs, greater risk, and low rates of employee satisfaction. This scenario tends to come about as a result of how teams are structured – since they are often small, everyone is expected to pitch in together, resulting in a lack of clearly defined roles and responsibilities and little-to-no segregation of duties. By the same token, critical processes and key person dependencies are not usually documented, even though payroll runs tend to rely on the expertise of a small number of people with very specific knowledge. This means that should they leave, a significant business continuity risk opens up.
All too often, however, team knowledge does not stretch to the specifics of legislation and regulatory requirements. ...Immature payroll processes generally lead to high error rates, elevated costs, greater risk, and low rates of employee satisfaction. This means the business can end up facing unknown compliance risks, which includes having processes and systems that fail to support their needs. Reporting activities are likewise basic, poor quality, ad hoc and offer little strategic value due to the use of disparate systems for storing data, and even manual spreadsheets. Unsurprisingly, a common by-product of this lack of maturity is significant and frequent payroll errors, which have a noticeable impact on employee satisfaction and take large amounts of time and money to rectify. The situation is also not helped by the more than likely absence of employee self-service applications, including access
to payslips and frequently asked questions, despite there being high numbers of error- related queries and complaints. As a result, employees have limited, or no, means of finding out key information for themselves, which increases the burden on payroll and human resources (HR) teams who are forced to spend time responding. Unfortunately, this scenario ends up generating a vicious circle of inefficiency. Level 2: Mediummaturity Once the payroll function hits medium levels of maturity, it finds itself able to react more effectively to key issues as they become apparent, although challenges remain in certain areas. For example, while payroll errors still arise, the rate at which they appear has become more manageable due to the introduction of better software and some automated processes. The downside is that such errors are costly, still represent a compliance risk, and there is only a limited understanding of why they are occurring. Challenges contributing to this situation include inadequate payroll processes and structures. For instance, while the team may now have more awareness of compliance risk and can handle certain aspects effectively, other issues remain unidentified and unmanaged. Moreover, more clarity on staff roles and responsibilities may exist, but it is still limited and certainly does not cover cross-functional relationships. Processes,
| Professional in Payroll, Pensions and Reward | July / August 2021 | Issue 72 38
Made with FlippingBook - Online magazine maker