Providing more professional payroll 

Issues around payroll have unfortunately become commonplace in recent years. So how can businesses take steps to avoid issues of their own in this sensitive area?

HRD spoke to Kim Boyd of Frontier Software to find out more

“Communication is key – employees need to be aware that the issue is being taken seriously and that there won’t be recurrences of the same issue further down the line”
Kim Boyd, Frontier Software

IN THE LAST few years, headlines around the country have been dominated by payroll scandals. Multiple major organisations have been uncovered for underpaying their employees, failing to comply with industry awards or otherwise acting in a manner that could be perceived as exploitative. It’s a high-profile issue that never fails to attract public attention and almost inevitably does PR damage to the company in question. So how can it be avoided?

According to Kim Boyd, national sales and marketing manager at Frontier Software, getting payroll right is a multifaceted process. There’s no single silver bullet, and the process requires the cooperation of multiple departments. Getting it right should be the default mode. On the other hand, getting it wrong will cause major issues.

Technology, Boyd explains, is one of the most powerful tools companies have to prevent payroll issues. Processes can be automated, data can be effectively tracked, and the need to look through files manually or jump between multiple systems in order to find critical information is eliminated. But, she cautions, it’s a tool that’s only as effective as the person using it and the processes that have been developed around it. Thus, payroll remains, fundamentally, a people issue.

“Really, you want to make sure you’re bringing high-quality payroll staff into your office,” Boyd says. “If you’re doing that, you’re setting yourself up to be more effective and spot potential issues before they arise".

Once they’ve got the right people on board, businesses must also be committed to investing in training. This aids in keeping employees up to speed with current internal systems and processes, as well as on top of changing legislation, awards and other relevant compliance factors. To ensure these processes take place, businesses must also ensure that they’re providing payroll with a seat at the leadership table, Boyd says.

“When you look at a lot of the high- profile payroll cases, it’s clear that they’re being reactive, as opposed to having taken proactive measures earlier,” she says. “How many of them had an environment where payroll was able to effectively engage with senior management?”

Businesses need to have checks and balances in place, Boyd adds. Management responsibility and accountability for issues needs to be clearly outlined so that potential issues can be addressed as early as possible. In some cases, it may be worthwhile to outsource payroll to a third party if internal payroll has previously proven problematic.

“Regular internal and external audits should be held to keep your business honest,” Boyd says. “Additionally, situations like a systems upgrade should be a cause for a ‘health check’ – it’s as good a time as any   to assess whether there might be any payroll issues.”

What if the worst happens?
While prevention is better than a cure, it’s still important to have a contingency plan in the event that something does go wrong. Waiting until after the fact to mitigate the issue is a key mistake many businesses make and is a substantial part of the reason that businesses find themselves floundering under scrutiny.

“An error occurring shouldn’t derail the whole business,” Boyd says. “Communication is key – employees need to be aware that the issue is being taken seriously and that there won’t be recurrences of the same issue further down the line.”

Boyd suggests holding meetings, preferably in a group environment that addresses all the relevant employees – depending on the nature of the error, it might affect the whole company or simply be confined to specific teams. Senior internal staff should generally handle this process to help reinstate confidence among staff and provide affirmation that this is a problem the company views as a significant issue.

Additionally, Boyd believes that solutions should rarely be proposed in a binary manner to affected staff, as there will rarely be a ‘one size fits all’ resolution.
“Employees need to feel that they can talk back and be part of the conversation,” Boyd says. “After all, it’s their livelihood which has been affected by the error – so it’s understandable that they will want their voices heard.”

Going public
It’s obviously preferable if a payroll situation can be dealt with quietly and in-house, but it’s possible that it will end up in the public eye. Boyd notes that this can be a fraught time for businesses, particularly those that aren’t used to having a public profile beyond their industry. Payroll issues, perhaps more so than others, can serve as a flashpoint for underlying issues in the company’s culture.

“Issues with payroll can really bring wider company problems to the fore-front,” Boyd says. “Being paid properly is – very understandably – a hot-button issue for employees, and it can provide a convenient catalyst for disgruntled employees to take their concerns to the wider public.”

While the initial focus might be on the payment error, media coverage can escalate to discussion around issues that are only tangentially related. Accordingly, Boyd says, businesses “need to be on the front foot”.

“Part of that is keeping communication channels open,” she says. “Staff should be hearing about new developments directly from management, not from the media outlets.”

Getting into finger-pointing and scapegoating in the media will cause issues internally, while also presenting a negative image of the wider company culture to the world both of which can have serious long-term implications. Nor does it reflect well on the role that HR plays within a company, Boyd says. While the distinction between HR and payroll can be quite significant in some companies, it’s likely that they’re closely associated by both employees and the general public.

“It’s an issue that affects employees, so it’s not surprising that HR might find themselves at the forefront of PR,” Boyd explains. “But if you don’t feel as though your company is equipped to handle this aspect directly, make sure you bring in the professionals. Engaging with a PR agency can help ensure that information is being communicated effectively and honestly.”

“Being paid properly is – very understandably a hot-button issue for employees, and it can provide a convenient catalyst for disgruntled employees to take their concerns to the wider public” Kim Boyd, Frontier Software

Looking at the big picture
Perhaps most importantly, Boyd stresses that HR must make employees continue to feel good about being present in the workplace. While anger and frustration in the short term are understandable, employee retention is also crucial.

“I think one of the most important takeaways is that there’s no one specific person who’s at fault,” Boyd says. “What’s most important is resolving the issues as quickly as possible with employees, while also making them feel positive about staying with the company for the long haul.”

Boyd believes payroll issues could become more prevalent in the near future. Legislative changes in Australia mean that numerous organisations that haven’t previously had to deal with awards will now need to do so – and could potentially find themselves in hot water if they don’t get up to speed.

“It’s going to be a big challenge for a lot of businesses,” Boyd says. “But the press around the issue is likely to serve as a bit of a wake-up call for companies who haven’t taken it as seriously as they should. We see our role as helping facilitate better processes for the future.”

Originally published on HRD Magazine in March 2020