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How to plug the leaks in your payroll

When you’re responsible for managing payroll, you want to get the best return on your staffing dollar. And that means being on top of each point in your payroll system, so you can find and fix leaks: places you’re losing money. It may be a slow leak: losing a fraction of your total staffing budget each staff member, each pay cycle. But that can really add up across the year.
When your payroll system is optimised, you’ll often find efficiencies your competitors won’t even think of. Here are our top four ways to get your payroll watertight:

1. Capture exact working times

Are you paying staff for hours they’re not actually working? Many of your staff won’t see anything wrong with fudging their times by a few minutes: writing that they left at 5:30 when actually they left at 5:27. After all, it’s only three minutes.

However, when you multiply that three minutes across your total staff, and across a whole year, it can add up to several FTE’s worth of time. That’s money you’re paying staff for no return.
The best solution: automate time capture. Use a device such as a fingerprint scanner or pin code clock, or input attendance directly into a timesheet. That way, there’s no room for human error — or fudging the numbers.

2. Check your labour forecasts

When you set out a staffing budget each month, is it easy for you to check what you actually spent, week by week? Or are you left with a huge variation at the end of financial year that you have to explain?

Capturing the discrepancy is only the first step. What’s really going to help you optimise your payroll is being able to explain the discrepancy. Exceeding the wages budget might be a good thing: let’s say you had a late rush of customers, and several staff stayed back later to process the sales. The extra wages was money well spent.

What’s important here is that you’re checking the forecasts in real-time. That way, you have the information on hand to do that analysis of the reasons for variation.

3. Spot ‘slow’ sites

Can you measure efficiency across individual sites, or zero in on particular sections? Without this information — when you only have aggregate data — you’ll often have a levelling effect. Data from high performing teams and low-performing teams cancel each other out. You lose meaningful data on wages to sales ratios. You lose opportunities to reward high performance or manage the underperformers.

What you need is flexible reporting: a dashboard that lets you interrogate the data in different directions, depending on what area you want to explore.

4. Audit leave

There are two ways leave makes payroll leak. Most HR systems will track excess leave balance: a debt owed by a company to an individual. But what only a handful of systems will do is reconcile leave with attendance data. Have your employees taken time off, but done so via an approved leave request? They’re double-dipping: getting to claim the same time off twice.

So check that your HR system ticks both leave boxes.

What you can do?

Make a 15 minute appointment with yourself to review your payroll system against these four criteria. And if you know another payroll manager whose payroll system might be springing a leak, please share this article with them.