Work!

As you might be able to tell, I have not been able to spend as much time writing my blog this year.

I never really wanted to write anything about my work for various reasons. One is that it’s work and it’s not me personally. I don’t want to define myself by my job title or employer. I’m not impressed with job titles, who you work for, or the important people you meet and I’m certainly not impressed by your wealth or pay.

In my experience, some jobs which seem fancy, often have just as much dull and boring things as apparently dull and boring jobs. And jobs which appear dull and boring can be really interesting if you become invested in your subject (apologies to dad for thinking that working on Concorde and at Hinkley Point nuclear power station was boring).

I’ve learnt to my cost that it’s actually much better and easier to appreciate and enjoy what you do than not. No matter what it is that you do. No, I didn’t dream of my current job as a kid, but then again, I don’t know what I did dream of. So it’s a moot point.

Anyway, all of that was just a long winded excuse for saying that this week I am

releasing something work related. Mainly because I have written 4 scripts for video presentations for work and I haven’t had time to write anything else on top.

I have been surprised at the time this has taken. Not so much in writing them, but editing this script alone has been a far more time consuming task than my normal writing would take, with me spending bits of time on it daily all this week. I have been using the 'Read Aloud' function in Word for the first time to help review the document, hence why 'A' is written 'Ae' so is says 'Aaay' rather than 'Aah'!

So here is script 1. I don’t expect you to enjoy it as it’s work. One day there may be a video on YouTube based on this and perhaps I will come back and put the link in just in case you wanted to read AND watch….

Explaining Payroll

Speaking from the perspective of someone who works closely with payroll teams, I am always left with the impression that people on the outside, really don’t understand what the payroll team does.

Payroll often seems undervalued, like it’s a low-level admin or data input task. In the old days, payroll people would have stuffed cash in envelopes every week, a job which looks repetitive and easy. In todays world, I often hear people say; “payroll… they just press a button, isn’t that right?” as if pressing a button is all that’s involved.

So to address this misconception, I am going to explain what a payroll team does, and some of its challenges.

Ae Gives Money To B

At its highest level, payroll is this: Ae gives B money, via the payroll function.

This highlights the importance of payroll.

B has spent all month doing important work for Ae. Doing jobs for Ae, making money for Ae, and making the whole purpose of Aes existence real, working for its customers and other stakeholders.

Legally, all Ae has to do in return, is meet its contractual obligations, by giving B their money. If it fails to do this, Ae has failed in its most fundamental contractual promise towards B.

This is a significant failure. It doesn’t matter what else you may do well as an organisation, if you cannot pay your people accurately and on time, you’re failing.

This is one reason why you cannot afford to undervalue what the payroll team does.

And while we can boil what payroll does down to this simple statement, of Ae gives B money, what it actually does to achieve this is far from straight forward.

So let’s turn to what payroll actually does, and some of its key challenges.

Deadlines

One of the main features of payroll life, is the calendar. Pay day is normally monthly, and there is no flexibility on that.

In other business functions, you can schedule a meeting, and then postpone that meeting a month, if something else more important arises. In payroll, everything you need to pay someone accurately this month, is important, and it all has to be dealt with. The deadline moves for no one.

The payroll deadlines don’t care about your personal holiday plans or religious holidays. Pay day is in the calendar, and that dictates your schedule.

Calculations

Aside from the calendar, payroll do calculations, and calculations present a myriad of challenges.

For example, HR have agreed an annual salary, of 28,000, so monthly salary should be a simple calculation. You divide 28,000 by 12.

Every month, the employee gets 2,333.33. This totals 27,999.96 by the end of the year. Have you met your contractual obligation to your employee, or have you underpaid them?

Should we pay 2,333.34 a month instead, and overpay them by 8 pence in the year? Or perhaps we should just pay that for the last 4 months of the year? And if you do this, how do you tell computer software to do this?

Even this most simple calculation gives us 3 different options, which require a policy decision, and which then needs to be implemented in practice. It’s your payroll team that grapples with these difficulties.

Data and Checking

Data comes into the payroll team from various sources.

That could be from employees and line managers, as overtime from departments. Or maybe employees decide to start and stop benefits or union deductions.

Perhaps there are pay changes from HR. Maybe cost centre changes from finance. Or external changes from tax departments and other government or legal authorities.

Each month this is an unpredictable volume of changes that payroll have to get into the system.

In a perfect world, the data is supplied on time, in an agreed format, which can go easily into the system. Changes are approved or checked, and the process is slick and industrialised so that it doesn’t matter if it’s 1 person changing something, or 10,000 changes, it can be easily processed by payroll.

But the perfect world does not exist for payroll, with reality more often being, information dumped on the team and them being expected to just deal with it.

Payslips and Accounting

Once calculations are done, and data is changed, payroll can press their button.

The results of this are that the months payroll should be posted into the GL. Then various internal and external reporting tasks can be performed. Plus, at this stage, a payslip can be prepared.

These are two key tasks of the payroll team.

Compliance with 3rd Party Obligations

Payroll have various legal obligations to comply with on a monthly basis, some from Government, some from other bodies such as pension scheme providers.

The payroll team have many legal requirements to follow. For example, In the UK it is illegal to take money away from an employee without their permission or the legal right to do so.

Also, the payroll manager is responsible for paying over certain deductions to Courts. If they fail, they can be summons to Court, held in contempt, and put in prison.

The risk of prison isn’t unique to payroll jobs, other jobs within business share this risk, but still, for such a lowly and unloved internal function, it’s worth noting the burden it carries.

Payments

Maybe the easiest thing done each month by payroll is getting Net Pay into every employees bank account on pay day.

As long as this is done, employees aren’t concerned with any of the challenges faced by this function. Payroll is hidden and unseen, and the efforts put into getting pay correct goes unnoticed.

Organisational Change

And finally. despite all thats going on and it having to be done every month without fail, organisations typically think about introducing new payments, new absence payments, changes to policy, paying bonuses, pay rises, changing other terms and conditions.

So if payroll ever thought it could settle into a steady state, it’s mistaken, as it’s faced with a constantly changing situation that also has to be managed.

In Conclusion

This is a quick run through of some of the common challenges any payroll team face each month. How would I sum this up in a 20 second sound bite or a Twitter friendly 200 characters? Like this:

“Payroll is a critical function responsible for paying people accurately and on time, meeting all connected legal obligations and accounting for the costs, so that it can be analysed and reported on.”

And I would follow this up with… “so unless everyone is happy working for free, value and support your payroll team. “ If they fail as a team, you fail as an organisation.

Hopefully this has helped shed some light on the challenges your payroll team face on a monthly basis, and the valuable work they do.