The complexities of rolling out a new payroll system cannot be overstated. In a time when technology is advancing quickly, businesses must prioritise payroll accuracy for the good of their employees, writes Lynne Scarisbrick.
Earlier this year, Asda decided to upgrade its software and roll out a new payroll system. This seems logical, and many businesses are striving to do the same to keep up to date with the latest technology. However, the transition caused a significant crisis, seeing around 10,000 employees receive an incorrect payslip.
The supermarket has reportedly started clawing back overpayments from workers’ wages following months of payroll chaos. This was understandably distressing for employees, particularly those already feeling the pinch due to the cost-of-living crisis. The company is now offering phased repayment plans of up to 12 months.
Reputation at risk
Payroll errors
It is thought that the debacle happened due to the business rushing through the rollout of the new IT system, as part of ‘Project Future’. Implemented with the intention of cutting costs, the plan has come at the expense of employees’ financial stability and wellbeing.
Corporate issues like this can be extremely damaging for a business and its reputation. This can have a knock-on effect on both customer and talent attraction, in addition to the obvious impacts on employee engagement and retention.
As we’ve seen with the ongoing conversation around the Post Office Horizon scandal, mishandled crises can ruin even the most esteemed brand’s reputation.
Despite the aim to cut costs, the unintended financial consequences could be significant.
Implementing new technology with care
It is important to keep technology up to date to optimise efficiency and remain competitive in a crowded market. For larger businesses, the likelihood of being able to bounce back from issues like this is high. However, for smaller businesses, this may not be the case. So, how can we avoid the same pitfalls when embarking on a payroll transformation project?
- Careful planning
This is a major transformation with potentially serious implications for the business and employees: do not try to reduce costs at this crucial stage. Instead, invest in experienced specialists to assist with the project.
Once you have done this, work together to map out your key stakeholders and include everybody who may be involved or affected by the transition. Every department providing or receiving payroll information must be included in the change management process.
It is also important to consider any new processes and integration requirements in the planning stage. Does the payroll need to integrate with your HR, time and attendance or accounts systems? Have a realistic timeline in place with clear deadlines. It is important that the project is not rushed and rolled out before each stage in the process is complete and thoroughly scrutinised.
- Implementation
Conduct thorough testing of any new system before rolling it out. Audit existing information, identify what data needs to be migrated, and consider if a data cleanse is required to ensure accuracy whilst remaining compliant.
Before any agreed ‘go-live’ date, you should perform multiple parallel runs against your legacy system to ensure accurate results, and this will also identify any idiosyncrasies unique to your business model.
It is also crucial to communicate changes to all employees, as they might be able to alert you of anything that doesn’t seem right. You can work with them to build an effective troubleshooting strategy to resolve any issues.
- Training
Roll out an effective training programme across the board for all parties in each stage of the process. This will ensure that they have a clear understanding of your new system and procedures.
Every department providing or receiving payroll information must be included in the change management process.”
Do not forget the employees. Are you moving to a more automated process that involves a new employee self-service facility? Consider what support they may need. Remember, training is an ongoing process, not just a tick-box exercise at the implementation stage.
- Feedback
Perhaps most importantly, once the system has been rolled out, employers should take on board any feedback. Regularly audit your payroll data and look at improving communication practices across the organisation to ensure that any discrepancies can be effectively reported.
What if a mishap does happen?
Ultimately, businesses have a responsibility to ensure payroll is processed accurately and on time. This enhances employees’ trust and morale as well as improving staff retention and productivity. But, as with any new technology, some mishaps may occur. Dealing with mistakes ethically and transparently can be the difference between a scandal or a temporary error.
Should any overpayments occur, it’s important to have an open conversation with affected employees and agree realistic repayment plans to avoid financial hardship, stress and anxiety. For any underpayments, have an agreed and documented process for dealing with these promptly.
Most importantly, listen to your employees. Be compassionate and communicate effectively to resolve any errors. After all, it is the employer’s responsibility to rectify errors that have implications for their workers’ wellbeing.
Transitioning to a new system is a huge, in-depth project that should not be underestimated. While new technology undoubtedly enhances efficiencies and keeps employers competitive, this should never be at the expense of employees. If you are considering upgrading payroll systems, keep in mind the steps outlined above to ensure a smooth transition for all.
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