How payroll errors can damage trust and a brand’s reputation

A glance at any recent news around payroll and the business world will show you how problematic and damaging errors with this process can be for companies. With this we’re of course referring to the story of ASDA knowingly pushing ahead with an incomplete move to a new system which then led to nearly 10,000 workers being incorrectly paid. Moreover, these issues weren’t resolved until weeks after this occurred.

All of this made national news and it’s fair to say that it hasn’t painted ASDA in a positive light, but it all could have been avoided. So with this, we’ve had a closer look at what common payroll errors can involve, some more examples of how and why this can damage a business, but more importantly how you can look to prevent them.

Common payroll errors

Below are some examples of the payroll errors that can happen, typically when payroll is managed manually:

• Miscalculating pay – which can involve over or underpaying people and even missing payments altogether.
• Incorrectly classifying employees – and potentially again under or overpaying or getting rates wrong.
• Not paying overtime.
• Not reporting on all areas – including earnings such as bonuses, private healthcare and rewards.
• Not being compliant.

Examples of how this can damage your business

Naturally, the severity of the damage your business suffers from payroll errors depends on how serious they are, but ultimately even one discrepancy can be bad for your reputation, your processes and your staff. Here are some specific examples of what can happen:

• Negative impact on your brand

As the ASDA article shows, word can get out that your business is one that doesn’t have a solid grasp of its finances. In the eyes of potential customers this won’t be a good look.

• Time lost resolving the issues

You’ll also have to put more time and effort into sorting out the problems caused by these errors, often at further cost.

• Distress caused to staff

If staff aren’t getting paid it can be problematic for them, some may even struggle financially if they’re underpaid.

• Reduced efficiency, productivity and profitability

A combination of the above factors could then impact on the running of your wider operations and ultimately cause a drop in the quality of the services your business provides.

• Poor client retention

Financial mismanagement can be a red flag for some clients and there’s a chance you may lose them as a client.

• Loss of talent

You also risk staff leaving if they’re not getting paid. At the same time you’re unlikely to attract the top talent to your business if it has payroll issues.

How you can avoid these errors

Fortunately there are ways and means of avoiding such issues with your business. A simple approach is to move away from manual processes and instead look to using payroll software to automate your setup. This can help avoid basic errors and in some cases even make your overall payroll process easier and more productive.

If you want to keep your existing team, then you should look to audit your payroll on a regular basis to monitor performance, review your company data and to ensure it’s in line with any regulatory changes or requirements.

The above may also require additional training for your payroll staff, but in the long run this can be worth it to avoid costly issues. You may also wish to hire someone more experienced who can bring their trusted expertise into your business. You can then lean on these employees to give regular feedback and keep you up-to-date with any developments.