What do payroll, Spiderman, and seven-figure sums have in common?
That may sound like the opener to a bad joke but if you read about the recent Tom Holland-er debacle, you’ll get the reference. The crux of the story, for those who missed it, is that an actor named Tom Hollander (The White Lotus, Pride & Prejudice) found himself in receipt of a seven-figure bonus that was meant for Spiderman actor, Tom Holland.
Needless to say, it’s the stuff that payroll nightmares are made of, so how did this happen?
Both are British actors who made it big in Hollywood. They share a first name and, but for a small suffix, also happen to have the same last name. They also shared the same agent for a time – and it’s these similarities that led to the prolific mix-up.
It’s an amusing story but one that also brings a serious topic to the fore: payroll accuracy. Payroll errors are rare, and they don’t typically (if ever) involve seven-figure sums. That’s not the point, however: any error, small or otherwise, is detrimental to the employee who’s on the receiving end of it, and the payroll team who must manually correct it.
Pay: the baseline for employee satisfaction
Ensuring that employees are paid accurately and on-time represents the baseline for employee satisfaction. Herzberg’s two-factor motivation theory identifies pay as a ‘hygiene’ factor; an extrinsic motivator that needs to be present and correct for employees to be satisfied. Get this wrong in any shape or form, and that satisfaction will be instantly lost. Not only that, payroll mistakes will also de-motivate employees, reducing their productivity and performance.
No margin for payroll error
In the current climate, of course, the stakes are even higher. A quarter of UK adults have less than £100 in savings and many more are living payday to payday. To put this into context, an underpayment of just £20 could be enough to prevent an employee from paying their electricity bill. What may seem like a small deficit can have a hugely disproportionate impact on someone’s life, health, and wellbeing. Research shows that, nationwide, more than half (51%) of employees who have been paid incorrectly experienced stress as a result, and a further 50% said any shortfall in pay would put them in immediate financial difficulty. Those are sobering statistics.
As the cost-of-living crisis continues, payroll managers are acutely aware that there can be no margin for error at all. The goal – impossible as it may seem to achieve – is 100% perfect pay, on-time, every time. And while that’s a very high standard to adhere to, it’s one that the payroll industry must strive for every single month.
Leveraging technology to improve payroll accuracy
So how can payroll and HR teams protect their people and their organisations from costly errors? What’s more, how can they help themselves to ensure the highest possible rates of accuracy?
1. Tech as a preventative measure
Complementing human expertise with purpose-built technology is a key means of reducing payroll mistakes. Integrating payroll technology with data feeds from HR systems, time and attendance, pension platforms, and so on is vital to mitigating human error by reducing – or even eliminating – the need for manual data entry.
The right technology can lend further benefits by reducing payroll queries and administrative burden, enabling payroll teams to spend more time reviewing, challenging, and triple-checking pay runs during what is always an incredibly busy and demanding time.
On the very rare occasion that an error does happen, however, how can payroll professionals increase their ability to spot it in time?
2. Anomaly detection
The human brain simply isn’t designed to spot a rogue decimal point in a sea of data, and this is where anomaly detection can really help. Let’s imagine that an employee’s preview pay report shows a one-off bonus of £50,000. That would certainly warrant a check, but would a busy payroll manager catch this every time? Perhaps not. Modern payroll technology, on the other hand, is purpose-built to identify these anomalies, reduce the element of chance, and flag any discrepancies as part of the payroll cycle.
AI-assisted payroll is set to take anomaly detection even further this year by comparing an employee’s payslips overtime and flagging, for example, when it ‘thinks’ an erroneous zero may have been added or omitted – and much earlier in the cycle. Likewise, AI-powered technology will help to reduce errors by cross-referencing information with known data points such as an employee’s National Insurance number or home address. This is the attention to detail that new technologies can provide, and it’s set to be a game-changer in accuracy terms.
3. Faster payments, more flexibility
The likelihood of a payroll error not being picked up by either technology or human hand in a high performing payroll team is highly unlikely (let’s say 0.1%). If you think of a 1,000-strong workforce, that’s only one employee in every pay run, but for that individual – and for accuracy-obsessed payroll teams – it’s still one too many.
In these instances, faster payments can provide the quickest resolution for both the employee and the payroll department. If the error relates to an underpayment, for example, a supplementary (and instant) transfer can be issued to make up the shortfall, preventing further delay and detriment to the employee.
Faster payments is emerging as the new way to pay employees yet the vast majority of UK employers still rely on BACS, which involves a three-day transfer window, and leaves little room for contingency once that window is closed. Complementing BACS with faster payments for when things do go wrong (or even better, using faster payments exclusively), presents a model that is both more agile and more flexible.
So the moral of the Tom Holland-er story is this: payroll accuracy really matters. Getting it right every time is essential for employee wellbeing, productivity, and performance – and by extension that has a tangible impact on the employer’s bottom line too.
It literally pays to get payroll right.
