The Quest for the Perfect Paycheck

by | Dec 19, 2011

What is important to your employees? Medical benefits? Definitely. Competitive wages? Absolutely. Being treated with respect? No doubt. But, one thing is always at the top of the list… getting their pay correct. Not just some of the time, but ALL of the time.   Having an imperfect paycheck can cause frustration, distrust and wasted time, all at a significant cost to the company. This is the one topic that is universally important to every level of the company. 

When we think of producing the perfect paycheck, we know it is important to the employee.  But, what many don’t realize is an imperfect paycheck has a negative impact on the rest of the organization.  Let’s look at what happens when an employee receives an imperfect paycheck:

  • Employee receives their paycheck and determines there is something wrong, immediately frustrated and upset that their pay is wrong.  
  • The employee will notify their supervisor or manager, who then must take time out of their day to research why the paycheck is wrong.
  • The supervisor will call Payroll. Payroll will look up their records in the payroll system and compare to what hours came into that system. This can be from either their Workforce Management System or whatever method is being used to populate the hours in payroll.   
  • If after researching it is determined there was an error, an edit is made to the hours and the employee and/or manager is notified. 
  • At this point, most payroll departments will advise the employee that they will receive the adjusted pay on their next check to avoid cutting a manual check. The employee will then, depending on the amount, complain and request a manual check. 
  • If it is agreed that a manual check will be cut, then the additional cost of processing that check in incurred which ultimately hits the finance department. 

We have now involved several different areas and individuals in the organization, all at a cost in time and materials. The average cost of processing one manual check is $17 not including cost of resources to research and resolve the issue, or the intangible cost of a disgruntled employee.  I worked with a company who admitted their employees expected their pay would consistently be incorrect and not surprisingly, their employee turnover was significant. 

So, how do you produce the perfect paycheck? The simple answer is to take any manual intervention in processing the payroll out of the equation. But, for many organizations that can be a difficult process especially if they are not using an automated solution for processing employee time. Even for those who have automated solutions, they may not be using the system in such a way to eliminate edits. If time is entered or modified by a person, there is the potential for a misinterpretation of a rule or the inconsistent application of a pay practice. In addition, there is always a possibility of a miss-key of the numbers.  All leading to that imperfect paycheck. 

An automated Workforce Management solution, such as Kronos, Workbrain or Workforce Software takes the guesswork out of the equation. These systems apply rules for overtime, paid time-off, flex time and other pay polices in a consistent manner which alleviates someone thinking about how to apply a rule. The key to the success of these systems is the initial interpretation and configuration within the system. If the requirements aren’t clear and then aren’t configured correctly, then the imperfect paycheck is created. 

For those that are currently using a WFM system and still not seeing perfect paychecks, there are several ways of determining the cause:

  • Run an audit report to see how many edits are done AFTER the payroll is processed. If there are significant amounts of edits, then the business process may an issue. Are the managers really reviewing the time before approving? Is the PTO (paid time off) time being entered prior to the pay period close?
  • Perform an analysis to see if the imperfect paychecks are due to calculations. It might be time to review the configuration to ensure accuracy.
  • Talk to your managers and get the perspective. My experience is that they are more than happy to share their experiences and even more pleased that you asked.

An imperfect paycheck impacts all levels of the organization from employee satisfaction, to a hard dollar cost. However, the perfect paycheck is achievable with the right focus and the right resources. Your employees deserve that, and so does your bottom line.

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