How to get your payroll processes documented

by | Apr 20, 2023 | Audit, Risk & Compliance, Executives

This article is part 3 of our Payroll Governance Essential series. We’ll go more in depth about documenting your payroll processes. We also have a free downloadable PDF that covers the 8 essential items of payroll governance.

Our last article focused on the importance of a transparent and communicated work schedule containing critical recurring events and activities in payroll. The next step is adding the “How to do it instructions” to these events.

Call them SOP’s, work instructions, process documentation or checklists – these artefacts play a key part in payroll governance. Documented processes lower payroll risk by reducing key person dependency, building organisational knowledge and reducing errors and missed checks.

But it’s not always easy to get your processes documented.

Handling objections to payroll process documentation

Let’s face it, a lot of payroll operations are terrible at documenting processes. High (and low!) turnover, payroll in crisis and under resourcing can all lead to inadequate processes in payroll.

So let’s look at a few common objections:

“It’s under control, I know what I’m doing”
Often said by the person who has been in the same position for 5+ years. The danger here is lack of transparency (audit) and key person dependency. What happens if that person leaves?
A well run payroll department can’t be an excuse for not being transparent about how things work.

“Documenting my job/knowledge will make me redundant”
Knowledge sharing is essential in any well run, sustainable function. That includes payroll.

Atlassian not only have great tools like Confluence for knowledge sharing but also provide thought leadership on the topic.

This quote from Atlassian summarises it well:

“Employees often perceive information as currency. People become concerned with being the one person that knows the most or who is the most relied upon, so they end up hoarding information at the expense of their team’s overall success.

But when your team freely shares advice and lessons learned, that barrier gets knocked down, and you foster a culture that emphasizes collaboration rather than competition.”

“I don’t have time to improve/create processes”
Setting aside time to document processes is a guaranteed way it won’t get done. No one has time (or the motivation) to write doco in a busy payroll department.

The better way is to build out process doco over time, spending a couple of minutes improving the process as you’re doing it. This works well for recurring processes, aiming to improve the process document incrementally each time it occurs.

“It’s too complex/We can’t capture everything”
I think this is where a lot of people get stuck, they figure it’s impossible to accurately reflect the complete process with all the edge cases so why even bother. Getting that last 20% of the process documented can be tricky – processes are living documents and change over time.

So my advice is to avoid perfectionism and aim to get close enough to capturing the main checks/actions of a process. If you can get 80% coverage of your process documentation, you are getting HEAPS of benefit compared to not having anything.

Create a culture of knowledge sharing

As with most things in business, it’s not about the technology it’s about the people. To create a calm, capable and sustainable payroll function you need to have good people with the right attitude.

Promoting knowledge sharing and continuous improvement is a great way to create a culture for having key processes documented and encourage people not to be information hoarders.

Rotating staff roles and responsibilities also shines a light on how repeatable processes are and whether they can be followed.

Using the right tools

This can make or break your efforts in capturing processes. Get out of the early 2000’s and use modern tools that can: be accessed via a web browser; searchable; linked to; shared; commented on; version history and have multiple editors at once.

Some tools that I’ve found handy:

  • Confluence by Atlassian – great for process documentation and knowledge management
  • Slack/MS Teams – use for team comms and reducing amount of internal emails
  • Paytools – Dedicated payroll operations software to centralise and manage work schedules, issues/risk registers and checklist templates.

In the end it takes a positive team attitude and the right tooling to increase team knowledge with documented and living processes. This goes a long way to reducing the inherent risks in a mission critical and detail oriented function like payroll.


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