top of page

3 Red Flags that could indicate you have a Payroll Problem

When we think about space missions, we tend to think of rockets taking off from launch pads. We rarely think about the testing and fail-safes that go into giving the mission the highest possible chance of success.

Even after the rocket has been designed, built, and taken to the launch site, there’s still a lot to do. They start at T-24hrs and run through checklist after checklist, looking at everything twice via two different checks from two different people.

They do this because the result of a failure is so catastrophic for rockets. However, there’s a lot that we can learn from that practice that would be beneficial for the safety of our businesses.

When a rocket fails, it tends to blow up and its payload suffers the same fate. Payroll doesn’t usually do that; in fact, it can be completed with the incorrect results and there’s a good chance that no one will even notice. In some ways, it would be good if the error did cause some dramatic reaction because at least then it would set off some alarm bells.

The problem with Payroll is that it usually fails silently. There are occasional exceptions to the rule – for example, if the whole system crashes or falls victim to a ransomware attack – as with the recent UKG issue at the end of 2021.

Even then, sometimes the most damaging kind of failure that you can have in any system (and not just Payroll) is a silent failure, where it doesn’t complete correctly but looks, to all intents and purposes, as if it did. It’s a ticking time bomb and when it eventually goes off it might be much worse than had it exploded at the very start.

So, what can you watch for to catch these issues early? If you know what you’re looking out for, these issues can be resolved before they lead to catastrophic failure – and that will save you a lot of money.

Three Red Flags

1. Inconsistent Payrolls

The first red flag that indicates that something’s wrong is when payroll takes too long, or you have inconsistent pay runs. If your Payroll team consistently takes two days to finish a pay run window and then suddenly it takes three days, this is a clear red flag that something may be wrong. It could indicate operational problems such as timesheets being filled out with the wrong data or manual workarounds being performed incorrectly. It certainly suggests that there’s some issue throughout the whole end-to-end process and not just the execution of the pay run.

2. Too Many Manual Processes

Knowing whether you have too many manual processes begins with knowing exactly what it is that you do. If your payroll team is having to follow a bunch of different manual processes every time you run payroll, it’s going to delay execution and increase the potential for mistakes. One or two manual processes are normal and acceptable. However, if your payroll team is performing 25% of the processes manually, that is an indication that there’s a high chance that something could go wrong.

It can help to bring in someone independent to help you to identify this because the people who are doing the work tend to not even think about those manual processes. They won’t recognise them as being extraordinary because they are so used to them.

3. Unable to Point to Progress

If you can’t look at your payroll process and identify something significant that you’ve adjusted and improved over the past 2 months, that can indicate that you have a problem. It shows that you’re not looking critically at what you’re doing and constantly making improvements to ensure that Payroll is as efficient and accurate as possible.

Payroll is like a living organism that changes all the time.

Therefore, your Payroll team need to be making changes to stay up to date with changes in legislation, systems and business processes. In fact, it’s a good idea to set an expectation for your Payroll employees to report a significant improvement that they’ve made every couple of months.

Having processes in place to monitor for these red flags can prevent the silent failure which can be so dangerous within the Payroll function. It can give you and your team the time to make corrections before errors spiral too far and enable you to prevent these errors from happening again in the future.

Businesses can email or call 1300 287 213 for free first-step advice on how to ensure your payroll processes can safeguard your payroll compliance. Follow us on Linkedin or sign up here to receive our articles direct to your email inbox.


bottom of page