Payroll processing often depends on the institutional memory of one key person.  What happens if that person is not available to direct the payroll process due to illness, paid time off, or retirement?  Let’s look at best practices for ensuring that the critical functions of the payroll coordinator are transferable. 

What does the Payroll Manager do? 

The first step in documenting the functions of the Payroll Manager is to understand what they are.  Payroll managers are typically responsible for several key areas: 

1. Understanding and managing the payroll system. Organizations large and small rely on software systems to process payroll. The payroll manager is responsible for understanding how to use the system; how to maintain and keep the system up-to-date and how to explain the system to others.  If there is a payroll staff, they will be supervising others in various tasks as well.
2. Monitoring legislation and regulation. Payroll is a system fraught with opportunities to be out of compliance.  The Payroll manager needs to understand what specific rules and regulations apply to the company from employment taxes to wage and hour rules. State, Federal and even local entities now often have jurisdiction over some part to the payroll process. The Payroll Manager must be the clearinghouse for understanding the impact and communicating it to senior management.
3. Communicating the payroll perspective to the rest of the organization. The Payroll Manager is typically the first person that employees go to with pay check-related questions.  Payroll Managers are often looked to by employees for advice on taxes and other pay matters.  If there are company rules around overtime or deadlines, it often falls on the Payroll Manager to explain to employees the impact on their checks. 

How Can You Build a Succession Plan for Payroll? 

Once organizations realize how much they rely on the Payroll Manager and their expertise, there are concrete steps to take to prepare for change.

1. Document the payroll process. Companies should develop clear documentation in writing for the entire payroll process from beginning to end.  Often companies can start with the payroll system training guides and help text, but the unique steps the company takes must be identified.  Once the procedural manual (be it on paper or in digital form) is complete, the next step is to take someone with no payroll experience and ask them to use the procedure manual to process the payroll.  If there is any ambiguity, the team needs to go back and clarify the steps until satisfied that “anyone could run the payroll”. 
2. Cross Training. Companies should identify individuals in other departments who could be cross-trained.  If payroll is the responsibility of HR, then perhaps someone from Finance could be cross trained. A factor to consider when selecting employees to be cross-trained is the sensitive information in payroll.  Good candidates for cross training are individuals that already have been exposed to – and understand the importance of – maintaining confidential information.   A key to successful cross-training is to be sure that the individual gets regular practice to keep their skills sharp.  Cross training needs to be taken seriously and practiced often.
   
3. Mentorship and Succession. In addition to cross training, companies should work to identify candidates for advancement into the Payroll Manager’s job.  Like any succession plan, employee skills need to be analyzed and training gaps identified.  Work temperament is important, as is an appreciation for the importance payroll holds for employees.  By identifying and actively mentoring a successor, the Payroll Manager provides the company with an ideal candidate for succeeding them.  Participating in mentoring is also one of the primary drivers of employee engagement and loyalty to the company. Meaning it is an ideal way to keep the most productive employees in the organization. 

This Summer, Net at Work is hosting User Group meetings for our Employer Solutions clients. Come join us in one of the three locations, meet other users and hear the latest in HR and Payroll news from experts. Learn more about talent acquisition and on-boarding tools and meet and discuss your needs with experts from our software publishers.

• July 19th |  Boston MA
• August 23rd  | Tampa FL
• September 12th  | Atlanta GA

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