As there are Web-based timekeeping systems, computerized time clocks, outsourced payroll processing, employee self-service, direct deposit, and payroll cards, the payroll department is a great place for installing automation. Don't forget that the finest automation in the world will not keep the payroll staff from working overtime if the underlying processes are laced with errors.
The first step in correcting mistakes is realizing that there is a problem. This, of course, requires a payroll fulfillment measurement system. No single measure can sufficiently reveal all possible problem areas. Think over a selection of measurements from the following list:
1. W-2c forms issued per 1,000 payees. This measurement allows you to know if the underlying mistake was bad enough to restate an employee's reported earnings. It really only tracks mistakes occurring near the end of the calendar year, since earlier mistakes would evidently have already been fixed in time for the regular W-2 form. And this is a problem.
2. Number of manual checks per 1,000 payees. However, this measurement also has some problems. Let's look at proportion of manual checks to payees. If it is high it can simply mean that the company has a loose policy in regard to the issuance of pay advances. In this way we can't say about any transactional problems within the payroll department.
3. Number of W-2 forms retrieved per 1,000 payees. What this one does is tracking how many times someone in the payroll department had to access the corporate copy of someone's W-2 form. Besides, it is of most use in building a case for setting up a Web-based site where employees can access their own W-2 forms.
4. Number of total transaction mistakes per 1,000 payees. The last type concerns to be the classic payroll measurement. This is because it gives a good feel for the total proportion of mistakes to total transactions. Nevertheless, managers typically need to break the underlying mistakes down into categories of mistake types in order to take constructive action.