Payroll managers seeking to resolve problems relevant to payroll processing may achieve success through using root-cause analysis, an investigative strategy that emphasizes gathering and examining data, a payroll educator said May 20.
Gaps between expected and actual performance of payroll personnel, systems, or processes may be reconciled through efficient application of root-cause analysis, said Steve Hodgson, CPP, director of payroll training at the American Payroll Association. A root cause of a problem is a prominent or primary cause of the problem, he said.
“Anything that impacts pay you want to resolve immediately,” Hodgson said at the annual American Payroll Association Congress in Orlando, Fla. “Sometimes there can be a break in the process that does not impact pay, but we don’t want to ignore those issues, as if left unresolved, they could eventually get worse to the point where they impact pay.”
There are five key steps for performing root-cause analysis, Hodgson said. The first step is to define a problem by detailing how undesired actual circumstances are deviant from desired expected circumstances, he said.
Qualitative or quantitative data then should be collected as the second step, and it would be especially valuable to collect data that indicate how long each component of a payroll problem has been in effect, Hodgson said. Payroll managers then should perform the third step, which is to evaluate the collected data to identify possible factors that contributed to the manifestation of the payroll problem, he said.
The fourth root-cause analysis step is to assess the data and contributing factors to identify the root causes of the applicable payroll problem, Hodgson said. After identifying the root causes of the payroll problem, payroll managers, as a fifth step, should recommend to fellow personnel how the problem might be resolved and, after working with fellow personnel to determine which recommendation would be most viable, implement that recommendation, he said.
“We have risks in payroll, but sometimes we’re so busy that we don’t stop to think of what is causing the problem,” Hodgson said. “We should take a step back and think of how we can prevent this from happening in the future.”
There are numerous tools that payroll managers may use as part of root-cause analysis to visually detail the factors that catalyzed a payroll problem, and using these pictorial tools may increase the efficiency by which a root-cause analysis is successfully performed, Hodgson said. Among the tools are flowcharts, which detail processes that are in effect and may help identify redundancies, fault-tree analyses, which detail potential problems that may occur and potential causes of those problems, and Ishikawa diagrams, in which primary and secondary causes of a problem are identified for further examination, he said.
“If you’re using your favorite root-cause analysis tool but it does not help you find the solution to your problem, you might need to use a different tool, or use a combination of tools,” Hodgson said.
For each problem that a payroll manager seeks to resolve, the manager should designate specific problem-solving responsibilities to specific members of the payroll staff, Hodgson said. Maintaining a written log of steps that were used to successfully resolve a payroll problem and providing payroll team members with access to the log may help the team resolve similar problems in the future, he said.
Take a free trial of Bloomberg BNA’s Payroll Decision Support Network, your one-stop resource for reliable, up-to-date guidance and analysis in every area of payroll administration and compliance.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)