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.
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