Seven ways new payroll systems can fail – and how to make sure you get it right

If not properly managed, failed payroll projects can end up in the press and cause significant brand damage.

In my experience, there are seven main reasons why payroll projects fail. Let’s take a look at them, and look at how to get it right.

1. Poorly defined requirements

This is the most common mistake that organisations make when implementing a payroll system.  Often an organisation only realises their requirements are poorly articulated during an implementation. At this point it’s often too late to do anything about it. You need to be very specific with your functional requirements and go to as much trouble as necessary to ensure there are no assumptions on either party’s behalf.

Related to having poorly defined requirements is not matching these to the actual functionality of the software. It is really easy to make decisions based on the sizzle, not the sausage.

2. No payroll operational experts involved

This is normally only an issue with very large, typically government style implementation, when departments other than payroll have the final say on what and how to implement.

The reality is that if you aren’t involved in payroll, you are unlikely to have a good enough understanding of the process to implement a system. So you should always ensure you have payroll professionals on your evaluation and implementation teams.

3. Under-resourced project

This one seems a no brainer, but it’s incredible how often payroll implementation projects are under resourced. My preference is to see senior payroll professionals implement a payroll project and have their payroll processing backfilled by temporary workers.

4. Lack of project control

The project manager is a critical part of any payroll implementation project no matter what size of organisation you are working with.

One of the biggest mistakes in this area is the implementation team on the client side thinking that the vendor owns the project plan. This is not the case. The client owns the project plan and as such needs to take the lead in managing it. Obviously you will be working very closely with your vendor, but don’t forget, it’s your project!

5. Lack of focus on outputs

So often I see organisations that implement payroll systems and only when it is close to running live do they start to give some thought as to the outputs they require.

Outputs should be documented as part of the project plan. If other departments need reports or you need interfaces to other business systems, make sure you identify these requirements up front and integrate them into the project plan and budget.

6. Lack of buy-in from users

Unfortunately this happens more frequently than you might realise. You need to ensure that all users, which can include line managers or members of your HR or finance teams, understand the reasons why you are changing systems and what that means for them.

They need to understand the effort and input that might be required from them as well as the improvement that will result from a new system.

Trying to fight this at implementation stage generally has a pretty dreadful outcome for all.

7. No consideration for process change

Finally, you have to keep your employees in mind. Often we see all the features of a new system from a payroll perspective, but don’t consider what has to happen at the coal face for these benefits to come to life.

Sometimes it is a completely new way for employees to enter attendance data, or apply for leave, or receive their payslips. Make sure you have considered these issues and ensure there are no barriers to implementing the changes.

I encourage you to look at different ways to address communication around process change.  Video training is especially good for a distributed employee environment as it’s cheap to produce as well as ensuring the same message for all.

If you have any questions on payroll projects and how to address these issues, please let me know at tracy@austpayroll.com.au