Payroll experience does not necessarily equal payroll knowledge

A person can claim to have 20 years’ experience and, of course, it sounds impressive. But is 20 years’ experience the same as one year’s experience, repeated 20 times?

I think there is a vast difference, particularly in the payroll industry. It’s the difference between someone working as a data entry level payroll processor versus a problem-solving, value-adding payroll professional.  The two are completely different roles and provide remarkably different outcomes.

One of the things that we do at Australian Payroll Association is provide a specialist payroll recruitment function without the need to advertise. In doing this, we meet candidates with varied backgrounds and payroll experience. But how can you tell if their payroll experience equals payroll knowledge. In short, you can’t.

You can ask candidates about payroll courses they may have completed or payroll qualifications they have studied. At least with a payroll qualification that has a competency framework you can get some comfort in the capability of the individual.

But as we know, the devil is in the payroll detail. It’s the interpretation, the understanding of employment fundamentals such as how Fair Work and Modern Awards work together, the combination of events and data as well as the employment peculiarities that often trip up even experienced payroll professionals.

Because capability is so hard to measure, we recently developed a payroll knowledge assessment designed to tangibly report on the knowledge levels of payroll professionals. It’s completed online and measures both knowledge and efficiency in relation to five key aspects of payroll.

Our clients tell us these types of assessments are vital to reduce the risk of employing the wrong person in a payroll job, which can be a costly mistake.

One of our clients, Julie, the payroll manager of a large transport company, recently recruited for a payroll role. She was inundated with resumes from people purporting to have many years of payroll experience, often in sole charge positions. She got down to a shortlist of two candidates and decided to assess their payroll knowledge. 

Julie was astonished at the lack of payroll knowledge from both shortlisted candidates. Candidates that on paper looked like they had all the skills, competencies and experience needed to perform the role. They had both interviewed well, but until she formally tested their knowledge she didn’t realise that neither candidate came close to being suitable for her position.

Payroll legislation, regulations and best practice are a moving target and continuous improvement needs to be high on the agenda of every payroll operation.

Formal qualifications, training and regular process and compliance reviews are essential to ensure an efficient and compliant payroll department.

Compliance is obviously critical to any organisation and protects the downside risk in payroll. A non-compliant payroll operation puts your business at risk of fines, under and overpayments and employee morale issues.

Efficiency is related to both being smarter about processes and costs of delivery as well as producing more valuable results and outcomes.

Both compliance and efficiency are important, but it is where they intersect that the payroll magic happens. Only when you have a high level of compliance and a streamlined, low risk, efficient process, can you get the most value from your payroll operation.

The payroll function is always a balancing act between gaining operational efficiency and protecting downside compliance risk. The key is getting the balance right.

Tracy Angwin is the founder and managing director of the Australian Payroll Association.