Super Blunder Puts Spotlight On Outsourced Payroll

Four steps for managing payroll failure

Global professional services firm EY (Ernst & Young) is reviewing its payroll obligations after its payroll provider ADP apparently neglected to pay super to hundreds of EY staff. In some cases the payments are 6 months in arrears and EY could be facing fines from the ATO for non-compliance.

The AFR reported the issue on August 15 (paywall) and confirmed that EY had begun transitioning its payroll to ADP in March this year. An EY spokesperson said there were some issues in the transition process but that they have largely been addressed. According to industry analysts IBISWorld, EY has about 5,800 employees in Australia.

While we can only speculate about the issues that led to the super non-payments, it could be an issue with accurate data entry into the new system or the way the payroll was configured, rather than an IT outage that would have affected the entire system.

Four steps for managing payroll failure

Whatever the cause, EY is in damage control, forced to manage the blow to its reputation – this kind of transition is supposed to be its area of expertise – as well as to staff confidence. So what should EY do to manage the super non-payment issue?

1. Fast response

Stop the rumour mill before it reaches hysteria. While the underlying cause may take time to determine, let along fix, stakeholders and staff need to be informed immediately of the issue and be assured no-one will be out of pocket.

2. Clear communications

Establish an update schedule to tell staff clearly and unambiguously what is being done to fix the problem, and who to contact if they think they’ve been affected.

3. Transparency

Even if the issue is rectified quickly, follow up with an explanation of why it happened and what’s being done to prevent a recurrence.

4. Respect

People affected by a service failure are more likely to forgive you if they receive an explanation that is timely, accurate and unambiguous, and feel the ongoing process is both transparent and urgent.

System failures do happen, and people will accept an explanation if they don’t feel like they’re being deceived, or the cause was an act of negligence rather than an understandable hiccup in a complex project.

Changing payroll provider shouldn’t be risky

Yes, payroll migration is a complex process, but no, it doesn’t have to be risky if you’re aware of what is required at each stage in the shift to a new platform to avoid costly and unnecessary mistakes.

  1. Training: Nothing will help you more than your staff with expertise in the new system.
  2. Due diligence: Discover all payroll data and infrastructure, and the security and privacy measures need for each database.
  3. Data format: Double check your data in the correct format for the new system, effort here will save much pain later.
  4. Infrastructure requirements: A new hosting environment will be prepared in the new provider’s data centre or third-party cloud that covers the payroll network, back-up, service continuity and scalability.
  5. Coordination: A team of the provider’s technical staff plus your payroll admin and security experts will arrange the migration process.
  6. Testing: The provider and your IT and payroll staff will be involved in testing the new system before it goes live and the previous system is decommissioned. They may use dummy data until they’re happy with their control of the new system.
  7. Baby-sitting: Once live, the new system is monitored closely, and any questions or concerns are addressed urgently. You can nominate some staff to keep an eye on their payslips for the next few cycles.

Our payroll migration expertise has been fine-tuned over 30 years, and we have seen hundreds of payroll set-ups successfully migrated to our platform. Build your expertise with our collection of useful articles and tips and tricks, or download our whitepaper to find the perfect cloud-based payroll solutions that can save you the kind of time, money and sweat now being expended by EY.