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Why it’s important to pay people correctly

Upload Date: December 7, 2017

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Video Duration: 6:47

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Dr Greg Timbrell is a Senior Lecturer at the Queensland University of Technology, with a special interest in Information Systems. He sat down with the Tanda team to talk about importance of paying people correctly.

Transcript

The sorts of area that I look at are many and varied. I did an accounting degree a long time ago and later built on an IT career with a PHD in Financial Systems. I have about 20-25 years in Financial Systems before that and looking at things like payroll.

The thing about payroll is it happens every week. People get into a habit of doing it and they don’t wanna change their habits. And in fact, it might be for some people a threat. But there’s a whole, there’s a big change even within the internal bookkeeping industry. Bookkeepers they have to be more professional and they charging considerably more these days, anywhere between $50 – $70 an hour. So local bookkeepers do it internally. I think they’ve been doing a great job all these years.

But for company owners then they’ve got to consider, is this still a good idea because this becomes one of those issues that keeps people from going and away on holidays, essentially. A lot of the, one of the great complaints of the bookkeeping industry is I’ve always got to pay the people and they know they have all usually, have a great responsibility about this, to make sure that the pays goes through. Because they understand the social justice issues involved in ensuring that people will get paid when they’re supposed to get paid. In a lot of cases people are living week to week. So they need their pay coming in on time in an accurate way to maintain their position in the society.

Health payroll is a pretty good example. I mean, there were people, where essentially car payments weren’t being made. Health insurance payments weren’t being made. There was all sorts of issues with that. And that’s a very public example. There were people getting overpaid, there were people getting underpaid. There’s all sorts of complex reasons about why that. And there are people not getting paid at all. Payroll is something that you just can’t go we’ll make it more efficient. And we’ll do something like a health payroll, won’t test it, we’ll have all these other issues. The effect , the social effects are critical. When people don’t get paid, people go without.

Parallel runs is probably the most common and to ensure that, and this is something that health didn’t do. By doing a parallel run two or three times, you can really check it. There are always, in any financial system, there are always going to be some percentage of issues. But when the percentage of issues is you know, 1% and you’ve got 300 people, you can manage three people. But when there’s a 5% and you got 200,000 people. Then you can’t manually manage 20,000 issues. You just, you have to hire a whole batch of people to do this, and this of course sends costs skyrocketing. In fact, most of the billion dollars that they spent on health payroll issues are have been hiring people in to do manual pays. If you’ve got a payroll provider who’s got a track record of that sort of change management, they’re very aware of what they’re in the business. They’re not just coming in and doing a system overhaul or system change as a one off thing. But they’re actually in the business. So, doing payroll from week to week, then you’ve got to establish the trust. And the provider’s got to establish the trust with the customer. And they do that by showing that we can run your payroll, we can run our payroll that looks exactly the same. So when it does that, when you’re happy to change over, we’ll be happy to change over as well.

All employers should really value their employees and you know, it’s their responsibility to pay them well, and its employee’s responsibility to provide the service and value that they need to provide to make the company successful and meet the company objectives. The difference between a part from the fact that there are so many parties and transactions in a payroll that you won’t find in any other financial transactions. You’ve got all of those, you’ve got your family, Tax, you’ve got the HECS, and social security and all family law and all these types of things. All these parties’ transactions. So there’s many many people that would get affected when things don’t go right and probably affected in a bad way, an adverse way.

So it’s important, always important to get it right, that’s something that I learnt. But if you don’t get it right then your attack on the brand becomes terrible. So you’ll find that well, you’ll find that when a company doesn’t do it right or if they do an individual implementation of a payroll and this tends to happens in larger companies rather than smaller companies. If that doesn’t happen then it reflects both on a company that’s being affected, and also the company that’s the provider or potentially the consultant. So we just had an issue with the census, and that’s reflected both on the provider of the census, and also the provider of the services to the census people. So brand protection is important. Now when 7-11 had their issues obviously, 7-11 brand took a beating. And they’re recovering from that, from what I can tell. But it’s also of course, you can be litigated if you don’t pay people correctly. You can be subject to litigation.

But overall people have got to be good corporate citizens. To be a good corporate citizen, you really need to ensure that you provide good quality of service. It’s okay to make a profit in business, but you’ve also got to take care of your people. Because for most companies, the people are the most important assets that they’ve got and people aren’t really assets. People are people.