HR FOCUS: Have Paycheck Errors Sent Your Staff Packing?

With the U.S. unemployment rate at 3.6 percent, it’s becoming harder to find and keep good employees. So you certainly don’t want a preventable administrative error to prompt valued and well-trained staff members to leave. But that’s just what can happen when you make payroll mistakes.

When staff paychecks come later than anticipated or are not in the correct amount, it affects productivity, attendance and morale. Worse yet, surveys find that nearly a quarter of employees begin searching for a new job after just one payroll mistake. Nearly half of employees say they start job hunting after two errors.

Percentages suggest that members of your current staff may have joined your restaurant after dealing with paycheck problems with a previous employer. An estimated 82 million Americans – more than half the U.S. workforce – have experienced a problem with their paycheck during their career.

Most entrepreneurs don’t start a business because they love doing payroll. Nonetheless, a survey conducted by the National Small Business Association (NSBA) found that almost a quarter of small business owners spend six hours or more a month on payroll. Many will never know they have made a payroll mistake until they get in trouble with the IRS… or until an employee walks out the door.

Roughly 40 percent of small businesses incur an average of $845 a year in IRS penalties as a result of mismanaged payroll processes. But that might not even be the biggest toll on your business.

Payroll is one of the most critical touch points between an employer and an employee. Payroll mistakes erode trust and the employment relationship.

Many employees live paycheck to paycheck, and payroll mistakes can ruin their credit score, cause them to fall behind on a car payment, or result in an eviction.

To avoid payroll mistakes, consider joining the 45 percent of small businesses that today use payroll services. Even if you have only a few employees, outsourcing payroll can more than pay for itself by saving you one fine or penalty for a missed payment, or a valued employee from leaving.

In today’s strong job market, you can’t afford to lose your best staff members to payroll errors. The hours, days and weeks you spend looking for suitable replacements is time and money that could be better spent growing your business.