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Percentage of payroll errors?

Hello all...

I would just like to get a general census on what would be an "acceptable" error
percentage per payroll.

For instance...I have an employee that consistently makes errors. I never expect a "perfect" payroll there will always be errors mine or his. He process the payroll by himself and there are approximately 600 +/- employees that he has to enter time sheets for (can you tell I want to give him the benefit of the doubt?) The last payroll was not good 602 employees and 22 errors. Initiallty..stunned..unhappy...pissed..etc. THEN I did the percentage and to my calcs (correct me if I am wrong please) but that is only 3.65% of errors.

So this is my question...what is acceptable to you all. obviously depending on payroll size how you enter your payroll etc..

Please help..

Thanks

Theo
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Comments

  • I'm sure that David Warren will come on here and say that zero is the acceptable answer, which is true and with the proper checks & balances that can be the case. However the management in the company has to give the proper tools to be able to do those checks and balances whether that be more man hours or more/newer technology. Beyond that I would always use the 1% range for employees I worked with. If they went above that then it was time to talk to the employee and implement steps to correct the process. That was with a company of about 2000. Of course it would also depend on the type of mistake. I had a manager who never made mistakes until she accidentally paid someone $100,000 commission instead of $10,000.
  • Kbrood wrote:
    I'm sure that David Warren will come on here and say that zero is the acceptable answer, which is true and with the proper checks & balances that can be the case. However the management in the company has to give the proper tools to be able to do those checks and balances whether that be more man hours or more/newer technology. Beyond that I would always use the 1% range for employees I worked with. If they went above that then it was time to talk to the employee and implement steps to correct the process. Of course it would also depend on the type of mistake.

    I agree. If the tools aren't there then 1+% is reasonable.

    Entering 600 time sheets manually seems a little archaic. Of course the amount of time available to him is the big question. Many places have a "handle each piece of paper only once" mentality and will provide an employee only that much time. Does he have time to do checks and balances or is he required to be out the door without OT? What tools are available to him to balance what he's entered? What tools could be available without much investment?

    In my world we have each plant balance their own hours internally, then I balance to their numbers when I import from the timeclock. It doesn't prevent all errors but we typically have about 20 corrections on about 5200 cks in an average month.
  • Agree with the others. I think a 1% error rate is good, 0% is better. But then again I was taught to check, double check and then have a peer check (thanks to the large HR consulting firm that trained me right out of college on processing deductions,loan payments, and distributions for very large 401k plans -- which had to balance to the penny). So now, even though I am the only one in payroll, I have a very low error rate. Because I check, double check and then check in a 3rd and different way. {To go a little crazy, I even get mad at myself when I don't find the error until the 3rd check...really peeves me because it's not as easy to fix then as if I had found it the first or 2nd check!}

    But 600 employees is a lot to manually enter. I would ask if there were a better process/system in place? Does the payroll software allow for any non-manual interfaces? Are there any places where totals could be compared as entered?
  • rrupert wrote:
    Agree with the others. I think a 1% error rate is good, 0% is better. But then again I was taught to check, double check and then have a peer check (thanks to the large HR consulting firm that trained me right out of college on processing deductions,loan payments, and distributions for very large 401k plans -- which had to balance to the penny). So now, even though I am the only one in payroll, I have a very low error rate. Because I check, double check and then check in a 3rd and different way. {To go a little crazy, I even get mad at myself when I don't find the error until the 3rd check...really peeves me because it's not as easy to fix then as if I had found it the first or 2nd check!}

    But 600 employees is a lot to manually enter. I would ask if there were a better process/system in place? Does the payroll software allow for any non-manual interfaces? Are there any places where totals could be compared as entered?

    I agree with you all. I would LOVE a 0% error rate. My employee, and incidentally he enters the payroll completely by himself, Once its all entered he double checks, then when he is done I triple check and that is when I find all the errors. The errors are silly errors for lack of a better word. Transposing numbers, entering hours under vaca when it should be sick or vice versa, canceling auto pay when there is a term etc...silly errors that should be caught on the double check. Did I answer all your questions? We use ADP PayExpert for the software. If there is any advice on how to handle the situation it would be appreciated. He is a great guy and I would hate to cut him off. Especially in these times.

    Thanks for all the advice so far.

    Theo
  • Before we implemented E-time at the city, we had nearly 3 FTEs who did NOTHING but audit, code (with different color ink) and total time sheets for data entry, about 15,000 employees. The forms were 11 X 14. :o :shock: They had been doing it that way since 1970.
  • For a manually entered payroll, I would say 1% would be the high end of being acceptable. Paying a terminated employee or grossly overpaying an employee would be errors that would warrent immediate attention.
  • Any idea why the errors happen and continue? Eyesight? Boredom? Dyslexia? Training? Doesn't give a hoot and figures you will catch them all? Fat Fingers? Figures you don't have enough to do? Sticky Keys on the Keyboard? Is there consistency in the types of errors?

    How are you handling the corrections? Does he make them? (And, obviously, you have to check the corrections). Does he know he is making lots of errors?

    Also, are you sure it is not intentional? Years ago there was a study that showed that if there was an occasional defect, the quality control inspectors stayed alert. If there were never any defects or they were very rare, the quality control inspectors failed to catch them - they stopped paying attention. Perhaps he just wants to make sure you stay awake :roll:
  • pattypa wrote:
    Before we implemented E-time at the city, we had nearly 3 FTEs who did NOTHING but audit, code (with different color ink) and total time sheets for data entry, about 15,000 employees. The forms were 11 X 14. :o :shock: They had been doing it that way since 1970.
    That job sounds so tedious I would expect errors due to boredom!
  • Agreed Pete.
  • This may be a silly question - when you talk about an acceptable percentage of payroll errors.... does that mean before or after the payroll is actually processed?

    We almost always have a zero error processed payroll, but that's because maintenance is entered by one person and audited by another before payroll is submitted. The "auditor" usually catches quite a few errors made by the person entering maintenance.

    My boss tells me that, because payroll is correct in the end, we're good. However, I believe that the person entering maintenance needs to improve their error rate. Thoughts?
  • Kathie wrote:
    This may be a silly question - when you talk about an acceptable percentage of payroll errors.... does that mean before or after the payroll is actually processed?

    We almost always have a zero error processed payroll, but that's because maintenance is entered by one person and audited by another before payroll is submitted. The "auditor" usually catches quite a few errors made by the person entering maintenance.

    My boss tells me that, because payroll is correct in the end, we're good. However, I believe that the person entering maintenance needs to improve their error rate. Thoughts?
    I guess its then a matter of how your payroll process is organized. In your case, I would think the the "raw" product, before the second person looked it it would have an acceptable error rate of 1%. Once the second person looks at it, you could then multiply that 1% by another 1% for an acceptable total, finished product error rate of 0.01% or one error per 10,000 transactions.

    Of course if there is something like sloppy handwritting, or a math mistake ON the initial timesheet that might lead to two people making the same error, you might want to cut them a break.
  • Take a look at the errors - is there some pattern? A slight change in process might eliminate a significant number of them - Or verification method that indicates that an error has occurred - how are you detecting the errors? Can that same process be applied before you get the package to review? Tracking the error rate and the types of errors may be helpful in reducing the error rate. Also focus on the size of the improvements - a reduction from 3.7% to 2.8% is a 25% reduction in the error rate. So if you are looking to approach a 1% error rate (6 out of 600) then there is lots of opportunity to pile on praise for what will look like large improvements - if you go the other way, going from 96.3 % to 97.3% is only a 1% improvement.

    This does not have to be detrimental - treat it as a regular productivity improvement process - not "we have a problem" but "how can we do better" - focus on the time lost - just a few errors increase time on task significantly - for example, just key punch errors in another department increase my reconciliation time for 200 travel advance accounts by one and a half days (or rather, eliminating unnecessary key punching cut the reconciliation time in half - from three days to 1.5 days).
  • I guess its then a matter of how your payroll process is organized. In your case, I would think the the "raw" product, before the second person looked it it would have an acceptable error rate of 1%. Once the second person looks at it, you could then multiply that 1% by another 1% for an acceptable total, finished product error rate of 0.01% or one error per 10,000 transactions.

    Of course if there is something like sloppy handwritting, or a math mistake ON the initial timesheet that might lead to two people making the same error, you might want to cut them a break.

    This is kind of what I was thinking too, thank you. And, no. I don't count a supervisor's sloppy handwriting errors :wink:
    Take a look at the errors - is there some pattern? A slight change in process might eliminate a significant number of them - Or verification method that indicates that an error has occurred - how are you detecting the errors? Can that same process be applied before you get the package to review?

    From what I can tell, some of it is not understanding how the system works or assuming that they they do know (we have additional training happening) - but then other times it's spelling errors, typos, something gets overlooked/forgotten. The auditor looks at every piece of maintenance, and basically audits to make sure it's correctly entered into the system & that fields are not missed. Kind of like entering it all over again. We do have a change report, but I've found that it's not as complete as I'd like it to be (doesn't include new hires for example).
    This does not have to be detrimental - treat it as a regular productivity improvement process - not "we have a problem" but "how can we do better" - focus on the time lost - just a few errors increase time on task significantly

    Agreed. I try to be very careful about the way that I present it.
  • Greetings all,
    Am managing at the moment 1623 workers payroll with microsoft excel, recently my manager identified 10 employees whose payslips had some errors. In being objective, can anyone be kind to offer advice, though am hoping to finding the source to forestall any future occurrence, should this rate of errors be unacceptable as my boss is saying.?

  • rrupertrrupert ✭✭✭

    agree it's not the # of errors but what the "some errors" are for....if it is something simple, no big deal. But if there are incorrect calculations that affect gross/net pay or deduction amounts or taxes, it would be a big deal.

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