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Payroll Contingency Planning: the key to surviving a payroll disaster

Posted by: on 23 January 2015 in Human Capital Management, Human Resources, Payroll

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Severe weather, an absent payroll employee or an IT hiccup are all common enough occurrences. All can have a profound impact on your business without warning. Would your company survive? As the financial well-being of your business is reliant on it ‘opening its doors’ it is crucial to have a contingency plan in place. Thankfully, exposing your business to disaster simply because you do not have an adequate contingency plan is something that can easily be avoided.

Contingency plan and mitigating risk

Payroll Contingency planning isn’t just for major disasters; it could be loss of data, legislative changes and day-to-day errors that can occur. It is important to regularly re-examine as your business grows and changes. And be mindful that your plan should be specific to your company’s unique needs.

Paying staff is critical to all business. Failure to do so on time due to an absent payroll employee can not only leave you with an irate employee but ultimately, according to studies, leads to a decrease in business productivity. Take US company Luzerne County’s payroll mistake for example, $2.8 million of wages didn’t get distributed over Thanksgiving, due to one employee being absent. Not only was it a costly mistake for the company that violated federal labour law, employees were hit by bank fees for drawing on insufficient funds – not great.

Technology is also a major factor in the day to day running of business. The larger your business is, the more IT infrastructure you will likely have in place. While the successful running of systems may lie with the IT manager, payroll professionals need to have a contingency plan in place that involves IT disaster recovery too.

  • It is important to recognise where your data is being stored.
  • How secure is your storage facility, what happens in case of fire or flood?
  • Do you have backups?

Issues with your data systems can have disastrous effects on payroll operations. Implementing a contingency plan can help eliminate the possibility of an IT disaster crippling your business.

Outsourcing and contingency planning

To implement a payroll backup plan is inherently complex, coupled with it being imperative to get right, outsourcing to experts can be an option for reducing the burden of contingency planning – allowing you to focus on your core business.  Outsourcing can provide protection against severe weather, an absent payroll employee or even that IT hiccup and to ensure your employees get paid correctly and on time.

In the end, it is important to consider: if a disaster strikes, can your business protect employees and ensure the stability and continuity it requires?

Written by: The Connect@ADP team

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TAGS: contingency disaster Outsourcing Payroll

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