By far, the most underrated element of every business has to be managing payroll. I use the term, “underrated,” because I feel like most entrepreneurs, myself included, expect running payroll to be the least of their worries when they are gearing up to go into business for themselves.
Managing Payroll… More than Meets the Eye
It sounds so simple on paper – people work, you add up their hours, multiply said hours by their hourly rate and then write a check. Wash, rinse, repeat. What a gross oversimplification, I’ve come to realize!
How do you classify hours worked?
These are just a few of the countless questions payroll management teams have to juggle. And the bittersweet part about being a successful company is that with growth comes more complexity. Sure, one could say that the law of diminishing returns applies here in that adding one new employee to a team of 10 has a significantly larger impact than adding one to a team of 1000. But keep in mind that every new addition has the potential to become an outlier, and it’s the outliers that make life tough. An outlier in the world of payroll can be anyone from the rogue employee taking advantage of a hole discovered in the system to the go-getter, rockstar employee who suffers an unexpected loss of a loved one, thus impacting their job performance.
Take Care of Your Employees
Over the years, I have come to see payroll as more than just a mundane task that has to be addressed twice a month. It is more than that. It is taking care of employee needs, so they can take care of their respective families. I know you’re probably thinking that I’m making too big of deal about this, as wages are a right and, if you work, you get paid. Plain and simple. Well, just because something is owed to you does not mean everyone is going to follow the rules. It pains me to think it, but I am sure a lot of people can relate to having worked for some bad apples in the past. It still grinds my gears to think about the jerk I used to work for as a generator service technician. Part of his poorly-structured on-boarding program required me to spend an entire weekend shadowing one of the other technicians. When the next payday came, I noticed 
my paycheck was significantly less than what I was expecting. I’m not talking about the boss forgetting to pay me time and a half – he did not pay me anything for those hours I was on the clock. I figured there must be a mistake, so I went into the boss’ office to get it sorted out. Instead of correcting the mistake, he told me, a kid in his early 20’s living paycheck to paycheck, “We all have to sacrifice sometimes.” Needless to say, I did not stay at the job very long. Before I left, my productivity dropped, and so did the productivity of some of the other technicians that caught wind of what the boss did.
It was through that experience that I learned there are few things more important than taking care of the people that are taking care of your business, and it all starts with managing payroll. It’s an essential part of accounting. You should pay your employees a fair and honest wage in a timely fashion and genuinely listen to them when they tell you there is a problem with their pay stub. No payroll system is perfect, and people make mistakes from time to time. Without a dedicated payroll staff in place to resolve these issues, you are almost guaranteed to see employee morale drop, which is generally followed by a drop in profits.
Article written by Vaughn Pourchot
