Some media outlets described the outages as a ‘digital pandemic’, as the outage grounded flights and disrupted services across banks, hospitals, payment systems and emergency services.
While initial headlines focused on inconveniences like delayed train journeys and disrupted shopping experiences, the impact rippled far deeper, affecting critical business functions like payroll processing. Payroll teams, as well as the supply chain and stakeholders involved, had to mobilise, react quickly, and try to find solutions to a system outage.
Read more: Half of employees have missed a bill payment due to inaccurate payroll
During the outage, organisations that operate on different payroll cycles, particularly those that issue weekly payments, faced delays in distributing salaries as they could not access their systems. Any processes requiring the transfer of time and attendance data for accurate payroll calculations were disrupted if they were dependent on specific timing.
Additionally, even when internal payroll processes were completed without issue, banking system delays could have still caused employee payments to arrive late. The breakdown also affected third-party payroll providers, hindering their capabilities to process payments on behalf of client organisations. Ultimately, every link in the payroll supply chain experienced difficulties. The outage triggered a domino effect that affected all aspects of payroll processing.
Beyond the numbers – the human cost
The impact of delayed or missed pay goes far beyond financial inconvenience. It’s important to consider the wider implications of any challenge like this outage on the overall employee experience.
Read more: Payroll errors impact 25% of UK employees
While financial wellbeing often forms a key component of an employee's value proposition, organisations should recognise the potential negative effects on an employee's productivity caused by financial stress. For instance, the uncertainty of not knowing when salaries will be received can significantly elevate stress and anxiety levels among employees, especially those who rely on each paycheque to make ends meet. This state of financial uncertainty can negatively impact their morale and productivity, as worries about finances can lead to errors or inefficiencies in their work.
Moreover, delayed salary payments can damage an employer's reputation, leading to a decline in trust and loyalty, which are essential for employee retention. Although creating an efficient employee experience is a priority for many business leaders, it’s a certainty that all efforts to enhance the employee experience will be compromised if employees are not paid on time.
Rethinking business continuity plans
Quite often, business continuity plans (BCPs) lack a specific focus on payroll. Organisations need to, therefore, verify the comprehensiveness and robustness of their plans, including clearly outlined procedures for responding to disruptions. They must account for external vulnerabilities that could impact their payroll procedures, such as dependencies on payroll providers and banking systems.
Understand what would be exposed during a crisis. Conduct an end-to-end analysis of the payroll process, identifying both automated and manual segments to detect potential frailties. In addition, organisations should regularly test and update their BCPs while also familiarising all relevant parties with the actions required, considering external contingencies like IT systems or software failures.
Striking the right balance – automation vs manual processes
While technology and automation are often viewed as comprehensive solutions, the failure of tech systems reveals the need for human input. However, organisations shouldn’t become overly dependent on manual processes either, as they can decrease efficiency and increase the likelihood of human error. The situation begs the question of whether organisations have adequately trained resources to activate their BCPs. Imagine a manual backup system, like the old credit card imprinters used in case of electronic malfunctions. What’s your payroll 'imprinter' in case of technology failure?
Read more: Payroll errors costing businesses £150,000 a year
The CrowdStrike incident should serve as a stark reminder of our dependence on technology and the potential domino effect of a single disruption. Therefore, each organisation must examine its own BCP, analyse end-to-end processes, and strike a balance between automation and manual intervention. By doing this, organisations can ensure the payroll function runs smoothly, even during unforeseen disruptions. This not only protects employees’ financial security but also safeguards the organisation’s reputation and employee trust.
By Simon Puryer, executive payroll practice lead at HR consultancy Lace Partners
