Is Payroll Confidentiality a Potential Hazard for Your Business?

One of our new clients explained his reason for outsourcing his payroll during one of the initial meetings he had with me here at The Payroll Department. We often hear how small business owners are eager to have someone else take care of payroll, payroll taxes and the payment and reporting of it to the government. They want to be sure they don’t make a mistake and end up paying out fines and penalties for an oversight. However, when Sam* talked about the problems of handling payroll in-house with his small business, he made no mention of those issues.

He talked about whispers and personnel problems.

Gossip and confidential information can be an open wound in the workplace.Whispers between co-workers may indicate an issue. Co-workers spend more time together on a daily and weekly basis than most families. Certain people become close and sometimes, cliques or unofficial groups are formed. When employees become close, they share confidences and confidential information.

Confidentiality inside organizations, especially small business operations, can be a real challenge. When personal issues become community knowledge employees can be embarrassed, ridiculed and judged. And those type of situations can have a direct impact on production – quality and quantity – and therefore, the bottom line.

Sometimes alliances are divisive and “sides” are taken. That’s when things tend to spiral downward and confidential matters become valuable collateral.

One of the most difficult areas to manage confidentiality is in payroll. It’s not just keeping pay rates confidential, but keeping personal matters such as garnishments for child support or other court ordered payments private.

It’s not uncommon to discover that private information is shared with the general office in the form of gossip, whether it is intended to be malicious or not, gossip always ends up hurting the organization.

Outsourcing your payroll is one easy and affordable way to manage the confidentiality of payroll. In fact, at The Payroll Department it is a policy to only discuss payroll matters with specified people within an organization. We respect the private matters of each individual on your payroll as well as the overall payroll and payroll tax matters of your business.

Sam saw his outsourcing payroll as being a proactive step to eliminate the potential of divided employees. He said there are enough issues with personalities without adding the potential for explosive situations around very personal matters in the workplace.

We like his thinking and I bet his employees would like it, too, if they realized he was working to protect them. But he keeps that confidential.

-Teresa Ray of The Payroll Department

*Not his real name

Posted in: Operating a Small Business, Payroll, Payroll Processing

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