How to boost efficiency and productivity in public sector payroll and HR

The digital transformation of public sector payroll and HR functions could play a key role in boosting productivity, new research has revealed. The deployment of more modern and efficient systems, combined with upskilling existing teams, would also deliver a welcome increase in cost efficiency.

According to the UK’s Office for National Statistics, productivity in the public sector dropped by 1% between the third and fourth quarters of 2023. This translates to 2.3% lower than a year before, and 6.8% below pre-pandemic levels.

Public sector productivity measures the volume of services delivered against the volume of inputs required to maintain such services. Ministers of almost all stripes indicate that raising productivity is a national priority, but the much looked-for boost remains elusive.

Challenges in optimising public sector payroll and HR

Our latest research also showed that, at a more functional level, the need for streamlined and accurate public sector payroll and HR operations has never been greater. But public authorities face challenges and barriers to achieving this.

The most common is a lack of workforce skills and capabilities. This is according to 23% of the 500 respondents to our survey, all public sector payroll, HR, finance, or IT professionals who work in middle management or above,

The finding is significant because inadequate training can lead to human error, which takes time and effort to fix. If it becomes necessary to divert resources to tackle pressing problems, it can also slow activities down.

Next on the list of challenges were out-of-date technology that’s no longer fit for purpose and the ability to recruit and retain team members (19% respectively). The latter situation can inevitably result in employee shortages, which only exacerbate existing issues.

Imperfect fixes and workarounds deployed

Unfortunately, too many organisations do not have the right technology in place to meet their needs. As a result, a quarter of those questioned said they currently fill gaps by using technical workarounds for their main system, or secondary software (22%).

A further 23% employ manual workarounds, such as spreadsheets and paper forms. And 22% go to the expense of either hiring in extra people to help or getting existing employees to spend time troubleshooting.

The problem is that these kinds of fixes bring challenges of their own. They can be a major drain on time and resources. Cobbled-together solutions can also create gaps for information to fall through, leading to a greater risk of mistakes and compliance challenges. The more steps in the process, the more room for errors and inconsistencies.

What are the solutions to public sector payroll and HR efficiency?

When asked how best to address the cost efficiency side of the equation, that was very clear. While most of those surveyed believed the biggest issue they faced was inadequate skills, they indicated that the answer could lie with technology.

At the top of the solutions list was to introduce more advanced public sector payroll and HR software (31%).

Implementing more cloud-based solutions and reducing IT infrastructure requirements came in joint second (24% each). Streamlining operations, for instance by introducing shared services, was also viewed as an effective tack (22%).

To tackle productivity issues, meanwhile, respondents again pointed to technology as the most effective approach. Just over a quarter (27%) cited the value of integrating new technologies, such as AI, into existing systems.

Almost a quarter (23%) indicated that automating public sector payroll and HR workflows and manual processes would help. Better training and skills development came in third (22%).

Ready to optimise your payroll and HR operations?

Productivity and Efficiency, Unlocked gives you more detail to optimise your public sector payroll and HR, empowering your teams to excel.

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