While some see payroll as a back-office function, it’s actually business-critical. The consequences when things go wrong are felt across the entire organisation.
Let’s look at three important examples, highlighted by the key findings from our survey for this year’s National Payroll Week.
Higher employee turnover
People are an organisation’s biggest asset, so a great HR strategy needs to account for everything and anything that could affect employee engagement and retention.
But it’s a big challenge for businesses of all shapes and sizes.
The cost of churn nationwide is equivalent to billions of pounds each year. The cost of replacing an employee can range from £2,000 to more than £200,000, depending on the nature of the business and the position that needs to be filled.
A high rate of employee turnover can also create wider skills gaps, lower workplace morale, and make maintaining product and service quality more difficult.
The link between payroll and staff retention may not be immediately obvious, but our research makes it clear: one in five (21%) employees has changed jobs as a result of being paid late or incorrectly.
The average person has a number of different reasons for changing jobs, but not paying staff on-time and accurately doesn’t help the employer’s cause. Even if an employee doesn’t leave over a bad payroll experience, the impact on the individual will still be felt in the form of damage to trust in the employer, motivation, and financial wellbeing.
Risk of non-compliance
We found that 60% of employees have, at one point or another, spotted a mistake on their payslip.
It’s no easy task to follow different (and often changing) payroll rules, covering things from handling personal data, to managing pension contributions, to paying the correct rate of minimum wage. Businesses must have a strategy in place to maintain compliance, supported by payroll software that can adapt to changing needs.
Compliance isn’t just about keeping employees happy. There are also financial and reputation risks. Penalties for organisations that are found to be in breach of laws such as the General Data Protection Regulation (GPDR) or The National Minimum Wage Act can be severe. Legal cases brought against businesses can also become high-profile, causing them reputation damage.
Unnecessary costs and inefficiencies
Running payroll can be expensive, especially within large businesses. It’s important to make the process as efficient as possible, minimising unnecessary issues that take additional time and money to fix.
After all, a payroll team that spends less time on fixing problems can instead spend time on value-adding activities, such as analysing data, training, and evaluating systems and processes.
That’s not all. An efficient payroll system gives valuable time back to the employee. It’s not always clear who an employee should speak to about a problem with pay and rewards. It could be the payroll team, HR team, finance team, or another team entirely, so the process is often complex and time-consuming.
Businesses can put in place standardised processes for fixing payroll issues that do arise as quickly as possible. This includes making sure everyone within the organisation is up to speed on best practices.
It’s also worth exploring more elements of employee self-service, so that payroll and other HR-related processes can be made more efficient by engaging staff directly.
Driving better value for your business with payroll
A strong payroll and HR system is at the heart of any high-performing business, supporting key strategic objectives, creating better employee experiences, and empowering the team to be more agile and productive.
Ready to transform your payroll and HR operations? Contact us today to learn more about how our award-winning software, ResourceLink, can support your needs.