TECHNOLOGY
How can businesses ensure their payroll systems are both efficient and effective?
Anton Roe, chief executive officer, MHR, discusses how organisations can bring their payroll processes and software up to speed with modern society
A gainst today’s volatile economic backdrop of inflation and surging costs of living, it has never been more important for organisations to pay their employees correctly and on time. Many businesses have expressed a willingness to provide additional support to help their colleagues through this challenging period. Pay advances, financial advice, savings and discount schemes are all providing welcome relief. However, all too often we see the financial basics being neglected. According to our research, almost 94% of British and Irish businesses have run into problems processing payroll in the last 12 months. The research can be found here: http:// ow.ly/c2M050KRnLs. Errors are stacking up and employees
from critical business tasks. Alarmingly, almost a third (32%) said that excessive manual administration was leading to an increase in mistakes. Across the board, our survey revealed companies are making mistakes across 5% of their payroll every month. These errors not only dent morale, but also reduce employees’ confidence in their employer and can lead to the financial well-being issues already described. As a result, payroll errors can be extremely costly in terms of lost talent and recruitment expenditure, which typically sits at around £30,000 per employee. Of our respondents, some 50% said they’d consider leaving their employer if they were subject to repeated salary mistakes. The good news is that modern, cloud- based payroll solutions can alleviate these problems dramatically. An effective software package will: l improve accuracy to virtually 100% l significantly reduce the time spent on processing payroll l manage regulatory compliance, and store and backup vital data securely. These systems can also help to reduce volumes of queries, especially around basic payslip information. By providing interactive payslips, employees automatically get an explanation of their pay across key areas, such as tax codes, how calculations have been made, pension contributions and more. Our calculations suggest this could save organisations up to £32,000 annually, leaving payroll teams to focus on more valuable tasks. The benefits of these solutions are
fundamental of all, is considering whether the organisation’s payroll schedule and processing dates are realistic and achievable. This could depend on the breadth and depth of expertise within the team. If the business is too reliant on a small group of people to process payroll, ensuring continuity during staff absence periods could be challenging. Payroll procedures should also be continually evaluated. Organisations should be assessing: l how they process payroll l how long it takes l whether the use of manual processes such as paper forms and spreadsheet management consumes too much time, and/or increases the chance of errors being made. The third key area to routinely monitor involves perceptions and pattern: l how does payroll interact with other departments? l are they recognised as a key function within the business? l does the payroll function work closely with other teams to share data and identify areas of improvement? And fourthly, employee perceptions are equally important. Here, payroll professionals should be identifying patterns in feedback to bring key issues to light. They should also have a clear picture of whether colleagues have confidence in their ability to pay accurately and on time. Consider putting payroll in the cloud If inefficiencies are uncovered during these payroll ‘check-ups’, there’s a strong probability that technology holds at least part of the answer. The most common payroll issues occur around time wastage and errors. Our research found that 72% of organisations still use manual methods to calculate their payroll, with 36% saying it distracts them
are suffering as a result. Of those respondents who had experienced
incorrect or late pay, more than six in ten (61%) had been financially impacted, including having to borrow money from friends or family (35%), not being able to afford anything deemed unessential (34%) and not being able to pay essential bills (25%). With inflation still climbing and a recession looming, the financial pressure is continuing to ramp up. Getting payroll processes up to speed So, what can human resource and payroll professionals do to ensure their employees benefit from consistently accurate and timely pay? The first step organisations should take is to normalise continuous check-ins and assessments of their payroll systems. Not only will this ensure fewer or no mistakes are made, but it will also allow payroll processes to keep up with evolving regulations. These check-ins should involve regularly gathering and reviewing answers to a series of four fundamental questions. Firstly, and perhaps most
therefore clear. As we continue to navigate through challenging times,
those employers who look out for their colleagues and support their financial well- being will be rewarded with happier, more productive and more motivated teams. This starts by mastering the basics and ensuring people are paid correctly and on time. n
| Professional in Payroll, Pensions and Reward | October 2022 | Issue 84 56
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