More than a third (36%) of HR Directors (HRDs) believe their organisation’s senior leadership team is not doing enough to address the potential business impact of inaccurate, late and non-compliant payroll practices.
According to the survey of 250 HRDs at large UK companies, conducted by Zellis, almost all (94%) said that their organisation’s decision makers understand the risks created by getting payroll wrong, but only 58% are actively implementing strategies and processes to mitigate them.
For HRDs, the most worrying consequences of poor payroll performance are:
- Increased operational costs (cited by 81%)
- Reduced employee engagement (79%)
- Increased employee churn (75%)
- Non-compliance with payroll legislation (67%)
In response to these challenges, over half (56%) of HRDs identified increasing the use of automation as one of their top three payroll priorities this year, along with developing a stronger compliance strategy (34%) and improving how they communicate with employees to receive accurate pay and benefits information (34%).
Nonetheless, the majority (54%) of HRDs said they are not currently reporting on payroll-related issues in senior leadership meetings, with the survey results pointing towards several possible reasons for this.
A third (32%) said they struggle with collecting and analysing data from their payroll systems in order to create impactful performance reports. In addition, roughly a quarter (24%) claimed that their senior leadership team does not consider payroll strategic enough to warrant board-level discussions.
Some HRDs indicated that they would benefit from a more collaborative approach, as 24% agreed that the Finance department should have shared responsibility for payroll performance and 16% said that the responsibility should be shared across HR, Finance, and Operations.
John Petter, CEO of Zellis, commented: “The ongoing coronavirus outbreak highlights how important it is for HR teams to be prepared for major workforce change, especially as the rate of employee absence has increased and complex emergency payroll legislation has been introduced. Payroll must be reported on at board-level to help build an appreciation of key challenges, and so that the appropriate collaborative actions can be taken to maintain high standards of accuracy, efficiency and compliance.
“But these findings suggest that many HR leaders are struggling to do this due to issues with collecting and analysing impactful data. Developing strong analytics capabilities will become essential in helping them to understand and respond to payroll challenges as they emerge. Not only this, but by marrying together payroll and core HR data, organisations can develop a fuller picture of the wider trends and issues shaping their workforce during these challenging times.”
The survey was conducted in March 2020 by Expedite Consulting on behalf of Zellis.