In a recent study conducted by HR, payroll and finance software provider MHR, concerning revelations about the detrimental impact of inaccurate payroll on both employees and businesses have come to light. The findings underscore the urgent need for organisations to prioritise accurate and timely payment processes for the well-being of their workforce and the overall health of their operations.
The study - based on surveys of employees across the UK - found that a staggering 46% had missed a bill payment directly due to their employer's inaccurate payroll practices. Whether it was being underpaid or not paid at all, the consequences left workers struggling to meet crucial financial obligations, particularly amid the ongoing cost-of-living crisis.
Anton Roe, CEO at MHR commented:
“Payroll errors represent not just a costly mistake to businesses, or a barrier to their growth, but also a real threat to employees up and down the country who will be relying on accurate pay to help navigate the ongoing cost of living crisis."
Financial stress has proven to be a pervasive issue, with 67% of respondents reporting difficulty concentrating at work and a significant 65% stating that their mental health had been negatively impacted in the past year due to financial concerns. This paints a stark picture of the intertwined relationship between financial stability and overall well-being and the direct impact it has on employee productivity and mental health.
Notably, the responsibility of organisations in maintaining the financial well-being of their employees is underscored by MHR's research, revealing that a staggering 88% of UK businesses experienced payroll errors resulting in incorrect or delayed payments in the last year. For nearly half (43%) of these businesses, inaccuracies in payroll operations were identified as the most significant challenge they currently face.
The investigation and correction of these errors were identified by more than half (53%) of businesses as the most time-consuming aspect of their payroll operations. The study highlights the substantial amount of time and resources businesses expend on rectifying payroll mistakes, with 80% of respondent businesses dedicating at least 12 hours per month to address these errors.
This 12-hour monthly commitment translates to a staggering 144 hours per year, equivalent to 18 full days of payroll staff time wasted on error correction. This not only poses a significant drain on productivity but also raises questions about the efficiency and reliability of existing payroll processes within companies.
In response to these challenges, half of the respondent businesses (50%) identified the adoption of new digital payroll technologies as a potential solution to improve their existing payroll practices and reduce the likelihood of errors. However, the study also highlighted a significant obstacle to implementing these changes: a lack of resources, cited by 46% of businesses as the primary reason for not embracing digital payroll solutions.
The revelations from MHR's research emphasize the pressing need for businesses to re-evaluate their payroll processes. As the study suggests, embracing digital payroll technologies may not only enhance accuracy and timeliness but also save valuable time and resources that can be redirected towards more strategic and impactful aspects of business operations.
