Ultimately, employees work to be paid. Payroll is therefore fundamental to the relationship with and motivation of an employee. An employee carries out their work and, rightly, expects to be paid correctly and on time. When this doesn’t happen, it damages the relationship and motivation.

Poor payroll in an organisation can have a negative impact on employees. Payroll is a complex business, it can be easily processed incorrectly by the wrong person. Payroll errors can lead to poor mental wellbeing and lack of motivation. It can also lead to an increase operational costs if HMRC do not receive the accurate information on time, there are heavy fines to pay.

With employer review websites it is all to easy for employers to be exposed for poor payroll processing. Poor ratings on these increasingly influential websites will have a significant impact on future recruitment.

According to research by Zellis (payroll and HR software provider:)

• 55% of employees have been caused undue stress and worry after being paid late
• 50% of employees have been caused undue stress and worry after spotting a mistake on their payslip
• 40% said it made them feel unstable in their financial situation.

When employees are paid later than planned:

• 37% could not pay direct debits and standing orders on time
• 33% wasted time trying to resolve the issues caused by missed payments
• 29% went overdrawn
• 26% had to pay bank and interest charges
• 24% experienced a negative impact on their credit rating
• 21% claimed they have quit their job and moved to another employer as a result of being paid late, or after the company had made an expensive mistake with their pay and rewards

Unfortunately, payroll errors are much more common than they should be, this causes employees undue stress and worry causing their engagement and productivity to decline. It also affects loyalty, staff retention is an important role in any business and worrying about being paid will impair trust and loyalty.

A truly motivated and satisfied employee has many contributing factors and each employee requires a different approach but it is safe to say that being paid correctly and on time is a big part of this experience.

In house payroll is expensive, staff training, software costs, time taken to calculate payroll, creating tax documents, holiday and sickness cover, staff costs all adds up. Outsourcing payroll is often a money and time saving option. If you add up the costs of an in house payroll function you would be surprised that in a lot of cases, outsourcing is a cheaper and more reliable option.