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Don’t underestimate the impact of the payroll team on engagement

Research suggests more than half of employees would lose trust in their employer if they were paid incorrectly even once. Based on this stat any action to improve employee engagement should first and foremost involve the payroll team.

National Payroll Week falls 11-15 September and it’s an occasion designed to mark the hard work payroll professionals do to keep Britain paid. And they really do.

In a year that started with CPIH inflation rates of 26.7% caused by housing fuel costs, payroll is becoming the most important department in every business and the payroll team is potentially carrying the weight of success on its shoulders.

35% of UK employees would find another job if they were paid incorrectly even once and 51% would lose trust in their employer and resent them. Based on this, you could be seeing more than a third of your staff walking out the door if the payroll department mess up just once – this is huge. Overlooking payroll processors as a business-critical role opens companies up to risks that aren’t just limited to financial in nature.

The first risk to consider is morale.
If an employee is paid incorrectly, they lose trust and confidence in the management and they might be vocal about it too. You can imagine it “we’re not priority” “we’re an afterthought” “I bet the boss still got paid”.  Of course, the thoughts will depend on how big an error is, how frequent errors are and who is on the receiving end, but they can quickly create a culture where people question the management’s integrity – if they don’t care enough to get my pay right, they certainly don’t care about what’s going on at home. Low morale can lead to a reputational issue internally but with the growth of review sites such as Glassdoor, internal reputational issues can quickly become external issues not only impacting retention but talent acquisition too.

Do it once you might be ok, do it more than once you’re in trouble.
At this point any change (good or bad) can raise suspicion. If you pay people a day early but don’t communicate why, they’ll think you don’t know what you’re doing. Pay people a day late, they’ll think there’s a cashflow issue. A lack of trust here will make employees question their faith in the leadership team to make decisions in other areas of the business and ultimately their confidence in the business and its products or services. And no matter what the cause is, people won’t 100% believe your reasons.

I believe people leave jobs for more money.
Yes, more and more people are considering culture and employee benefits over salary but ultimately in a time where less and less people have savings for a rainy day because it’s been raining for two years, pay matters and is usually the deciding factor. So, a reputation for paying people late or incorrectly isn’t a look you need to be going for.

Employee benefits are not contractual in nature and can be removed from an employee’s contract without consultation. Being paid correctly on a certain date is. In essence, if you mess up payroll, you mess with people’s contracts of employment. Employee benefits don’t mean anything if you have a bad culture anyway. So, for those companies that attract people based on a great rate of pay if you don’t deliver it on-time and correctly – you better have an out of this world company culture to make them stay. Of course, chances are you won’t if you have payroll issues.

Payroll is complicated.
The importance of paying people correctly isn’t new – but when you consider that a third of UK workers are now living payday to payday the potential impact of payroll errors and mistakes has higher stakes.  But payroll is complicated. You only have to look back to last year when bosses of high street giant Next apologised to staff for underpaying some of them by up to £200 a month due to a payroll error and just a few months ago WH Smith, Marks & Spencer and Argos were among a list of companies facing financial penalties for payroll breaches.  If the big boys can make mistakes, it’s a stark reminder to check in with your payroll team or provider to assess the potential risk to your business. If new legislation is announced, how is it handled? Do they have the reliable updated software to comply automatically with significant changes?

Ultimately if you want an engaged workforce, check in with your payroll team or provider first. If you want to invest in employee benefits to improve company culture, check in with your payroll team or provider beforehand. If you genuinely care about your employees and believe they are the key to business success, you guessed it check in with your payroll team or provider.

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